Hong Kong stock exchange to reduce minimum price changes to boost liquidity
The reform aims to lower overall transaction costs and support a more efficient price-discovery process, says HKEX deputy CEO
The reduction of the minimum price change, which determines the tightest bid-ask spread allowed, will encourage smaller trades. It will apply to equities, real estate investment trusts and other applicable securities – excluding debt securities, exchange-traded options and products, and structured products – with the first phase being rolled out in mid-2025. The second phase will be implemented in mid-2026, subject to a review of the first phase’s results.
The announcement follows a consultation in June, in which HKEX received 110 responses, with the majority showing support, according to the consultation conclusions published on Tuesday.
Under the first phase, the minimum spread of securities that fall within the price bands of HK$10 to HK$20 and HK$20 to HK$50 will be reduced by 50 per cent and 60 per cent, respectively. The second phase will apply to securities in the HK$0.50 to HK$10 range, for which the minimum spread will drop by 50 per cent.
“HKEX is fully committed to elevating the depth and vibrancy of its markets, and this is reflected in the continuous roll-out of new microstructure enhancements,” said Wilfred Yiu, HKEX’s deputy CEO, co-chief operating officer and co-head of markets.
