Response Consultation Paper: Board Lot Framework Enhancements in the Hong Kong Securities Market
Release Date: 2026-02-22
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Attention : Hong Kong Exchanges and Clearing Limited
Response Consultation Paper: Board Lot Framework Enhancements in the Hong Kong Securities Market
The Hong Kong Securities & Futures Professionals Association (hereinafter referred to as “the Association”) in principle agrees with the direction of the Hong Kong Stock Exchange (HKEX) to simplify the board lot framework. However, it believes that having eight types of board lots is still excessive and suggests that the long-term goal should be to aim for a “single board lot (including one share per lot).” This suggestion aligns with the development direction of major international markets: for example, although U.S. stocks traditionally have a round lot of 100 shares, electronic trading widely supports single and fractional shares; Japan also fully unified to a trading unit of 100 shares starting in 2018. The Association suggests implementing a “one-time system switch” when the paperless securities system is in place. Supporting measures should include handling odd lots, system upgrades, investor education, and transition arrangements, and should monitor the policy's effectiveness through phased evaluation indicators such as liquidity, spreads, trading volume, and retail participation rate.
Our association will provide a consolidated response to the consultation document and will not respond point by point.
- Support for Reform: Enhancing Efficiency and Inclusive Participation
The consultation document released by HKEX on December 18, 2025, proposes simplifying the current over 40 board lot sizes to eight and reducing the board lot value floor from HK$2,000 to HK$1,000, with an upper limit of HK$50,000 (applicable to board lots greater than 100 shares). The Association believes this will help:
- Lower investment barriers and the risk of “negative value trades”;
- Streamline operational processes and reduce odd lots;
- Improve pricing and trading efficiency.
- Eight Board Lot Sizes Are Still Excessive: Lack of Consistency and Understandability
The diversity of board lot sizes will continue to burden investor education and system configuration, making it difficult to create a unified and clear investment experience. This also hinders international investors’ quick understanding of Hong Kong market rules. Additionally, for brokers, intermediaries, and infrastructure institutions, the complexity of risk parameters, pricing, and verification rules for multiple board lot sizes increases long-term operational costs.
- Proposed Goal: Single Board Lot (Recommended: One Share per Lot)
The Association suggests clearly aiming for a “single board lot” as the ultimate goal, with a priority on assessing the “one share per lot” approach. The rationale includes:
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- Significanty simplifying rules and user experience: clear and straightforward, eliminating odd lots.
- Compatibiity with electronic and platform-based investment behaviors: can integrate with fractional or value-based order mechanisms.
- Achieving system modernization in one step to avoid future adjustments.
- International Comparative Analysis
- U.S. Market: Historically, the standard was a 100-share round lot, but modern electronic platforms now widely support one-share (odd-lot) and fractional trading, significantly lowering retail barriers and enhancing market inclusivity.
- Japanese Market: Since 2018, the Tokyo Stock Exchange has fully unified to a 100-share trading unit and continues to manage minimum price changes with tick size tiers to maintain market order and efficiency.
- Proposed Implementation Roadmap and Transition Arrangements
- Phase 0 (From Consultation Conclusion to Pre-Paperless Launch): Announce the long-term direction for a “single board lot” and impact assessment framework (covering spreads, liquidity, trading volume, and retail penetration rate).
- Phase 1 (Concurrent with Paperless Launch): New issuers adopt a single board lot; existing issuers must comply with revised investment guidance and initiate odd lot optimization mechanisms (e.g., matching or specific batch auctions to clear odd lots).
- Phase 2 (6–12 Months After Paperless Stabilization): Existing issuers transition to a single board lot within a designated window; the exchange and clearing system provide a “one-time board lot conversion tool.”
- Phase 3 (Monitoring and Optimization): Quarterly publication of monitoring indicators, with adjustments to tick size, market-making incentives, and trading fee structure as necessary.
- Impact Assessment and Quantitative Indicators
To ensure the reform is “stable and measurable,” the Association suggests establishing the following key performance indicators (KPIs):
- Liquidity: Average Daiy Trading Volume (ADTV), depth at each price level, and market-making quote continuity rate.
- Trading Costs: Weighted average bid-ask spread (bps), effective spread, and transaction sippage.
- Participation: Retai investor trading proportion, average order value, and median order size.
- System Stabiity: Trading/settlement error rate and corporate action error rate related to board lot conversion.
- Risks and Mitigation Measures
Risk: Short-term spread widening — Mitigation: Introduce temporary market-making incentives and fee rebates, and dynamically adjust tick size ranges.
Risk: Increased odd lot concentration — Mitigation: Design a one-time odd lot matching/buyback mechanism and provide broker APIs for automated processing.
Risk: System modification costs — Mitigation: Offer clear technical specifications and testing environments, and provide transitional subsidies or fee reductions.
Risk: Investor awareness gap — Mitigation: Publish easy-to-understand guidelines and educational resources, and provide calculators and examples.
Our Association supports, in principle, the direction of HKEX's reform to simplify the board lot framework, recognizing its benefits in lowering investment barriers, enhancing efficiency, and promoting inclusive market participation. However, we believe that having eight board lot sizes is still excessive and does not fully resolve the system burdens, investor comprehension costs, and international alignment challenges posed by the diversity of board lots. Therefore, our Association suggest setting a “single board lot (one share per lot)” as the long-term goal and seizing the opportunity of implementing a paperless securities system for a one-time system switch. The implementation should include comprehensive transition arrangements, system support, and investor education, with continuous monitoring of effectiveness using quantitative indicators such as liquidity, trading costs, participation, and system stability. This move will not only make Hong Kong's market rules clearer and more transparent but will also enhance international competitiveness, achieving a truly modern and efficient securities trading environment.
Should you have any inquiries regarding this letter, please feel free to contact Mr. MA Tsang Kit, Martini (Phone: / Email: ) or me (Phone: / Email: ).
Your sincerely,
[Signature and Chop]
Mofiz Chan
Chairman
Hong Kong Securities & Futures Professionals Association