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- Most IPO price discovery and open market reform proposals will be adopted with some modifications and clarifications
- New Listing Rule requirements will come into effect on 4 August 2025
- The Exchange seeks market feedback on ongoing public float requirements over a two-month period
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published conclusions to its consultation paper on proposals to optimise IPO price discovery and open market requirements (Consultation Paper)1, and launched a further consultation on ongoing public float proposals (Conclusions and Further Consultation Paper).
Conclusions to IPO price discovery and open market reform proposals
The Exchange received 1,253 non-duplicate responses2 to the Consultation Paper from a broad range of respondents. Having considered the responses, the Exchange will adopt most of its proposals, with some modifications and clarifications.
HKEX Head of Listing, Katherine Ng, said: “As one of the world’s most dynamic IPO fundraising centres, Hong Kong’s market has over the last two decades of its development welcomed an increasingly diverse set of issuers, with new listings growing substantially in both total deal sizes and in the breadth and international composition of investors. It is therefore crucial that we continue to evolve our listing framework so that it remains globally competitive and fit for purpose, ensuring that we benchmark ourselves favourably against international standards to appeal to the world’s next generation of leading companies.”
Ms Ng added: “Through the proposals set out in this consultation, HKEX has sought to enhance the robustness of the IPO pricing and allocation mechanisms, whilst supporting balanced participation from a broad range of local and international investors. At the same time, we have revised the initial public float requirements to provide issuers with greater flexibility and certainty in structuring their public offerings, and introduced a new initial free float requirement to ensure there are sufficient tradeable shares upon listing. We would like to thank all market stakeholders for their valuable feedback throughout the consultation process, as together we work to promote the sustainable development of Hong Kong’s IPO market. Their feedback has been especially important in helping us modify and finalise our plans for implementation.”
The key changes to the listing requirements include:
IPO offering and pricing mechanisms
- Minimum bookbuilding placing tranche:3 Require an issuer to allocate at least 40 per cent of its shares initially on offer in an IPO to its bookbuilding placing tranche. (This allocation has been reduced from 50 per cent in the original proposal.)
- Allocation to public subscription tranche:4 Allow a new listing applicant to choose either Mechanism A or Mechanism B as its IPO offering mechanism: *
- Mechanism A: Replace the current allocation and clawback mechanism5 with prescribed allocations to the public subscription tranche as follows:
| Initial allocation | Demand for shares in the public subscription tranche in number of times (x) the initial allocation | |||
|---|---|---|---|---|
| ≥15x to <50x | ≥50x to <100x | ≥100x | ||
| Percentage of offer shares allocated to the public subscription tranche | 5% | 15% | 25% | 35% |
The maximum clawback allocation to the public subscription under Mechanism A has been increased to 35 per cent from 20 per cent in the original proposal.
- Mechanism B: Introduce an alternative mechanism that requires a minimum 10 per cent initial allocation (and a maximum of up to 60 per cent) of offer shares to the public subscription tranche with no clawback mechanism. (The maximum allocation to the public subscription tranche under Mechanism B has been increased to 60 per cent from 50 per cent in the original proposal.)
Proposals not adopted: The Exchange has decided to retain the existing six-month cornerstone lock-up requirement to uphold investor commitment to offerings. Additionally, the proposed upward pricing flexibility mechanism will not be implemented, given the practical challenges highlighted by respondents during the consultation process.
Open market requirements
3. Initial public float and free float: Require issuers to meet the following minimum public float and free float requirements at the time of listing:
| Initial public float thresholds6 | Initial free float thresholds7 | |
|---|---|---|
| Issuers (not incorporated in Mainland China) with a single class of shares | Tiered percentage thresholds ranging between 10% and 25%, depending on the market value of the relevant class of shares at listing * |
10%, with a market value of HK$50 million (GEM: HK$15 million); OR HK$600 million in market value |
| H-share issuers with no other listed shares | ||
| A+H issuers |
10%; OR HK$3 billion in market value |
5%, with a market value of HK$50 million (GEM: HK$15 million); OR HK$600 million in market value |
The lowest initial public float threshold under the new tiered structure has been increased to ten per cent from five per cent in the original proposal; and the initial free float percentage threshold for A+H issuers has been modified to five per cent (of total number of A+H shares) from ten per cent (of total number of H shares) in the original proposal.
* The Exchange will continue to have the discretion to grant waivers to new applicants on a case-by-case basis from these requirements.
The new requirements will come into effect on 4 August 2025 and apply to all issuers and all new applicants with listing documents published on or after that date.
