HKEX wants to speed up IPO process by 2022

Its new FINI platform targets to cut the IPO settlement process to two days from five.

The Hong Kong Exchanges and Clearing Limited (HKEX) announced plans to streamline and digitalise the settlement process for initial public offerings in Hong Kong.

The HKEX received 49 responses to the November 2020 concept paper on the Fast Interface for New Issuance (FINI), which sought to shorten the IPO settlement cycle that currently takes 5 days.

The Concept paper had proposed to reduce it to T+1, but the HKEX will initially adopt a T+2 settlement cycle by the fourth quarter of 2022 at the earliest.

“We are delighted that our proposal to modernise Hong Kong’s IPO settlement process received such strong support from the market,” HKEX CEO Nicolas Aguzin said.

“The introduction of FINI will shorten the cycle between IPO pricing and the start of trading, driving market efficiency and reinforcing Hong Kong’s position as the world’s premier IPO market.” 

FINI will also address the issue of excessive liquidity lock-up in heavily oversubscribed IPOs, by allowing clearing participants to opt-in for a compressed pre-funding requirement in certain circumstances.

Moreover, through FINI, brokers, share registrars, and IPO sponsors amongst others will be able to use this new digital platform to execute their respective roles and to coordinate workflows during the listing initiation, subscription, pricing, allotment, payment, regulatory approval, and stock admission processes.