HKEX proposes Chapter 18D merging GEM with main board, 300 firms

Hong Kong Exchanges and Clearing is exploring a merger of its GEM board with the main board through a new Chapter 18D listing rule. The proposal would affect about 300 companies and form the core of the second phase of the listing regime review.

About 300 GEM-listed companies would transfer to the main board under an HKEX proposal to create a new Chapter 18D listing rule.

"There have been studies on reforming the GEM for a long time, as the second board did not really work well in terms of allowing smaller-sized companies to list," a person familiar with the discussions told the South China Morning Post.

The proposal would form the core of the second phase of the listing regime review, with a public consultation expected before the end of 2026. About 300 companies currently listed on GEM may be exempted under the new chapter and transferred directly to the main board. The chapter would allow newly established small companies and firms unable to meet profit requirements to go public. Since its 2018 reform, HKEX has introduced Chapter 18A for pre-revenue biotechnology firms, 18B for special purpose acquisition companies and 18C for large technology companies without revenue.

The merger would broaden the range of listed companies on HKEX while helping smaller firms obtain financing, potentially boosting listing revenue and trading volumes. HKEX shares rose HK$1.40, or 0.333 percent, with short selling at HK$195.95 million, a 21.067 percent ratio.

An HKEX spokesperson said the exchange is looking at more new measures related to the listing regime and will continue to examine additional initiatives to enhance the attractiveness of the listing framework.

The GEM board has struggled with minimal turnover and a limited number of new listings, prompting long-running studies on how to reform the second board. Merging it with the main board is one option to reboot the poorly performing market, the source said.

The proposed Chapter 18D would follow the pattern set by earlier specialized listing chapters introduced since the 2018 reform. Each chapter was designed to accommodate companies that could not meet general listing requirements, tailoring the framework to different company needs. The new chapter would replace GEM as a dedicated venue for smaller issuers, folding them into the main board's broader investor base and liquidity pool.

The proposed merger marks a significant structural reform of Hong Kong's listing regime that could revive the underperforming GEM market and strengthen the exchange's competitiveness against rival Asian venues. Investors will watch for the public consultation details expected before the end of 2026.

This article is for informational purposes only and does not constitute investment advice.