Zhitong Finance App learned that on October 9, 2026, the Chief Executive of the Hong Kong Securities Regulatory Commission, Leung Fung-yee, delivered a speech at the Asian Securities Industry and Financial Markets Association (ASIFMA) conference on Friday, saying that it will continue to improve the liquidity of the Hong Kong stock market and make market transactions more convenient and cost-effective. HKEx will publish a discussion paper on extending trading hours in the fourth quarter. Over time, using tokenized currencies and CyberHKD settlement methods can support transactions for a longer period of time. Meanwhile, HKEx will publish the consultation findings on T+1 settlement as soon as possible and set a target implementation date.
Leung Fung-yee said that market microstructural reforms have achieved results. The liquidity of Hong Kong stocks has been greatly improved, which can not only guide capital flows, but also improve price discovery efficiency and enhance investors' confidence in trading. In order to continue the momentum, more measures are being promoted one after another.
She mentioned that measures being studied in Hong Kong include extending the securities trading period and will take the lead in the derivatives market. The move helps investors to respond to the rapidly changing pace of the global market spanning different time zones in a timely manner to ensure that Hong Kong maintains its competitive advantage. In the long run, the policy of extending trading hours will be complemented by other promising innovative measures, such as tokenized currency and CyberHKD settlement arrangements.
In terms of narrowing the trading spread, the first phase of measures implemented a year ago covered 300 stocks. Since its launch, the trading price spread has narrowed by 38%, and the transaction execution time has also been shortened by 26%. Preliminary results of the second phase of the measures show that the bid-ask price spread has narrowed by about 30%.
Promote shortening of settlement cycles to T+1. Shorter settlement cycles will help reduce various risks, improve capital efficiency, and further integrate Hong Kong with major international markets. This move can also promote a higher degree of automation and improve operating standards. The Hong Kong Stock Exchange will publish a summary of the consultation and implementation date of the target in the near future.
Reform the trading unit aspect of each lot. Hong Kong will introduce eight standard categories, with a maximum value limit of HK$50,000 per lot and a lower limit of HK$1,000, in order to lower entry barriers and increase market participation. The first phase of measures applicable to new issuers was implemented in July of this year, and the second phase of measures applicable to existing issuers will be introduced simultaneously with the paperless securities market system in November.
Leung Fung-yee pointed out that more than three years ago, the Hong Kong market fell into a period of dry liquidity, and the average daily turnover of the stock market was less than HK$100 billion. The authorities then took decisive measures to deal with it. It is encouraging that these measures have worked together and have now achieved tangible results. Since this year, the average daily turnover of the Hong Kong stock market has surpassed HK$270 billion, up 160% from 2023 levels. The trading price spread has narrowed, and the execution time for trading orders has also been shortened. In terms of turnover, Hong Kong has become the third largest exchange-traded product (ETP) market in Asia.
She mentioned that Hong Kong will continue to improve capital efficiency and build a liquidity ecosystem. In the area of capital efficiency, Hong Kong is working to improve the efficiency of the collateral framework to ensure greater efficiency of capital while maintaining full guarantees.
To ease the high financing cost pressure faced by market participants when providing cash collateral, the Securities Regulatory Commission and the Hong Kong Stock Exchange raised interest rebates on cash collateral and cut non-cash collateral charges by half. Since its launch in October 2025, the HKD cash collateral interest rebate rate for settlement participants in the derivatives market has increased by 45%, and the spot market has increased eightfold.
At the same time, the authorities have also optimized the customer margin framework for derivatives clearing houses under the Hong Kong Stock Exchange. Earlier this year, the Securities Regulatory Commission approved a reduction in the minimum customer deposit requirement, so that brokerage firms can set margin requirements more flexibly according to customer conditions, product characteristics, and market conditions. The first phase of the plan was implemented in September of this year.
Bond Connect bonds become eligible collateral. At the beginning of 2025, Hong Kong OTC Clearing Limited, a subsidiary of the Hong Kong Stock Exchange, began accepting Bond Connect bonds as margin collateral. As of August 2026, China's treasury bonds and policy bank bonds have increased to about 18% of the total margin collateral of OTC settlement companies. In November of this year, this arrangement will be extended to HKEx's largest clearing house responsible for futures and options settlement.
Looking ahead, the next important task is to implement cross-market margin arrangements. The Securities Regulatory Commission is cooperating with the Hong Kong Stock Exchange to study the implementation of margin cancellation arrangements between its clearing houses, and to streamline the non-cash collateral process, and strive to introduce same-day settlement measures for bond deposits within this year. These measures are expected to improve the efficiency of collateral use, reduce financing costs, and release capital without weakening risk management standards.
Finally, referring to the strong liquidity “flywheel” of the Hong Kong ETP market, she said that since 2023, the average daily turnover of Hong Kong ETPs has surged 3.6 times, and currently accounts for nearly one-fifth of the main board turnover. In terms of turnover, Hong Kong has become the third-largest ETP market in Asia.
ETP transactions have been exempted from stamp duty since 2015. Since then, a series of optimization measures have been introduced, including the introduction of a new repurchase exemption arrangement in 2019 to facilitate bookmaker activities, and a shift to a continuous pricing bookmaker responsibility system in 2020. These measures have narrowed ETP trading spreads by more than 40%.
The second success factor was market connectivity achieved after two years. At the beginning, only four eligible exchange-traded funds (ETFs) listed in Hong Kong were included in ETF Connect. Today, the total number has grown to 31, and the north-water south-south movement driven by ETF Connect has become a strong growth engine, expanding the scale of market connectivity and the investor base. Since the launch of ETF Connect, southbound ETF transactions have accounted for a considerable share of overall ETF turnover. With the facilitation measures of the China Financial Supervisory Authority coming into effect last month, mainland insurance funds were approved to invest in Hong Kong ETFs through the Shanghai-Shenzhen-Hong Kong Stock Connect, and the market growth momentum is expected to continue.
The third element is product diversification and innovation. The Hong Kong market continues to introduce new products. Currently, it offers a wide variety of products, including active ETPs, prepaid subscription options ETFs, virtual asset spot ETPs, tracking indices, and individual stock leverage and inverse products. Each type of product meets the needs of different investors and generates new hedging needs, while helping to open up more market opportunities.
As ETP turnover increases day by day, international securities makers and liquidity providers will also be more willing to bring technology, capital and talent to settle in Hong Kong. International liquidity providers are making great strides in Hong Kong, which just confirms this. In recent months, they have contributed more than 30% of market turnover. Their active participation helps to narrow the spread of trading prices, increase the depth of trading orders and improve the quality of trade execution, thereby attracting more industry players adopting diversified trading strategies to enter the Hong Kong market.
In her concluding remarks, Leung Fung-yee emphasized that Hong Kong's liquidity, as a highly open market with frequent cross-border capital flows, is certainly affected by macroeconomic and geo-economic factors. However, Hong Kong's experience has fully proved that the increase in market liquidity is no accident, but the result of careful planning.