Glossary
Common HK money terms, explained simply.
A-shares Class A Mainland Chinese shares
Mainland Chinese stocks listed in Shanghai or Shenzhen and quoted in RMB.
Why it matters
Accessed from HK via Stock Connect; subject to daily quota.
eDDA Electronic Direct Debit Authorisation
A standing authorisation that lets a broker or fund pull money from your bank account when you initiate it.
Why it matters
Set up once, top up your account in seconds afterwards.
ETF Exchange-Traded Fund
A fund that trades on an exchange like a stock, usually tracking an index.
Why it matters
Lowest-cost way to get broad market exposure.
FPS Faster Payment System
HKMA's instant cross-bank transfer system. Free, 24/7, runs by mobile number or email.
Why it matters
Brokers funded via FPS settle the same day.
FX spread Foreign-exchange spread
The mark-up the broker adds when converting HKD to USD (or back). Expressed in basis points over the mid-market rate.
Why it matters
For US-stock investors this can dwarf trading commissions.
HIBOR Hong Kong Interbank Offered Rate
The interest rate banks in Hong Kong charge each other for short-term loans. Most HK mortgages use it as the base rate.
Why it matters
If you have a HIBOR mortgage, your monthly payment moves with this rate.
HKEX Hong Kong Exchanges and Clearing
The operator of the Hong Kong stock and derivatives markets.
Why it matters
All HK-listed stocks trade on HKEX.
HKMA Hong Kong Monetary Authority
Hong Kong's central bank — manages currency stability and supervises banks.
Why it matters
Sets the linked exchange rate and oversees HK banks.
Investor Compensation Fund Investor Compensation Fund
An HK fund that compensates retail investors up to HK$500,000 if their licensed broker defaults.
Why it matters
Only kicks in for losses caused by broker default — not market losses.
IPO Initial Public Offering
When a company first sells shares to the public and lists on a stock exchange.
Why it matters
Many HK brokers offer IPO subscription with margin financing.
MPF Mandatory Provident Fund
Hong Kong's compulsory retirement scheme. You and your employer each pay 5% of your wages (capped at HK$1,500/month each).
Why it matters
You can switch trustee and pick your own funds.
Prime rate (P) Bank Prime Lending Rate
The base rate each bank publishes. Slower to change than HIBOR and capped by competition between banks.
Why it matters
P-based mortgages have a cap and are more predictable than HIBOR plans.
SFC Securities and Futures Commission
Hong Kong's regulator of brokers, fund managers and securities markets.
Why it matters
Any HK broker handling your money must be SFC-licensed.
Stamp duty HK Stock Stamp Duty
A 0.1% tax payable on the value of each HK stock trade, charged on both the buyer and seller.
Why it matters
Unavoidable cost for HK stocks; doesn't apply to US stocks.
Stock Connect Shanghai/Shenzhen-Hong Kong Stock Connect
Cross-border channel letting HK brokers trade eligible mainland Chinese A-shares.
Why it matters
How you access mainland A-shares without a mainland account.
TVC Tax-Deductible Voluntary Contributions
Extra contributions to MPF that reduce your taxable income up to HK$60,000/year.
Why it matters
Lowest-effort way to cut salaries tax in HK.
Type 1 licence Dealing in Securities
SFC licence required to execute buy/sell orders for clients in listed shares, bonds, funds.
Why it matters
Every legitimate retail broker holds at least Type 1.
Type 4 licence Advising on Securities
SFC licence required to give personal recommendations on specific stocks or funds.
Why it matters
HK Wealthwise does NOT hold this — we never recommend specific securities to you.