Hong Kong SFC to Launch Uncertified Securities Market (USM) Regime with Target Implementation in Early 2026
18th April 2025 | Hong Kong
The Hong Kong Securities and Futures Commission (SFC) new Uncertified Securities Market (USM) target implementation is on track to be launched in early 2026. Hong Kong SFC (17/4/25): “The Securities and Futures Commission (SFC) welcomes the enactment of all necessary legislation to pave the way for the implementation of the uncertificated securities market initiative (USM) in early 2026 subject to market readiness (Note 1). During the SFC’s recent consultations and engagement, a broad array of market participants have shown support and enthusiasm for this initiative, which will further increase efficiency in our securities market and also provide investors with better protection and trading convenience. To help the market better understand and prepare for this new initiative, the SFC also launched a dedicated USM webpage today to provide one-stop access to all useful information. The webpage includes a set of frequently asked questions to help listed issuers and investors better understand their rights and obligations under USM. Among the key changes under USM: 1) Newly listed securities will have to be in paperless form from the time of listing, meaning investors will no longer be able to hold these securities in paper form. 2) For existing securities, investors may continue to hold their paper certificates, which will not be invalidated. Meanwhile, specific deadlines will be set for each issuer to take steps to enable investors to hold and transfer the securities in their own names without paper (Note 2). Thereafter, issuers will no longer be able to issue new paper certificates … … The SFC is working with Hong Kong Exchanges and Clearing Limited (HKEX) and the Federation of Share Registrars Limited (Federation of Share Registrars) on a detailed five-year implementation timetable which will cover issuers from Hong Kong, Mainland China, Bermuda and Cayman Islands. In the coming months, the SFC will increase engagement efforts together with HKEX and the Federation of Share Registrars, to help stakeholders understand how the new regime operates, its benefits and impact, as well as next steps for their participation. In 2025 February, the Hong Kong Securities and Futures Commission (SFC) issued a consultation, proposing fee limits for Uncertified Securities Market (USM) to protect investors, simply processes & avoid confusion. The 3 fee types are 1) Setup-fee, 2) Dematerialisation fee & 3) Securities transfers fee. The target implementation for the Uncertified Securities Market (USM) is in early 2026.
“ Hong Kong SFC to Launch Uncertified Securities Market (USM) Regime with Target Implementation in Early 2026 “
Notes:
- All USM-related primary law amendments had been enacted by end-2024, and the Legislative Council also completed its negative vetting process for all USM-related subsidiary legislation this week. All legislation has yet to come into effect. The specific implementation date of USM will be announced in due course.
- A five-year timetable will be set, with specific deadlines for each issuer, to facilitate more than 2,500 existing issuers’ gradual participation in USM.
Hong Kong SFC Proposes Fee Limits for Uncertified Securities Market (USM) to Protect Investors, Simply Processes & Avoid Confusion, 3 Fee Types are 1) Setup-Fee, 2) Dematerialisation Fee & 3) Securities Transfers Fee, Uncertified Securities Market (USM) Regime Target Implementation in Early 2026
25th February 2025 – The Hong Kong Securities and Futures Commission (SFC) has issued a consultation, proposing fee limits for Uncertified Securities Market (USM) to protect investors, simply processes & avoid confusion. The 3 fee types are 1) Setup-fee, 2) Dematerialisation fee & 3) Securities transfers fee. The target implementation for the Uncertified Securities Market (USM) is in early 2026. Hong Kong SFC (24/2/25): “The Securities and Futures Commission (SFC) today launched a consultation on proposed limits for three types of fees that an approved securities registrar (ASR) may charge under the upcoming uncertificated securities market (USM) regime in Hong Kong. The fees are: the facility set-up fee for investors to hold and manage uncertificated securities; dematerialisation fee; and fee for processing and registering securities transfers. The main reason for proposing limits on these fees is to provide a degree of protection to investors since they are not in a position to negotiate the fees. Also, aligning the charging basis will help simplify processes and avoid confusion for the market. In developing the limits, the SFC has sought to strike a balance among the costs shared by different stakeholders and maintain reasonable fees for investors. This will encourage investors’ early participation in USM and also ensure ASRs’ businesses remain commercially viable. The SFC encourages interested parties to provide feedback to the proposals during the consultation period, which will end on 23 April 2025. Subject to the legislative process of USM-related subsidiary legislation and the market readiness, the SFC targets to implement the USM regime in early 2026.”
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