Hong Kong Stock Exchange: Hong Kong's transition to a paperless securities market from 2026 to promote capital market modernization

The Zhitong Finance App learned that Hong Kong will transition to the paperless securities market (USM) as soon as 2026, marking an important milestone in improving the accessibility, resilience and competitiveness of the Hong Kong market. USM can not only reduce the complexity of transactions and post-transaction processes, but also build investor confidence through more clear information and enhance the appeal of the Hong Kong market to a wide range of participants.

For investors, simpler processes and more clear information mean lower costs, fewer delays and greater certainty, underscoring Hong Kong's role as a link between capital and opportunity.

The Hong Kong Stock Exchange will continue to implement various market optimization measures to bring better services and experiences to investors, enterprises and participants around the world, and strengthen Hong Kong's position as a leading international financial center.

USM drives market modernization

After the launch of USM, it will promote the modernization of market operation processes, so that investors can hold and manage securities more efficiently in their personal name through digital means.

Under the USM system, prescribed securities that have been listed or will be listed on the Hong Kong Stock Exchange will eliminate paper documents, reduce manual operations, and operate fully in a digital model, making Hong Kong's financial market infrastructure more efficient.

To support the implementation of USM, the Hong Kong Stock Exchange will introduce new securities depository procedures and make the fee structure more suitable, and work closely with the Securities and Futures Commission (Hong Kong Securities Regulatory Commission), the General Association of Securities Registration Companies Limited and other stakeholders to follow common global standards to make interaction between investors and companies more rapid and efficient.

USM benefits the market

Implementing USM will bring significant benefits to the Hong Kong market. In the future, investors will be able to hold participating securities in their own name and in digital form, making the procedures for managing and trading securities more convenient; the central agent structure of the existing central clearing and settlement system (central clearing system) will be retained.

Securities held by investors through the Central Clearing System will continue to be registered under the name of Hong Kong Central Clearing (Agent) Limited. While the level of service provided to participants remains unchanged, securities transfer and registration procedures can be greatly shortened and operational efficiency improved.

By optimizing post-transaction system facilities and eliminating the risk of paper document procedures and delays in physical operations, the process required for settlement can be shortened, ultimately improving the overall capacity and processing speed of the market and increasing efficiency.

For issuers, investors holding participating securities in their own names can enhance transparency, promote communication and interaction, and help strengthen corporate governance.

As the name suggests, USM will reduce the carbon footprint associated with printing, transportation and storage of paper documents, eliminate the need for additional paper in key work processes, and promote Hong Kong's sustainable development process.

USM has laid the foundation for more market optimization measures in the future, including the use of paperless statements, more convenient electronic communication, more intelligent post-trade solutions, and a simplified framework for each lot.

Get ready for USM

Implementing USM requires the concerted efforts of the entire industry. It is stipulated that securities will become participating securities in batches. The issuer will announce its timeline for transition to USM in due course.

During the transition period, paper and paperless securities holdings will operate in parallel until the full transition to the paperless securities market is in order to ensure market readiness and uninterrupted daily operations.

HKEx will work closely with intermediaries and issuers to plan and implement necessary system optimization measures for this large-scale transition, and arrange exercises for market participants to familiarize them with the upgraded infrastructure and operating processes.

At the same time, Hong Kong will adjust the fee structure to make the fees simpler, fairer and more predictable to ensure that the operating costs of the market meet the needs of digitalized operations and support the sustainable development of the market.

HKEx has also implemented a number of market optimization measures over the past few years, making trading more convenient and increasing market liquidity. Among them, the severe weather trading arrangement introduced in September 2024 has ensured that the Hong Kong market opens as usual on seven bad weather trading days to avoid affecting international investors through Hong Kong transactions due to market suspension arrangements in the past. The IPO pricing mechanism reform implemented in August 2025 has also promoted the IPO pricing process and increased Hong Kong's appeal as a capital raising center.