Preface

In an effort to enhance market efficiency, the Hong Kong Stock Exchange (HKEX) is set to implement a new fee structure for stock transactions starting June 30, 2025. This change marks a significant shift from the previous fee limits, aiming to create a more equitable trading environment for both retail and institutional investors. The overhaul is expected to address discrepancies in transaction costs for trades of different sizes, ultimately boosting market activity and accessibility.

Lazy bag

The upcoming HKEX fee structure eliminates the minimum and maximum charges, encouraging more equitable trade costs. Smaller trades will see reduced fees, while larger transactions may incur higher costs, fostering a fairer market environment.

Main Body

The Hong Kong Stock Exchange (HKEX) is undergoing a transformative change in its securities transaction fee structure, set to take effect on June 30, 2025. This strategic move is aimed at modernizing how trading costs are calculated and removing limitations that have been in place for years, namely the minimum and maximum fee caps. Originally, fees were set at 0.002% of the transaction value, with a floor and ceiling of 2 HKD and 100 HKD per trade, respectively. The new policy will establish a flat rate of 0.0042% without any minimum or maximum fee restrictions.

This policy shift stems from HKEX's commitment to providing a dynamic and efficient trading platform, as expressed by their Chief Operating Officer and Group Chief Financial Officer, Bi Yin Liu. The change aims to align transaction costs more closely with trade values, thereby enhancing transparency and fairness.

One of the most significant impacts of this new structure is felt by small-scale traders. Previously, transactions under 47,600 HKD were subject to a minimum fee, which has been eliminated under the new system. Now, small trades, such as a 10,000 HKD transaction, will attract a fee of just 0.42 HKD compared to the earlier 2 HKD charge. For those executing larger trades, the cost will increase, as illustrated by a 1,000,000 HKD transaction rising from a 20 HKD fee to a 42 HKD fee under the new rules.

HKEX's decision addresses the structural issue where small trades were disproportionately expensive and large trades relatively cheap. This overhaul is expected to lower the barriers for both retail and institutional investors, especially benefiting high-frequency trading, quantitative strategies, and small-to-medium investors, thereby invigorating overall market activity.

The new fee structure complements previous reforms, such as HKEX's reduction of the minimum spread, aligning with the broader goal of optimizing the market's microstructure and enhancing its price discovery capabilities.

Investor sentiment is reflecting optimism about these changes. HKEX's market value has surged, with its stock rising over 44% year-to-date by June 27, 2025, and achieving new heights unseen since October 2024. Analysts from Morgan Stanley have adjusted HKEX's target price from 440 HKD to 500 HKD, maintaining an 'overweight' rating due to better-than-expected average daily trading volumes and earnings forecasts.

Goldman Sachs echoed this sentiment, noting that HKEX's performance remains undervalued despite a 35% increase in stock price, driven by share earnings adjustments and valuation expansions. They predict additional growth potential if more A-shares list in Hong Kong, forecasting significant increases in transaction volume and HKEX's market capitalization.

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