[Paperless Securities] The Securities Regulatory Commission aims to implement on November 16, expected to submit to the Legislative Council in the second quarter, with market testing to be conducted in the coming months.

The Hong Kong Securities and Futures Commission has announced that it aims to gradually roll out the securities scripless market (USM) starting November 16 this year. To allow the legal provisions for the scripless securities market to take effect, it is expected that an effective date announcement will be submitted to the Legislative Council in the second quarter of 2026.

After the scripless securities market is implemented, newly listed securities will have to be issued in scripless form at the time of listing. As for securities that have already been listed before the implementation date, they will be gradually scripless over a period of five years. This involves more than 2,600 listed companies, about 4.6 million physical shares held by Hong Kong Securities Clearing Company, which will be converted to scripless form, and about 10 million physical shares held by investors outside Hong Kong Securities Clearing Company, which can be converted to scripless form.

The SFC said that with broad market support and close cooperation with The Stock Exchange of Hong Kong (00388) and the Hong Kong Securities Registration Company, it has made steady progress on the main work to implement the scripless securities market over the past year, and has now entered the late stage.

• The relevant systems and processes of the scripless securities market for the Stock Exchange and related share transfer offices have entered the late stage of development and testing;
• Market participants will be invited to take part in testing in the coming months;
• The SFC has reviewed and approved the amendments that the Stock Exchange of Hong Kong needs to make to various rules and operating procedures for implementing the scripless securities market;
• The Stock Exchange of Hong Kong and the Hong Kong Securities Registration Company have also updated the relevant information documents, including adjustments to the major fees under the new regime.
• The SFC is reviewing applications from six members of the Hong Kong Securities Registration Company general body, seeking to become an approved securities registrar (ASR).

At that time, shareholders holding company physical shares (i.e., paper share certificates) will be able to open a scripless securities investment account (USI) at the transfer office to hold scripless securities in their own names, enjoy the legal title to the shares in the same way as physical share certificates, and be listed in the register of members. At the same time, they may also choose not to make any changes.

The existing beneficial owner structure within the Central Clearing and Settlement System will be retained. The procedures will only be subject to limited changes, the most notable of which is the process for depositing and withdrawing securities from the Central Clearing and Settlement System. These changes, together with the revised fees, may require intermediaries to make certain adjustments to their own business models and operating procedures, as well as to their clients and other documents. Intermediaries should proceed with the relevant preparation work as soon as possible to ensure that the new regime is ready by the time it takes effect in November.

梁仲賢, Executive Director of the SFC’s Market Surveillance Department, said that the implementation of the scripless securities market regime will further enhance Hong Kong’s financial market infrastructure, giving investors more options, more streamlined processes, and more opportunities to achieve straight-through processing. There is already a clear timetable for this important measure. In the coming months and beyond, the SFC will continue to work with The Stock Exchange of Hong Kong (00388) and the Hong Kong Securities Registration Company general body to ensure the smooth rollout of the new regime, and to further enhance and improve public awareness and understanding of the new regime.

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