New Digital IPO Platform Launched

The Fast Interface for New Issuance (“FINI”) has been launched by the Hong Kong Exchanges and Clearing (“HKEX”) to accelerate the settlement cycle to two days from five, by modernising and digitalising Hong Kong’s IPO settlement process.

This new digital platform enables IPO market participants and regulators to manage the end-to-end settlement process for new listings in Hong Kong. FINI modernises the IPO settlement process and shortens the time gap between IPO pricing and trading, giving investors quicker access to new listings, reducing market risk, increasing transparency and improving efficiency for all parties involved.

This initiative from the HKEX, accompanying the incentive of reduced stamp duties on stock market transactions, could help lift market sentiment. And it has been welcomed by analysts and stakeholders in the sector, as a quicker listing process improves risk management and boosts the overall competitiveness of Hong Kong capital markets.

“FINI is cloud-based platform tasked with processing different procedures in an IPO, such as pricing, allotment and payment. We are able to shorten the period between pricing an IPO and the actual trading of shares,” explained HKEX Co-COO Bonnie Y Chan.

Market participants such as regulators, issuers, brokers, lawyers can instantly access IPO status and updates on the online platform which operates in real-time.

Barry Chan, Managing Director of China International Capital Corporation International elaborated: “Changes in the prefunding model could significantly reduce the money locked up under the public offer tranches, resulting in lower funding cost for both sponsors and investors. This is especially true for an oversubscribed IPO, this model will help release up to hundreds of billions of dollars in capital in lock-up funds, reducing the cost of funding for the whole market. This arrangement will enable capital to be more efficiently deployed.”

“A shorter IPO settlement time will mean retail investors need to pay less in their margin lending for their new listing subscriptions; the new funding model will also substantially cut down the amount of money locked up in the banking sector during the IPO period, which will enhance the stability of the banking system,” Edmond Hui Yik-bun, CEO of Bright Smart Securities said.

The data of the entire IPO process can be analysed post-IPO to examine possible issues and weaknesses and facilitate improvements of future IPOs. HKEX further highlights that this platform is scalable and thus will accommodate future requirements.

Graphics source: HKEX