Hong Kong Exchanges and Clearing Limited (HKEX) published today a Consultation Paper on Accelerated Settlement for the Hong Kong cash market. The paper outlines the proposed operational model to shorten the settlement cycle for Hong Kong’s cash market to T+1 from the current T+2, and seeks public comment.

HKEX has proposed certain amendments to the existing operating model covering the cash market trade lifecycle, while trade execution arrangements would remain unchanged.

The proposals aim to facilitate earlier completion of post trade activities on the trade execution date (T), so that market participants can better prepare for settlement on the following business day (T+1). These measures include adjustments to the timing of clearing procedures, as well as settlement-related processing to facilitate timely and orderly settlement under a shortened cycle. However, the existing delivery versus payment framework and batch settlement structure will remain unchanged.

Due to the accelerated post trade operation timeline, HKEX also proposes to extend service windows for settlement-related activities such as settlement instruction input and matching, providing participants with greater flexibility to complete their post trade processing ahead of settlement. The existing clearing risk management framework would continue to apply, with certain timelines adjusted to reflect the shorter settlement cycle.

Based on feedback from the Discussion Paper, HKEX will consider developing a tool that enhances operational efficiency for institutional market stakeholders, including investment managers, custodians and brokers, under the T+1 settlement model.

The proposed T+1 settlement cycle would apply to secondary market exchange trades, including equities, exchange-traded products, structured products and debt securities, as well as the physical settlement of equities arising from stock options exercise and assignment. Initial public offerings and Stock Connect Northbound trading would continue to operate based on their existing settlement timetables.

A shorter settlement cycle will require adjustments across various downstream processes and related market activities. HKEX is also seeking market views on how these processes can be adjusted. In addition, HKEX encourages market participants to review their securities- and money-side activities, such as securities borrowing and lending, funding and foreign exchange arrangements, in order to support the proposed T+1 settlement cycle.

HKEX will publish technical specifications to help market participants make necessary system enhancements, as required, in due course. Subject to market readiness and regulatory approval, the transition to a T+1 settlement cycle in the cash market is intended to take place in the fourth quarter of 2027. Given this indicative timeline, HKEX encourages market participants to begin assessing their operational readiness, systems and processes as soon as practicable.

Upon finalising the T+1 framework, HKEX will also make subsequent amendments to its Exchange Rules, Clearing House Rules and Listing Rules.

The consultation period will close on Monday, 18 May 2026. Interested parties are invited to respond to the Consultation Paper by filling out and submitting a questionnaire on the HKEX website.