HKEX(HK:00388) Jin Rong Shi Bao·2025-07-17 13:34Core Viewpoint - The Hong Kong Stock Exchange (HKEX) has released a discussion paper aimed at shortening the settlement cycle for the stock cash market from T+2 to T+1, encouraging market participants to discuss how and when this change can be implemented [1][2]. Group 1: Market Context - Hong Kong is one of the most active capital markets globally, with over 2,600 companies listed and an average daily trading volume exceeding HKD 240 billion in the first half of 2025 [2]. - The current T+2 settlement cycle has been in place since 1992, attracting global investors and fostering a robust financial ecosystem through active corporate financing and cross-border investment flows [2]. Group 2: Global Trends - Other major global markets have transitioned to T+2 settlement cycles over the past 20 years, with many now considering or adopting T+1 or shorter cycles [2]. - Markets currently using T+1 settlement include mainland China, the United States, Canada, Mexico, Argentina, and India, with an expectation that by 2027, 88% of global stock market transactions will utilize T+1 or T+0 settlement cycles [2][3]. Group 3: Benefits and Challenges - Transitioning to a T+1 settlement cycle could enhance market efficiency, reduce systemic risk, and align the Hong Kong market more closely with international standards [3]. - Challenges include addressing time zone differences, foreign exchange conversions, and the need for market participants to upgrade systems and automate processes to maintain operational efficiency [3]. Group 4: Implementation and Participation - The discussion on the settlement cycle is limited to the secondary market for stock cash transactions and does not involve primary market settlements [3]. - The HKEX encourages all market participants to submit their suggestions by September 1, 2025, to help establish a timeline for implementation [3]. - HKEX's CEO emphasizes the importance of collaboration within the financial community to adapt to evolving global market conditions and optimize the financial infrastructure [3].