Stock exchange proposal is a cause for public concern

PUBLISHED : Thursday, 05 July, 2007, 12:00am
UPDATED : Thursday, 05 July, 2007, 12:00am

Hong Kong Exchanges and Clearing has proposed scrapping the independent listing committee ('HKEx wants independent listing committee abolished,' June 9).

This proposal will cause public concern that HKEx, which has a dual role as a regulator and a listed business, may not be able (and not seen to be able) to discharge its duties and obligations to the public and investors.

Under the proposal the final decision on whether an applicant can be listed will rest with the listing division of HKEx and not the independent listing committee.

Although the proposal is going to be implemented first for Growth Enterprise Market applicants, according to Richard Williams, head of HKEx's listing division, such a policy may be extended to the listing of the main board if the new policy works well.

This begs the question of how HKEx will measure whether the policy is effective - success, measured by the number of applications approved and the shorter time for vetting each application, cannot be a substitute for quality and transparency. We have confidence in the competence and integrity of the staff of the HKEx listing division, but the listing committee which comprises independent professional and leading figures in the securities industry, should be left as the final gatekeeper.

Although there is much to be decided on the procedural rules of the listing committee including its size, composition and frequency of meetings, it would be wrong to abolish it.

As Mr Williams has rightly pointed out, Hong Kong should be in line with other advanced markets.

In light of this, it will only be right if an independent regulator (that is, the Securities and Futures Commission) eventually becomes the vetting agent for all listing applicants. This is a practice which has been followed in the US for a long time.

This move will remove any public concern of any potential conflict of interest created by the dual role played by HKEx.

Kenneth Leung, vice-chairman, the Professional Commons