According to Zhitong Finance APP, Hong Kong Exchanges and Clearing Limited (HKEX) published a consultation paper in April this year, proposing to shorten the settlement cycle of Hong Kong's stock cash market from the current "T+2" to "T+1," with implementation expected as early as the fourth quarter of 2027. "A shorter settlement cycle helps improve the capital efficiency of market participants and reduces related market settlement risks." At a Legislative Council meeting, while providing a written reply to a lawmaker's question, Hong Kong Acting Secretary for Financial Services and the Treasury Chan Ho-lim stated that promoting the adoption of the T+1 settlement cycle in the stock cash market is an important part of optimizing market infrastructure, allowing Hong Kong's settlement cycle to closely align with international trends, facilitating the smooth flow of capital between Hong Kong and overseas markets, and helping to further consolidate and enhance Hong Kong's status and positioning as an international financial center.

Chan Ho-lim pointed out that shortening the settlement cycle involves adjusting the market's settlement process and existing infrastructure. HKEX will prioritize ensuring a stable transition for the market when formulating the implementation plan, and the relevant operating model will also take into account the actual circumstances of the local industry. Considering that the post-trade operating time will be shortened, HKEX also proposes extending the service hours for settlement instruction activities (such as inputting and matching settlement instructions), allowing participants to handle relevant procedures more flexibly.

At the same time, HKEX proposes to retain the existing delivery versus payment arrangement, the multiple batch settlement processing architecture, and the settlement risk management framework, thereby reducing the transition costs for the industry.

Chan Ho-lim stated that to ensure Hong Kong can move toward T+1 in a stable and smooth manner, HKEX will fully consider the actual needs of the industry (especially small and medium-sized securities firms) in terms of system upgrades and process adjustments when formulating the implementation timetable, and will reserve sufficient preparation time to ensure that all market parties can connect in an orderly manner. HKEX will continue to maintain communication with the industry to understand the readiness and actual needs of different market participants, and will assist market participants in getting ready and support a smooth transition to the T+1 settlement cycle through phased publication of information documents, provision of sufficient preparation and testing time, facilitation of industry guidelines, and promotion of standardization measures.

Chan Ho-lim continued that shortening the settlement cycle from T+2 to T+1 will improve capital turnover efficiency, with funds from sell-side transactions recoverable one business day earlier, making it more convenient for institutional and retail investors to conduct subsequent investments more flexibly and quickly. To ensure that retail investors can fully understand the operational arrangements of T+1, the Hong Kong government will promote HKEX and the Investor and Financial Education Council to strengthen public education targeting retail investors. HKEX will provide comprehensive implementation support to the market, publishing relevant information documents and implementation arrangements through a dedicated T+1 webpage. HKEX will also continue to maintain close communication with the market through briefings, industry engagement activities, and systematic testing to assist market participants in preparing early.