FINI is an innovative electronic platform developed by HKEX, which will enable faster IPO settlement for all Hong Kong IPOs. It will be used by different IPO market participants, such as intermediaries, investment banks, brokers, share registrars and regulators, to handle IPO subscription and settlement processes.

FINI shortens the time between the pricing of an IPO and the trading of shares from five business days (“T+5”) to two business days (“T+2”), which greatly reduces the risk of pre-IPO price volatility and enhances overall market operational efficiency.

HKEX is also introducing a new pre-funding model in FINI to help reduce the amount of funds locked up in over-subscriptions.

Normally, an IPO is priced after the public subscription closes (T day). Once pricing is confirmed, various market participants will then proceed with necessary IPO procedures including share allocation, allotment results announcement, money settlement, share delivery and/or refund. The whole process normally takes at least five business days to complete under the current model before trading starts (i.e. “T+5” cycle). With the implementation of FINI, these IPO settlement processes will be streamlined and integrated, enhancing market operational efficiency and reducing the time between IPO pricing and the start of trading to two business days (i.e. “T+2” cycle).

The new pre-funding model helps clearing house participants, such as brokers and banks, to reduce the duration and, in certain cases, also the quantity of lock-up funds for IPO subscription.

Retail investors will continue to subscribe for IPO shares and confirm their funding arrangements with their broker or bank, and may benefit from this new model. For example, as the IPO settlement cycle will be shortened from T+5 to T+2, the number of days for which investors need be charged on IPO margin lending will also be reduced correspondingly.

The new arrangement will enable investors to trade IPO shares earlier, lowering their funding costs and potentially reducing their exposure to price volatility.

FINI is a business-to-business (B2B) platform for use by market intermediaries, issuers’ advisers and agents and regulatory authorities. Investors can continue to subscribe to an IPO through the eligible brokers or banks, and will not be required to directly use FINI.

After FINI’s launch, investors’ personal data (including ID and/or other identification) will need to be provided by their broker or bank when subscribing for IPO shares on the investor’s behalf. This is similar to the existing arrangement for secondary market trading in SEHK-listed securities.

As FINI requires all IPO subscribers to provide ID information compatible with the Hong Kong Investor Identification Regime (HKIDR), potential multiple applications could be identified and alerted to issuers and their agents. Investors found submitting multiple applications for the same IPO have the potential therefore to be excluded from the share allocation process.

Once FINI is rolled out, the IPO subscription function for HKSCC Investor Participants will be discontinued. IPs may subscribe for IPO shares via eligible brokers or the issuer’s assigned share registrar. HKEX will however waive share transfer charges on IPO shares, such that IPs may move the allocated IPO shares into or out of their Investor Participant Accounts if they wish.

FINI will not affect the post-IPO settlement process, and investors can continue to apply to receive physical share certificates and/or transfer of ownership of such certificates after IPO through their brokers or banks.

At first, FINI will process all new listings of equity securities and REITs on SEHK. All other existing listing, trading and settlement arrangements in the Hong Kong market will remain unchanged.