Editorial | HKEX must press ahead with board-lot reform

Board-lot restrictions on the buying of shares is an anachronism. Many leading stock exchanges around the world have long allowed investors to buy any number of shares from a listed company.

Hong Kong still imposes limits on lot-size buying. Hong Kong Exchanges and Clearing (HKEX) is set to review the long-standing practice, and it is about time changes were made.

Lifting restrictions would boost liquidity, encourage turnover and give smaller retail investors greater choice.

For example, take China’s largest electric car maker BYD, whose share price recently shot past HK$400 (US$50), making its board-lot size of 500 worth a minimum of HK$200,000. Many small investors do not have that kind of cash, and buying on margin – that is borrowing – increases risks for them.

Another reform option is to standardise board-lot sizes to lower the minimum investment threshold and thus make them more affordable.

HKEX currently allows listed companies to decide their own board-lot sizes, which can range from 10 shares to 10,000 shares. In the old days, before the advent of computer-processing power and online trading, standardising lot sizes helped to avoid odd lots.