Placement by HSBC 'met requirements'
The Securities and Futures Commission will consider complaints by Templeton Asset Management's Mark Mobius over rules that allow companies to place shares without first offering them to existing shareholders.
However, SFC chairman Andrew Sheng said criticism by Mr Mobius of HSBC's US$3 billion placement this week was unlikely to be accepted.
He said the placement - which will partially fund HSBC's $10.3 billion takeover of Republic New York - had been in accordance with overseas as well as Hong Kong regulations.
'It is up to Mr Mobius - as an individual investor - to express his discontent,' Mr Sheng said.
'As a regulator, the SFC will certainly consider suggestions from the investors.
'However, I must emphasise that HSBC's placement has been fulfilled [in line] with the regulatory requirements of the US and UK.' On Thursday, Mr Mobius hit out at the directors of HSBC Holdings and Cheung Kong (Holdings) for maintaining the right to place new shares privately without first offering them to existing shareholders.
Such share issues diluted the holdings of minority shareholders without giving them adequate warning or protection, the Templeton managing director said.
Mr Mobius said the HSBC placement underscored the need for a review of the existing regulations.
Mr Sheng did not confirm yesterday whether the commission had received a formal complaint from Mr Mobius.
Meanwhile, Mr Sheng said in an American Chamber of Commerce lunch speech that Hong Kong's proposed market reforms were necessary to meet intensifying competition in global financial markets.
The US Securities and Exchange Commission had approved a new stock exchange last month for the first time in 26 years, he said.
The new exchange, Island ECN (electronic communication network), provides a computerised stock trading system, which automatically matches up orders from buyers and sellers.
Mr Sheng pointed out that electronic trading systems such as Island ECN had been luring trades away from New York Stock Exchange and Nasdaq by offering quick and low-cost services.
'Older markets fight back by offering longer trading hours, demutualisation, investing in technology and establishing alliances aimed at making themselves more competitive,' he said.
Hong Kong's reforms, proposed in the Budget, will change the face of the market by demutualising and merging the stock and futures exchanges and their associated clearing houses into a new entity to be listed by September next year.
Mr Sheng said the SFC would consider whether the enlarged exchange should retain monopoly status.
He said four working groups formed by the SFC and the two exchanges hoped to offer a report to the Government soon. The four groups would look at new exchanges' user regulations, market surveillance, the regulation of listed companies and compensation for investors of collapsed brokers.
