Hong Kong Exchanges and Clearing (HKEX) on Thursday said it hopes to standardise its trading unit options to eight from over 40 as part of a reform move to further boost liquidity while encouraging smaller retail investors.

The proposals came as it launched a three-month public consultation on a slate of proposals that had been put through a comprehensive review.

In a statement, the city's bourse operator said it hoped to standardise the board lot – the number of shares defined as a trading unit – and slash the number of such choices from more than 40 to just eight.

The eight are one, 50, 100, 500, 1,000, 2,000, 5,000 and 10,000 shares and apply to equities, real estate investment trusts and other applicable securities.

Currently, firms publicly traded in Hong Kong are allowed to decide on the size of their own board lots, which are generally large and not standardised, discouraging smaller retail investors, as the investment threshold would be quite high.

If the rules are to be implemented, about 25 percent of the listed issuers would need to adjust their board lot sizes, though the new system would also be rolled out in phases to ensure a smooth transition, the exchange said.

Meanwhile, HKEX proposes that the trading value per lot be capped at HK$50,000 and the minimum board lot's value guidance be slashed by 50 percent from the current level of HK$2,000 to HK$1,000 to account for lower costs to execute the trade.

HKEX head of markets Gregory Yu said the exchange was committed to enhancing market vibrancy and boosting trading efficiencies.

"These proposals aim to make trading simpler and more accessible to all, while also catering to the needs and distinctive features of Hong Kong’s financial markets," he said.

"Moving to eight standardised board lot units from over 40 currently will help streamline trading and operational processes whilst maintaining flexibility for issuers and will be the first step of a longer-term journey to transition to a single unified board lot unit," Yu added.

Finance sector lawmaker Robert Lee said the proposals are generally welcomed by the markets.

"I think there are benefits to retail investors. But also from the industry's perspective, there are a lot of small to medium-sized brokers and securities firms here in Hong Kong that predominantly focus on the retail segment. Certainly, they can also benefit [from the changes]," he said.

"With more retail participation in the marketplace, it can help provide more liquidity, thereby helping the entire market and overall liquidity in general."

The public consultation concludes on March 12.