Transitional consequential amendments8 have been made to the existing ongoing public float requirements to ensure their compatibility with the new initial public float requirements. These arrangements will be superseded and replaced by the final ongoing public float requirements to be implemented following the further consultation on ongoing public float proposals (see below).
Further consultation on ongoing public float proposals
In response to market feedback on the appropriate ongoing public float requirements, the Exchange is also launching a further consultation on detailed proposals on those requirements.
Ms Ng said: “We are pleased to be launching a further consultation on ongoing public float requirements. These proposals underscore our commitment to modernising our Listing Rules so that they meet the needs of our global issuers, which represent a broad range of industries and scale. The proposals offer issuers greater flexibility in conducting transactions for better capital management, while also introducing a robust deterrent against prolonged non-compliance — reinforcing shareholder protection. We thank you in advance for your valuable feedback.”
A comparison of the current and proposed ongoing public float requirements is set out below:
| Current requirement | Proposed requirement | |
|---|---|---|
| Ongoing public float thresholds | ||
|
Maintain at all times the percentage of public float prescribed at listing, i.e. 25% or any lower percentage prescribed at listing (the Initial Prescribed Threshold) | Maintain at all times:
|
|
||
| H shares in public hands must have HK$1 billion in value OR 5% public float | ||
| Public float shortfall | Breach of Listing Rules if public float falls below the applicable ongoing public float thresholds | |
| Consequence of public float shortfall | ||
| Obliged to restore public float and publish announcement | Obliged to restore public float and publish announcement; AND Restricted from taking actions that may further lower public float percentage |
|
| Exchange reserves right to direct trading suspension in case of a public float shortfall | No suspension solely due to a public float shortfall | |
| Delisting if trading is suspended for 18 months (GEM: 12 months) |
Impose stock marker if issuer has a significant public float shortfall;10 AND Delisting if issuer fails to restore public float within 18 months (GEM: 12 months) |
|
| Public float reporting | Confirm public float sufficiency in annual reports | Confirm public float sufficiency in monthly returns and annual reports, with additional actual public float disclosure requirements |
The Exchange is seeking market feedback on its ongoing public float proposals and the proposed Listing Rule amendments to implement them. The public comment period ends on 1 October 2025. Interested parties are encouraged to respond to this further consultation by completing and submitting a questionnaire on the HKEX website.
The Conclusions and Further Consultation Paper and copies of the respondents’ submissions to the Consultation Paper are available on the HKEX website.
For more information, listen to the latest HKEXVoice podcast featuring HKEX Head of Listing Katherine Ng on this reform and the further consultation.
Notes:
- The Consultation Paper was published on 19 December 2024. The consultation period ended on 19 March 2025.
- 777 responses were found to duplicate other responses (representing a total of 81 distinct groups of responses) and are not counted for the purpose of a quantitative and qualitative analysis of the responses.
- Placing tranche is an offer of securities in an IPO for subscription by persons selected or approved by the issuer or intermediary. Bookbuilding placing tranche is the part of placing tranche not taken up by cornerstone investors.
- Public subscription tranche refers to an offer of securities in an IPO for subscription by the public.
- Clawback mechanism increases the size of the public subscription tranche by reallocating offer shares from the placing tranche to that tranche in the case of an excess demand for offer shares.
- Calculated based on shares to be listed on the Exchange and in public hands, as a percentage of total number of issued shares (excluding treasury shares).
- Calculated based on shares to be listed on the Exchange and in public hands and not subject to disposal restrictions upon listing, as a percentage of total number of issued shares (excluding treasury shares).
- See Table 12 in Appendix VIII to the Conclusions and Further Consultation Paper for a summary of the applicable minimum ongoing public float thresholds under the transitional consequential arrangements.
- Calculated based on shares listed on the Exchange and in public hands, as a percentage of total number of issued shares in the class of shares listed (excluding treasury shares).
- See paragraphs 364 to 367 of the Conclusions and Further Consultation Paper for the meaning of a “significant public float shortfall”.
About HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is a publicly-traded company (HKEX Stock Code: 388) and one of the world’s leading global exchange groups, offering a range of equity, derivative, commodity, fixed income and other financial markets, products and services, including the London Metal Exchange.
As a superconnector and gateway between East and West, HKEX facilitates the two-way flow of capital, ideas and dialogue between China and the rest of the world, through its pioneering Connect schemes, increasingly diversified product ecosystem and its deep, liquid and international markets.
HKEX is a purpose-led organisation which, across its business and through the work of HKEX Foundation, seeks to connect, promote and progress its markets and the communities it supports for the prosperity of all.
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