Hong Kong Stock Market "Board Lot" System Should Be Reformed: Lowering Barriers to Enhance Competitiveness
Hong Kong Stock Market "Board Lot" System Should Be Reformed: Lowering Barriers to Enhance Competitiveness
The source text is in Chinese. This English version is for reference only. In case of any discrepancy between this English version and the Chinese version, the Chinese version shall prevail.
The IPO market has been exceptionally vibrant recently. On 9 July, the Hong Kong Stock Exchange (HKEX) witnessed a spectacular moment for the first time by listing 5 companies and one ETF simultaneously.
In the first half of 2025, Hong Kong's IPO fundraising reached HKD 107.1 billion, which is approximately 22% higher than the total for 2024. This puts Hong Kong first among global capital markets. While this is commendable, optimising the existing “board lot” system is vital to further enhance the liquidity and competitiveness of Hong Kong's stock market.
Overseas Markets Experience: Standardiising “Board Lot” Sizes
The 2025-26 Budget proposed that, to improve trading convenience and market efficiency, HKEX and the Securities and Futures Commission (SFC) would present specific recommendations within the year to optimise the “board lot” size system. According to reports, HKEX has already begun discussions with the securities industry, with preliminary ideas including unifying or lowering the minimum trading units for certain stocks. This would reduce the investment threshold for high-priced stocks and attract more retail investors to boost market vitality.
Major stock exchanges around the world adopt diverse approaches to trading units. To illustrate, Mainland China’s A-shares use a uniform “board lot” size of 100 shares per trade, whereas markets in the United States and the United Kingdom are more flexible, permitting transactions in single shares. Taiwan and Singapore maintain “board lot” sizes of 1,000 and 100 shares respectively, but at least provide clear and standardised rules that enable investors to anticipate entry costs.
Unlike the others, Hong Kong allows listed companies to determine their own “board lot” sizes, which can range from 10 shares to 10,000 shares, consequently creating significant disparities in investment thresholds and impacting market liquidity. To address this, Hong Kong could draw inspiration from other mature markets by introducing a unified “board lot” size standard or introducing mechanisms for single-share trading. Such reforms would lower investment barriers, boost retail investor participation, and improve competitiveness.
Currently, the entry thresholds of some popular stocks in Hong Kong are excessively high. For example, Tsingtao Brewery (00168) is one of the few stocks with an entry cost exceeding six figures. As of 25 July, its stock price was HKD 52.3 per share, and with a “board lot” size of 2,000 shares, the minimum investment cost was over HKD 100,000 (see the attached table). As shown, many high-priced stocks, including several Hang Seng Index constituent stocks, have entry costs of tens of thousands of dollars, making them unattractive to retail investors and, to some extent, suppressing overall market liquidity.
High Entry Barriers Put Retail Investors Off
Excessive entry thresholds also restrict retail investors' flexibility in asset allocation, reducing their capacity to diversify into other investment products or adjust their portfolios. This hinders the development of a more diverse market.
Currently, companies listed on the HKEX can reduce the entry cost per board lot through stock splits. For instance, BYD (01211) recently announced a "1-to-3" stock split plan. While these measures help reduce investment thresholds and boost market liquidity, they also highlight a fundamental issue: decisions and processes for stock splits are entirely at the discretion of listed companies, leaving investors with virtually no say in the matter.
In terms of odd-lot trading, the systems in Taiwan and Singapore are more mature and have higher liquidity. In their markets, trading in odd-lots (fractions of a board lot) is particularly active for ETFs and popular stocks, and transparent pricing enables investors to participate in the market with lower thresholds.
Improving Odd-Lot Trading to Enhance Vitality
However, Hong Kong’s odd-lot market faces significant inefficiencies. Odd-lot shares cannot be traded via the HKEX’s automatic matching system. Retail investors must place orders through broker platforms on designated odd-lot trading boards, a relatively cumbersome process. Furthermore, low liquidity and wider bid-ask spreads resulting from limited buyer and seller volumes make short-term operations and price discovery difficult.
Compared to Taiwan and Singapore, Hong Kong's odd-lot trading mechanism is less efficient and less accessible to investors. Optimising this mechanism in the future would encourage greater retail participation and boost overall market activity.
Since the presidency of Donald Trump, uncertainty has characterised U.S. capital markets due to various policy shifts. As global dynamics evolve, Hong Kong, serving as a vital bridge between the Mainland and international capital markets, is a critical juncture in its transformation. Hong Kong could further solidify its position as Asia's leading financial hub, by seizing this opportunity to implement microstructural enhancements to its capital markets. Reforms to the board lot system and odd-lot trading mechanisms would attract more capital from local and international investors, fostering a more resilient and diversified market ecosystem.
