Core Viewpoint - The Hong Kong Stock Exchange has implemented the first phase of a significant change by lowering the minimum price fluctuation units for certain stocks, aiming to reduce trading costs and enhance market efficiency [1][11]. Summary by Relevant Sections Minimum Price Fluctuation Units - The minimum price fluctuation unit for stocks priced between HKD 10 and HKD 20 has been reduced from HKD 0.02 to HKD 0.01, and for stocks priced between HKD 20 and HKD 50, it has been reduced from HKD 0.05 to HKD 0.02 [1][11]. Benefits to the Market - The adjustments are expected to lower trading costs, improve transaction efficiency, and optimize price discovery, allowing trading prices to better reflect the actual value of stocks [6][14]. Implementation Timeline - The first phase of the adjustment took effect on August 4, 2023, with the second phase anticipated to be introduced around mid-2025, depending on the evaluation of the first phase's effectiveness [9][12]. Market Participant Feedback - The Hong Kong Stock Exchange received 110 responses from various market participants, with a majority supporting the two-phase reduction plan, believing it would lower trading costs and enhance market liquidity [8][11]. Impact on Trading Dynamics - The reduction in minimum price fluctuation units is expected to narrow the bid-ask spread, particularly for low-priced stocks, thereby reducing implicit trading costs and increasing trading liquidity [13][14]. Future Considerations - The second phase will focus on stocks priced between HKD 0.5 and HKD 10, with a proposed 50% reduction in the minimum price fluctuation unit, while stocks priced below HKD 0.5 will not be adjusted at this time [11][14].

Core Viewpoint - The Hong Kong Stock Exchange (HKEX) is implementing a significant change by reducing the minimum price fluctuation for certain stocks, which is expected to lower trading costs and enhance market efficiency [1][4]. Summary by Sections Phase One Implementation - The first phase of the adjustment will take effect on August 4, 2023, focusing on stocks priced between HKD 10 to 20 and HKD 20 to 50, with minimum price fluctuations reduced from HKD 0.02 to HKD 0.01 and from HKD 0.05 to HKD 0.02, respectively [1][6]. - The adjustments represent a 50% reduction for stocks priced between HKD 10 and 20, and a 60% reduction for those priced between HKD 20 and 50 [5]. Consultation and Support - The HKEX conducted a consultation process that began in June 2022, receiving 110 responses from various market participants, with a majority supporting the proposed changes [4][9]. - The feedback indicated a consensus on the positive impact of smaller minimum price fluctuations on market liquidity [9][10]. Future Phases - A second phase is planned for mid-2026, contingent on the evaluation of the first phase's effectiveness, with a six-month preparation period before implementation [5][10]. - The second phase will also target stocks priced between HKD 0.5 and 10, proposing a 50% reduction in minimum price fluctuation [5]. Market Impact and Concerns - Some market participants, particularly traders and retail investors, expressed concerns about the potential impact of the second phase on lower-priced securities, fearing it may narrow bid-ask spreads and hinder profitability [8][10]. - The HKEX acknowledged these concerns, stating that lower minimum price fluctuations could reduce trading costs and improve liquidity, thus benefiting public investors overall [10].

Core Viewpoint - The adjustment of the share transaction fee structure in the Hong Kong market is set to take effect on June 30, 2025, increasing the fee from 0.002% to 0.0042% of the transaction amount, while eliminating the minimum and maximum fee limits, which is expected to significantly lower costs for small transactions [1][2][3]. Summary by Sections Fee Structure Adjustment - The new fee structure will charge 0.0042% of the transaction amount, rounded to two decimal places, with no minimum fee of 2 HKD or maximum fee of 100 HKD [2][3]. - This adjustment applies to various trading activities including Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, H-shares "full circulation," and B-share to H-share conversions [2]. Impact on Small Transactions - The removal of the minimum fee means that small transactions will see a drastic reduction in costs. For instance, a transaction of 1000 HKD will incur a fee of only 0.042 HKD compared to the previous minimum fee of 2 HKD [3][6]. - Institutional investors will benefit from a more accurate calculation of transaction costs, allowing for better optimization of trading strategies [3]. Relation to Market Structure Changes - The fee adjustment is linked to the Hong Kong Stock Exchange's initiative to lower the minimum price fluctuation unit, which is expected to facilitate smaller transactions [4][5]. - The first phase of this initiative is planned for mid-2025, with further adjustments contingent on market conditions and regulatory approvals [4][5]. Rationale Behind Changes - The current fee structure disproportionately affects small transactions, leading to higher relative costs compared to larger trades. The new structure aims to maintain overall market cost neutrality while providing a fairer cost framework [7][8].