Hong Kong Settlement: The paperless securities market will come into effect on November 16, while physical stocks will continue to be valid.

On September 1, Hong Kong Central Clearing and Settlement System Limited issued a notice clarifying the principles for handling physical shares related to the paperless securities market (USM), which will officially launch on November 16, 2026. The notice emphasizes that physical shares will remain valid, and the dematerialization process will be voluntary, with no mandatory deadline. The notice states that after the paperless securities market comes into effect, existing physical shares held by investors will still have legal validity, and shareholders' rights will not be affected. Investors are not required to passively handle the deposit, withdrawal, or dematerialization of shares due to the system change. The conversion of physical shares to paperless will be a voluntary choice, with no time limit, allowing investors to decide how to hold their shares based on their own circumstances. Hong Kong Clearing reminds brokers and other settlement participants to clearly communicate the relevant rules to their clients, advising against actively encouraging clients to handle deposit, withdrawal, or dematerialization of physical shares unless there is a genuine need. Hong Kong Clearing indicated that it will continue to monitor the dynamics of the market depositary business and will provide supplemental guidance in response to market conditions to ensure a smooth transition to the paperless securities market.