The source text is in Chinese. This English version is for reference only. In case of any discrepancy between this English version and the Chinese version, the Chinese version shall prevail.
The IPO market has been exceptionally vibrant recently. On 9 July, the Hong Kong Stock Exchange (HKEX) witnessed a spectacular moment for the first time by listing 5 companies and one ETF simultaneously.
In the first half of 2025, Hong Kong's IPO fundraising reached HKD 107.1 billion, which is approximately 22% higher than the total for 2024. This puts Hong Kong first among global capital markets. While this is commendable, optimising the existing “board lot” system is vital to further enhance the liquidity and competitiveness of Hong Kong's stock market.
Overseas Markets Experience: Standardiising “Board Lot” Sizes
The 2025-26 Budget proposed that, to improve trading convenience and market efficiency, HKEX and the Securities and Futures Commission (SFC) would present specific recommendations within the year to optimise the “board lot” size system. According to reports, HKEX has already begun discussions with the securities industry, with preliminary ideas including unifying or lowering the minimum trading units for certain stocks. This would reduce the investment threshold for high-priced stocks and attract more retail investors to boost market vitality.
Major stock exchanges around the world adopt diverse approaches to trading units. To illustrate, Mainland China’s A-shares use a uniform “board lot” size of 100 shares per trade, whereas markets in the United States and the United Kingdom are more flexible, permitting transactions in single shares. Taiwan and Singapore maintain “board lot” sizes of 1,000 and 100 shares respectively, but at least provide clear and standardised rules that enable investors to anticipate entry costs.
Unlike the others, Hong Kong allows listed companies to determine their own “board lot” sizes, which can range from 10 shares to 10,000 shares, consequently creating significant disparities in investment thresholds and impacting market liquidity. To address this, Hong Kong could draw inspiration from other mature markets by introducing a unified “board lot” size standard or introducing mechanisms for single-share trading. Such reforms would lower investment barriers, boost retail investor participation, and improve competitiveness.
Currently, the entry thresholds of some popular stocks in Hong Kong are excessively high. For example, Tsingtao Brewery (00168) is one of the few stocks with an entry cost exceeding six figures. As of 25 July, its stock price was HKD 52.3 per share, and with a “board lot” size of 2,000 shares, the minimum investment cost was over HKD 100,000 (see the attached table). As shown, many high-priced stocks, including several Hang Seng Index constituent stocks, have entry costs of tens of thousands of dollars, making them unattractive to retail investors and, to some extent, suppressing overall market liquidity.
High Entry Barriers Put Retail Investors Off
Excessive entry thresholds also restrict retail investors' flexibility in asset allocation, reducing their capacity to diversify into other investment products or adjust their portfolios. This hinders the development of a more diverse market.
Currently, companies listed on the HKEX can reduce the entry cost per board lot through stock splits. For instance, BYD (01211) recently announced a "1-to-3" stock split plan. While these measures help reduce investment thresholds and boost market liquidity, they also highlight a fundamental issue: decisions and processes for stock splits are entirely at the discretion of listed companies, leaving investors with virtually no say in the matter.
In terms of odd-lot trading, the systems in Taiwan and Singapore are more mature and have higher liquidity. In their markets, trading in odd-lots (fractions of a board lot) is particularly active for ETFs and popular stocks, and transparent pricing enables investors to participate in the market with lower thresholds.
Improving Odd-Lot Trading to Enhance Vitality
However, Hong Kong’s odd-lot market faces significant inefficiencies. Odd-lot shares cannot be traded via the HKEX’s automatic matching system. Retail investors must place orders through broker platforms on designated odd-lot trading boards, a relatively cumbersome process. Furthermore, low liquidity and wider bid-ask spreads resulting from limited buyer and seller volumes make short-term operations and price discovery difficult.
Compared to Taiwan and Singapore, Hong Kong's odd-lot trading mechanism is less efficient and less accessible to investors. Optimising this mechanism in the future would encourage greater retail participation and boost overall market activity.
Since the presidency of Donald Trump, uncertainty has characterised U.S. capital markets due to various policy shifts. As global dynamics evolve, Hong Kong, serving as a vital bridge between the Mainland and international capital markets, is a critical juncture in its transformation. Hong Kong could further solidify its position as Asia's leading financial hub, by seizing this opportunity to implement microstructural enhancements to its capital markets. Reforms to the board lot system and odd-lot trading mechanisms would attract more capital from local and international investors, fostering a more resilient and diversified market ecosystem.
