Hong Kong outlines new liquidity reforms as US market rally pulls funds away

Hong Kong’s securities watchdog is renewing its push to boost market liquidity, setting out further reforms as emerging markets grapple with capital outflow pressure amid a rally in US equities and a strengthening dollar.

Speaking at a conference organised by the Asian Securities & Financial Markets Association (Asifma) on Friday, Julia Leung, CEO of the Securities and Futures Commission (SFC), outlined measures ranging from extended trading hours and shorter settlement cycles to cross-market margining and board lot reform aimed at improving market liquidity and efficiency.

“The SFC is working with the HKEX [Hong Kong Exchanges and Clearing] to develop margin offsets across its clearing houses,” Leung said, adding that the move would free up capital for “more productive” uses.

Leung also said the HKEX’s clearing house, OTC Clear, would enable same-day settlement for bond deposits and withdrawals later this year, streamlining the process and making non-cash collateral “a more attractive funding pool”.