The goal of the initiative is to enable investors to hold securities, particularly shares, in their own name without paper documents, according to a consultation paper.

Hong Kong law currently still requires the use of paper documents to show the owner of certain securities.

The consultation paper was issued jointly by the Securities and Futures Commission, the city's securities regulator, Hong Kong Exchanges and Clearing, the stock exchange operator and the Federation of Share Registrars.

The proposed changes would also make it "more feasible to shorten the IPO settlement timetable" in Hong Kong, the consultation paper said, by removing the current options of submitting IPO applications in paper form and paying subscription monies by cheque or cashier order.

In Hong Kong it typically takes up to seven days before a company's shares begin trading after an IPO closes, in part because of the need to process paper based applications and payment.

Bankers in Hong Kong have long seen the gap between pricing and trading as a major irritant and have lobbied the Hong Kong stock exchange to change the system.

It is particularly problematic, they say, when markets are volatile, as sentiment can change significantly between when a deal prices and when the shares actually begin trading.

(Reporting by Alun John and Julia Fioretti; Editing by Kirsten Donovan)