Hong Kong to launch paperless securities regime on 16 November
Hong Kong will launch its uncertificated securities market regime on 16 November, enabling retail investors to hold shares directly in their own names electronically. IPOs will go paperless first, with existing listed firms transitioning over five years.
Hong Kong will launch its uncertificated securities market regime on 16 November, allowing retail investors to hold shares directly in their own names electronically. The move eliminates the need for physical share certificates and introduces a new facility called USI (Uncertificated Securities Infrastructure).
Initial public offerings will be the first to go paperless under the new regime. Existing listed companies will transition to paperless shares in phases over the next five years, according to the government's plan.
While the new mechanism gives shareholders greater autonomy and eliminates bank or brokerage custody fees, the electronic holdings are strictly for holding rather than trading, said Pamela Chung Kong-hung, managing director of Vistra. “Unless you never plan to sell, you cannot do without a brokerage account,” she said at a TV programme.
Chung noted that while same-day transfers to brokers for sale are possible after IPO investors receive shares via USI, they are not instantaneous. This may affect short-term IPO traders looking to flip shares immediately on debut, she added.
Even investors keeping physical certificates may eventually need a USI account to receive scrip dividends or bonus shares once an issuer transitions, as paper certificates will no longer be printed, Chung said.