Meanwhile, Petrikas revealed that the HKEx is studying how to use new technology to shorten the settlement cycle, such as reforming the new share issuance mechanism. At present, when IPOs are conducted in Hong Kong, it usually takes about five days to determine the issuance price and to formally list shares on the Hong Kong Stock Exchange. The mechanism of T+5 (five trading days between the pricing date and the listing date) of new shares also affects the ability of new shares pricing to respond quickly to market changes to a certain extent, and thus is affected. Market criticism.
Hong Kong Stock Exchange Chief Executive Li Xiaoga has previously revealed in an interview with 21st Century Economic Reporters that the direction of future new share issuance reform is to break the existing logic, the whole business model may change for some participants, and ultimately hope to achieve T+1, that is, listing the next day after pricing, in order to reduce the risk of market volatility.
Liang Songguang, Chief Technology Officer of HKEx, told the media on July 11 that it was necessary to discuss with different stakeholders what needs to be improved in the current practice. At present, it has not entered the stage of discussing the specific technology to be used, but emphasized that block chain is one of the technologies to be considered.
Major exchanges embrace new technologies
With the development of block chain technology, the advantages of high transparency, low cost and high efficiency make the major exchanges foolish.
The Hong Kong Stock Exchanges three-year strategic plan, previously announced, points out that the future will take root in China, connect the world and embrace technology. At the end of last year, the Hong Kong Stock Exchange formally cooperated with Digital Asset to develop a post-transaction allocation and processing platform driven by block chains for downward northward transactions between Shanghai, Shenzhen and Hong Kong.
Liang Songguang said that the current proof of concept results are satisfactory, and will invite all parties to participate in the bidding. At the same time, he pointed out that the Hong Kong Stock Exchange has applied artificial intelligence technology in extracting key information from public announcements of listed companies, market monitoring and identifying investorsbehavior patterns.
In fact, in December 2017, the Australian Stock Exchange (ASX) announced the use of block chains to handle stock transactions, making it the first large-scale exchange in the world to officially launch block chains. It is reported that ASX plans to officially launch the block chain network in 2021 to replace the decades-old Chess electronic recording system, which will save up to 23 billion dollars in cost.
In October 2018, the Chief Economists Office and Innovation Laboratory of the Hong Kong Stock Exchange released a research report, The Framework for the Use and Regulation of Financial Science and Technology, which explores how financial technologies such as block chains and artificial intelligence affect the global exchange market.
The report points out that block chains have five main advantages in securities trading settlement process, including the use of block chains technology to start liquidation and settlement when transactions occur, greatly reducing settlement time. Each participant achieves a high degree of consistency on the data fields in the block chain, which is conducive to the participantsrapid data processing and greatly improves the settlement efficiency.
However, Peter Shen, Director of Technology Strategy and Innovation, Singapore Exchange, admits that the financial market is an ecosystem with different participants, such as brokers and customers. Therefore, it is difficult for the exchange to unilaterally innovate in technology, and it is necessary for all parties to act in concert. For example, in a transaction, brokers need to investigate customers. Background information, while other institutions provide credit lines, the whole process is very complex. Therefore, in the application of large data, AI technology, it will take some time.
The maturity of Hong Kong stock market going south exceeded expectations
Since the opening of Shanghai, Hong Kong and Shenzhen, mainland investors have been able to invest directly in the Hong Kong stock market through the Hong Kong Stock Exchange. What changes will this bring to the Hong Kong stock market, which has been dominated by institutional investors?
Petrikas admits: In the past, there have been some prejudices against mainland investors, such as thinking that they prefer speculation, and the mentality of speculation is similar to that of gambling. Data show that the turnover rate of mainland investors participating in Hong Kong Stock Exchange reached 189%, while that of local and international investors in Hong Kong was only 68%.
However, he believes that other data suggest that the maturity of mainland investors may exceed expectations. For example, each transaction by mainland investors was $105,000, similar to $101,000 by international investors. The former involves only 1.5 orders per transaction, much lower than the latters 3.6 orders. The former has a median hanging order instruction time of 136 seconds, while the latter is only 89 seconds.
Data show that as of July 10, 144.729 billion shares were held by southward funds, accounting for 5.30% of the total capital of the underlying shares and 896.436 billion Hong Kong dollars, or 3.16% of the total market value of the underlying shares. The overall share-holding ratio of southward funds to Hong Kongs common stock is 5.30%, and that of 33 stocks is more than 20%.
Source: Yang Qian_NF4425, Responsible Editor of Economic Report in the 21st Century