Since the beginning of 2025, the Hong Kong stock market has shown a significant recovery, and the profit effect of the Hong Kong IPO market has become increasingly evident, reviving the memories of many experienced investors from the previously dormant IPO bull market, and causing many new investors to eagerly anticipate joining the IPO army.

I know you may be anxious, but hold on for a moment. There are three important changes in rules for Hong Kong IPOs, which even some experienced investors may not fully know, but it is crucial for you to understand; otherwise, losing money might occur in an instant. What are the three changes?

The first point is the retirement of multiple accounts for IPOs.

If investors subscribe to the same new stock through different brokers, it constitutes multiple accounts for IPOs. Multiple accounts for IPOs have historically been prohibited, but previously it was technically difficult to identify duplicate applications. Therefore, just like the traffic light rules cannot completely prevent pedestrians from running red lights, multiple accounts for IPOs also objectively existed before.

However, in November 2023, the Hong Kong Stock Exchange launched an electronic settlement system for new stock issues (FINI system), which has made checking for multiple accounts very straightforward. This system ensures that all duplicate subscription orders do not enter the lottery and settlement process for new stocks.

In other words, regardless of how many brokers investors subscribe to for the same new stock, all subscription orders will be deemed invalid. Note that this applies to 【all】 orders, and no orders will be preserved for investors; do not hold onto any false hopes.

This means that multiple accounts for IPOs have effectively exited the historical stage.

The second point is that the settlement period has been shortened, reducing the cost of IPOs and market risks.

The FINI system technically eliminates multiple accounts while significantly shortening the new stock settlement process. Previously, from the end of the Hong Kong stock initial public offering (IPO) to listing, it required five trading days. During this period, the funds used for bidding were not only occupied but also had to endure up to five days of market fluctuations, thus increasing the risks associated with bidding on new stocks.

However, after the launch of the FINI system, this process has been shortened to two trading days, as shown in the figure below.

(1) The bidding time remains unchanged, usually still 3.5 working days.

(2) Previously, the pricing of new stocks generally occurred on the same day that the bidding ended. Now it has changed to the day after the bidding deadline (T-1), and the pricing day is defined as day T.

(3) One working day after the pricing day, which is T+1, is the dark market, and the next working day, T+2, is the official listing.

The shortening of the IPO settlement process brings two major benefits.

The first benefit is a significant reduction in bank financing interest. Previously, if investors financed bidding for new stocks, they needed to pay interest for about six days, with an average interest cost of over 3,000 Hong Kong dollars for purchasing a Class B share.

Now, however, due to the shorter settlement cycle, the minimum interest calculation period only requires one day. Futu even offers clients an interest-free financing policy from banks, meaning that clients bidding through Futu, even when financing through banks for amounts of tens of millions or even hundreds of millions (the largest bidding tier), do not need to pay any interest! It can be said that this is a ceiling for saving money when bidding on new stocks.

The second benefit is reducing the risk of new stock subscriptions. This is easy to understand: the time from the end of the public offering to when the dark pool can be traded has changed from five trading days to two, significantly decreasing market risk exposure. Investors can focus more on the risks of the new stock itself, rather than market risks.

The third point is that dark pool trading has a blind box attribute.

Before the FINI system went live, the results of new stock allocations were usually announced on the morning of the dark pool trading day. Some important information included in the allocation results can significantly impact the performance of the new stock in the dark pool and the trading decisions of investors.

This information mainly includes the subscription multiple for the public offering, the winning rates for various subscription tiers, and the number of applicants; as well as the subscription multiples for international placements, the allocation situation for over-allotment (green shoe), and so on.

For example, if the international placement is very popular or there are particularly many applicants for the top subscriptions, it indicates that Institutions or large funds are very Bullish on the new stock, thus Bullish for the dark pool performance.

After the FINI system went live, the results of new stock allocations were changed to be announced on the evening of the dark pool trading day. For the multiple of the public offering and the winning rate, investors can still infer from the results published in advance by the brokers, which is not too far off. However, regarding the subscription situation for international placements and other key information, investors can no longer learn this in advance from public information, which is a bit like opening a blind box.

Taking Chabaidao, which is listed in late April 2024, as an example, this new stock dropped about 13% in the dark pool on April 22. Some investors may think the green shoe will support the price on the first trading day, thus reducing the drop on the first day. Therefore, these investors may tend to buy at the bottom in the dark pool.

However, in fact, the allocation results announced that evening for Chabaidao showed that its international placement multiple was only 1.11 times, with the over-allotment ratio being only about 2.1%, and the buy support from the green shoe was very limited. On the first trading day, April 23, Chabaidao's drop further widened based on the dark pool, with the maximum intraday drop reaching 38% and closing down about 27%. Investors who hoped the green shoe would support the price in the dark pool might incur significant losses.

Therefore, since the placement results are not announced in advance, investors may need to be more cautious when making decisions on dark market trades.

To summarize,

Currently, the Hong Kong IPO market has significantly rebounded, and the profit-making effect is obvious, but investors need to pay attention to three major rule changes before entering the market.

First, multiple accounts for IPOs will undergo an automated duplication check. Investors should not hold onto a fluke mindset as this may not only cause missed opportunities for potential allocations and profits but also lead to wasted interest and processing fees.

Second, the settlement period has been shortened, greatly reducing the cost of interest for IPOs and market risks. Futu's IPO financing from the bank is directly interest-free, while the waiting time from the prospectus to dark market trading has been reduced to two trading days.

Third, the placement results are only announced after the dark market trading has concluded. During dark market trading, important national allocation and public subscription data are missing, so more caution is necessary when making trading decisions.