【HK Pink Sheet】Financial Secretary Paul Chan: Market Opinion Divided on OTC Trading Platform - Will Seek Market Feedback at Appropriate Time

Delisting companies are increasing daily, and brokerages are incurring additional operating costs due to holding large amounts of delisted listed company stocks. Financial Services and the Treasury Bureau Secretary Christopher Hui stated that he understands the situation and will continue to monitor the operations of brokerages and maintain close communication with the industry.

The market is hopeful that establishing an over-the-counter (OTC) trading platform will create new trading opportunities for delisted companies’ stocks. He mentioned that the government will continue to explore with the market the possibility of providing an OTC platform for delisted or specially handled shares. The Hong Kong Securities and Futures Commission and the Hong Kong Stock Exchange (00388) have already conducted preliminary consultations with market participants on this matter.

Divergence in Market Opinions on OTC

He revealed that there are differing opinions: some believe that an OTC platform would offer shareholders of delisted companies an exit opportunity and should be open to retail investors, with market makers introduced to address liquidity issues. Others think that if the OTC platform only allows shareholders of delisted companies to sell their holdings, the volume may be insufficient to sustain a market.

He pointed out that due to the basic conditions of delisted companies, they may lack sufficient transparency or be difficult to fully assess. Retail investors could face higher risks, and the platform’s attractiveness to institutional investors is limited. Whether brokerages can find channels to sell related shares remains uncertain. The HKEX will continue to gather opinions from all parties, announce specific arrangements in a timely manner, and seek further market feedback.

Brokerage Revenue and Profit Expected to Continue Growing

Additionally, when asked whether a dedicated fund would be set up to support the securities industry in system upgrades to meet new regulations, Hui did not give a direct response. He only mentioned that, amid a booming stock market, brokerage income has increased. The Hong Kong securities industry maintained steady growth in the first half of 2025, with net profits rising by 14% to HKD 28.9 billion driven by increased trading volume. The total net profit of trading participants was HKD 15.6 billion, up 34% from the previous six months, while small C-group brokerages saw their net profits double to HKD 2.5 billion. As trading volume continued to grow in the second half of 2025 and the first two months of this year, the government expects brokerage income and profits to continue rising.

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