Authors: David Cheng, Tiffany Kwok
Hong Kong is targeting to implement an uncertificated securities market (“USM“) regime on 16 November 2026. USM regime provides an efficient means for investors to hold and transfer legal title to securities in their own names without paper documents, with the register of holders maintained by approved securities registrars (“ASRs“) appointed by each issuer. To enable their prescribed securities to become participating securities, issuers must appoint an ASR and, where appropriate, amend the terms governing the holding and transfer of those securities, such as their articles of association or by-laws. They must also publish the specified date, the participation date and the relevant disclosures in accordance with the Listing Rules. The initiative will be implemented in phases over a five-year period, with a final implementation deadline of November 2031. Over 2,600 listed issuers are required to participate.
Regulatory framework
In June 2021, the Securities and Futures and Companies Legislation (Amendment) Ordinance 2021 was enacted, putting in place the broad legislative framework for implementing USM regime. The relevant subsidiary legislation and legislative amendments were enacted in April 2025 to pave the way for the implementation of USM regime in 2026, subject to market readiness. In February 2026, the Securities and Futures Commission (the “SFC“) approved the corresponding amendments to the General Rules and Operational Procedures of Hong Kong Securities Clearing Company Limited, the trading rules of the Stock Exchange of Hong Kong Limited (“HKEx“) and the Listing Rules, which will take effect upon the implementation of USM regime.
The key pieces of legislation are summarised below:
| Instrument | Key provisions |
| Securities and Futures (Uncertificated Securities Market) Rules (the “USM Rules“) | New subsidiary legislation under the Securities and Futures Ordinance (the “SFO“) regulating operational, technical and procedural matters under USM regime. |
| Securities and Futures (Approved Securities Registrars) Rules | New subsidiary legislation under the SFO governing ASR responsibilities, compliance requirements and regulatory arrangements. |
| Securities and Futures (Stock Market Listing) Rules | Amended to (i) require all issuers of prescribed securities to appoint an ASR; and (ii) require issuers to notify the SFC and HKEx of any change of ASR at least three months before the change takes effect or, in the case of unplanned changes, as soon as reasonably practicable after the issuer becomes aware of the change, whichever is the later. |
The SFC has also issued a guidance note for issuers on participation in USM regime, including sample provisions that issuers may refer to when considering how best to amend their articles of association or by-laws. HKEx has also published a Guide on the Uncertificated Securities Market setting out issuers’ obligations under the Listing Rules in connection with USM regime.
Which securities are covered?
The USM regime applies only to “prescribed securities”. Issuers must participate in USM regime by enabling their prescribed securities to become participating securities that can be issued, transferred and held without paper. The table below shows which products are covered and which are not.
| Products listed on HKEx | Status under USM regime |
| Equity securities (shares), Hong Kong depositary receipts, stapled securities, subscription warrants, rights under a rights issue, and interests in SFC-authorised collective investment schemes withdrawable from CCASS (e.g. real estate investment trusts) | Prescribed securities — must participate in USM regime |
| Debt securities (including bonds yet to be converted into prescribed securities such as listed shares); interests in an authorised collective investment scheme not withdrawable from CCASS; and options, warrants or similar rights to subscribe or purchase equity securities that are not prescribed securities | Not applicable — outside the scope of USM regime |
Subscription warrants and rights under a rights issue must be in uncertificated form if, at the time of their issue, the underlying securities have already become participating securities. For subscription warrants or rights under a rights issue that already existed when the underlying securities became participating securities, there is no obligation for them to become participating securities.
Participation timeline
The USM regime will begin with prescribed securities constituted under the laws of Hong Kong, the People’s Republic of China, Bermuda and the Cayman Islands. Securities listed on or after 17 November 2026 must be in uncertificated form from their listing date. Prescribed securities (other than subscription warrants and rights under a rights issue) falling within these jurisdictions must become participating securities within five years from the USM implementation date. For securities constituted in other jurisdictions, participation in USM regime is not yet mandatory. However, issuers of such securities are encouraged to participate where their home jurisdiction laws are compatible with the USM regime. Such issuers should obtain independent legal advice on whether the relevant home laws are compatible with the USM regime before deciding whether to participate. To ensure an orderly transition, all specified prescribed securities will be lined up in a queue, with each assigned its own deadline, the “specified date”, determined jointly by the issuer’s ASR, HKSCC and HKEx.
To prepare the market, each issuer must announce the specified date and the participation date, being the date from which those prescribed securities become participating securities and provide updates in accordance with the Listing Rules. The two dates are expected to be the same. There will be a detailed timetable, with each prescribed security having its own specified date and participation date, of which issuers will be notified in writing at least three months in advance. HKEx will maintain a running list of prescribed securities scheduled to become participating securities on its USM webpage, updated quarterly. Within the first year after USM implementation, HKEx may grant a limited exemption from the requirement for listing applicants to be in uncertificated form where exceptional circumstances exist and compliance would cause an unreasonable delay to the intended listing date. Any listing applicant relying on such an exemption must include special disclosure in its listing document and maintain a dedicated USM webpage for at least one year after listing.
What issuers need to do
Amend constitutional documents
Where appropriate, issuers must amend the terms governing the holding and transfer of their prescribed securities, such as their articles of association or by-laws. This is necessary because from the participation date, issuers must issue new units of their prescribed securities only in uncertificated form and cease to issue new certificates, including upon transfer. Provisions in constitutional documents that currently require or assume the issue of certificates will therefore need to be amended accordingly. More broadly, the terms of issue must be reviewed and amended to ensure they are fully consistent with the USM regime, including in relation to the electronic holding and transfer of securities, dematerialisation, the maintenance of the register of holders and the use of authenticated messages for communications with holders. The SFC’s guidance note includes sample provisions to assist issuers with this exercise. This review and amendment exercise must be completed within one year from the USM implementation date, or by the first annual general meeting held after the USM implementation date, whichever is later.
Appoint and engage with an ASR
To provide securities registrar services for prescribed securities, all securities registrars must obtain SFC’s approval to act as an ASR upon and after USM implementation. Issuers should contact their share registrar as soon as possible to confirm the registrar’s ASR status. Where no ASR is acting as securities registrar for any listed prescribed securities, HKEx is required to suspend dealings in those securities.
Be aware of mandatory dematerialisation
After the participation date, all participating securities held in the name of HKSCC or its nominee and covered by a valid title instrument held in the custody of HKSCC must be converted into uncertificated form. Under the USM Rules, this must be completed within six months of the date on which those securities become participating securities, after which HKSCC Nominees Limited will only hold participating securities in uncertificated form.
Meet your disclosure obligations
Issuers will be required to make three announcements in connection with their USM participation:
- notification of specified date: as soon as reasonably practicable and no later than one business day after being served a written notice by HKEx of its specified date;
- USM transition plan: as soon as reasonably practicable following the finalisation of the issuer’s plan for its prescribed securities to become participating securities, including details of the participation date and the steps taken or to be taken to amend its constitutional documents or terms of issue (this announcement may be made together with the notification of specified date mentioned above); and
- reminder: no later than 21 business days prior to the participation date, reminding shareholders that the prescribed securities are about to become participating securities and that, from the participation date, new securities will only be issued in uncertificated form.
Conclusion
USM regime will elevate Hong Kong’s financial market infrastructure by further enhancing efficiency through streamlining and automating processes and minimising the need for paper and manual processes. Listed issuers will benefit from greater shareholder transparency and will be able to engage with shareholders more directly, facilitating better investor communication and enhanced corporate governance.
With over 2,600 listed issuers required to participate and individual participation deadlines rolling out over a five-year period, issuers should start preparing as soon as possible.