The stock exchange in the Hong Kong Special Administrative Region proposed to half the time it takes to settle stock trades to one day to align better with the Chinese mainland and international standards.

The city proposed to move to so-called T+1 from T+2, according to a consultation paper issued by the Hong Kong Exchanges & Clearing Ltd on Wednesday. There was no time period given for the change, but industry participants were asked to submit feedback on the paper by Sept 1.

The faster settlement would cover stocks, exchange-traded products, structured products, real estate investment trusts, listed debt securities and the physical settlement of equities as stock options are exercised.

It will not apply to initial public offerings, which are now settled in two business days. The new arrangement will also exclude ETP primary creation and redemption, as well as structured products issuance and expiry.

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The latest move will bring the $6.5 trillion market in line with the settlement cycle on the mainland, the US, and other major bourses. Europe and the UK are also planning to cut the settlement time for stock trades.

The move could add pressure on particularly smaller brokers as it requires firms to upgrade their back office technology, often incurring significant costs. The bourse said late last year that its systems would be ready for T+1 settlement by the end of this year.

The change will be difficult for overseas investors in Europe and the US since due to the time difference a T+1 will effectively mean same day settlement.

It will make it necessary to have overnight trade processing capabilities and “in some cases, these investors will also need to make staff available on Sunday afternoons to handle any exceptions relating to Hong Kong’s Monday settlements,” HKEX said.

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Hong Kong has since 2023 shrunk the pricing-to-settlement period of new listings to two days from five days.