The RWA Window Period for Hong Kong Stocks: xBrokers' Practical Implementation

Written by: Ethan Cole

There are many high-quality companies listed on the Hong Kong stock market, but the barriers to cross-border investment have kept potential buyers on the sidelines. At the previous Hong Kong University of Science and Technology "Web3.01" seminar, Dr. George Lam (former Chairman of Cyberport and Honorary Chairman of the RWA Institute) pointed out that Hong Kong must "take proactive action" in policies related to RWA and stablecoins to leverage its institutional and market advantages as an international financial center. This judgment precisely addresses the structural dilemma currently facing the Hong Kong stock market: persistent valuation troughs and insufficient liquidity have become a common shackle for both companies and investors.

Dr. George Lam has long focused on digital transformation, responsible investment, and cross-border cooperation. As the former Chairman of Cyberport, he is well aware of Hong Kong's unique advantages in combining traditional finance with emerging technologies. His role as an honorary guest at the 2025 Hong Kong RWA Industry Conference further highlights his authoritative voice in the field. When such an industry leader calls for "proactive action," it reflects deep insight into the current situation and strategic thinking for the future.

Structural Causes of the Hong Kong Stock Market's Liquidity Dilemma

The reality of the Hong Kong stock market is that fundamentally sound small and medium-sized enterprises have long been undervalued, and the secondary market lacks sufficient buying power. High underwriting costs and cumbersome cross-border procedures have created a clear disconnect between financing and investment. Retail investors find it difficult to participate in early subscriptions, while institutions lack sustained allocation motivation, resulting in the awkward situation of "financing achieved, but buyers absent."

Although the traditional investment banking underwriting system provides a standardized path, underwriting fees usually account for 6-8% of the financing amount. Coupled with legal and audit fees, the actual financing cost for companies is high. For investors, the friction costs of opening Hong Kong stock accounts, cross-border fund transfers, and tax processing are also significant. This multi-layered intermediary structure increases both complexity and cost at every stage.

A deeper issue lies in information asymmetry. While corporate disclosures meet regulatory requirements, there is often a mismatch between the timing, format, and actual needs of investors. Retail investors lack professional judgment, and institutional investors are constrained by risk management requirements, leading to reduced pricing efficiency. When participation boundaries are limited, price discovery inevitably deviates from true supply and demand.

The xBrokers Model: Putting "Proactive Action" into Practice

The "proactive action" emphasized by Dr. George Lam means that Hong Kong must treat RWA as new market infrastructure at the industry level, lowering the cost of investor participation and enabling compliant capital to enter more efficiently. The key here is not just conceptual packaging, but the restructuring of processes and evidence.

The combination of xBrokers and Ju.com (formerly JuCoin) is a concrete implementation in this direction. Through standardized disclosure and a T+1 allocation return mechanism, the corporate subscription period is shortened from the traditional 6-12 months to 2-3 months, and the overall cost is reduced to 2-3%. This efficiency improvement is especially important for small and medium-sized enterprises, allowing more high-quality assets to access global capital.

In terms of technical architecture, through 1:1 real stock custody by licensed brokers and on-chain proof, investors can obtain full shareholder rights and verify their holdings at any time. This solves the issue of unclear ownership in traditional stock tokenization projects. The broker system records holdings, the blockchain provides proof, and the middle office handles rights distribution. The three parties can cross-verify information, greatly reducing trust costs.

The more important innovation lies in the staking and dual-yield model. Investors not only receive traditional shareholder dividends as a source of cash flow, but can also choose compliant staking to receive RWA token incentives. This design gives investors a reason to hold long-term, providing stable support for companies in the secondary market. As the scale of staking expands, the platform's buffer pool becomes more abundant, the incentive mechanism more stable, and a virtuous cycle is formed.

Exploring a Compliant Path for the Stock Connect Ecosystem

From a compliance perspective, the design of xBrokers fully considers Hong Kong's existing regulatory framework. All Hong Kong stock transactions are completed through licensed broker systems, ensuring alignment with regulatory bodies such as the Hong Kong Securities and Futures Commission. Funds and securities are held separately to avoid platform misappropriation risks. KYC/AML processes adopt international standards, suitable for cross-border investment needs.

The value of this compliant path is that it provides new possibilities for the Stock Connect ecosystem. Traditional Stock Connect mainly serves institutional investors, with relatively high entry barriers for individuals. Through RWA technology, more overseas retail investors can participate in Hong Kong stock investments in a compliant manner, expanding the market's capacity.

The "distributed custody and settlement efficiency" emphasized by Dr. George Lam is reflected here. Traditional centralized custody relies on a single institution, while xBrokers uses a hybrid model of broker custody and on-chain proof, enhancing transparency and verifiability while maintaining compliance. Investors do not have to fully trust intermediaries but can independently verify through technical means.

Benchmarking Against Nasdaq's Standardization Experience

Comparison with Nasdaq further highlights the value of this model. Nasdaq has created the world's deepest market capacity through standardization and transparency. If Hong Kong can graft this logic onto its stock market during the RWA policy window, the structural bottlenecks of the market may be alleviated.

The key factors behind Nasdaq's success include: unified disclosure standards, transparent trading rules, efficient settlement systems, and a diversified participant structure. xBrokers is translating these elements into a version suitable for the Hong Kong stock market. Standardization is reflected in the predictability of the subscription process, transparency in the verifiability of on-chain proof, and efficiency in the smooth flow of cross-border funds.

It is particularly noteworthy that Ju.com's global user base (50 million users across more than 30 countries) provides a testing ground for such standardization. When disclosure rhythms and subscription timings align with financial reports and milestones, information naturally translates into buying support. This bottom-up market cultivation is a key feature of Nasdaq's early development.

Strategic Opportunities in the Policy Window

In recent years, the Hong Kong SAR government has adopted relatively open policies in the Web3 and digital asset fields, providing a favorable environment for RWA applications. The "proactive action" called for by Dr. George Lam is essentially a hope that Hong Kong can seize this wave of technological upgrades and maintain its leading position in the competition among global financial centers.

From a global competition perspective, financial centers such as Singapore and Dubai are actively deploying in the digital asset and RWA fields. Hong Kong's advantages lie in its deep traditional financial foundation, sound legal system, and convenient cross-border capital flow environment. However, these advantages need to be combined with new technologies to win in the new round of competition.

The significance of the xBrokers model lies not only in technological innovation but also in providing policymakers with a practical reference case. Through actual operation, the platform can accumulate compliance experience, risk control data, and user feedback, providing a basis for regulators to formulate more precise policies. This virtuous interaction between policy and practice is the true meaning of "proactive action."

Synergistic Effects from Advocacy to Implementation

The advocacy of Dr. George Lam and the practice of xBrokers form a meaningful mutual validation: "proactive action" on the policy side, combined with "mechanism implementation" on the platform side, is the only way for RWA to truly play a role in the Hong Kong stock ecosystem. Pure policy support cannot solve the specific frictions of market participation, and pure technological innovation is difficult to gain regulatory recognition and user trust.

The $500 million joint venture between Ju.com and Nasdaq-listed company Connexa to establish the aiRWA exchange further validates the practical feasibility of this model. The participation of traditional financial institutions not only provides funding support but, more importantly, recognizes the compliant path.

As more similar collaborations emerge and more companies adopt this financing model, the overall liquidity and internationalization of the Hong Kong stock market will be enhanced. This is precisely the ultimate goal of the "proactive action" expected by Dr. George Lam: to enable Hong Kong to maintain its status as an international financial center in the new round of financial infrastructure upgrades.

For investors, this is a new path to participate in Hong Kong stocks; for companies, it is a new mechanism to obtain long-term buying support; for Hong Kong, it is an opportunity to redefine its competitiveness as a financial center in the RWA era.