Ashley Alder, the new chief executive of the Securities and Futures Commission (SFC), has pledged to tighten oversight of listing sponsors to enhance investor protection.
The British lawyer, who replaced Martin Wheatley as the SFC's head this month, said he would release proposals in the coming months.
The regulation of investment banks, which act as sponsors of new listings, has come under the spotlight recently, following recent controversies about companies that get into trouble shortly after their listing.
The controversies have raised concerns that the sponsors failed to conduct proper due diligence of the information that the companies had provided to investors in their prospectuses.
Shares in Fujian-based sports fabric maker Hontex International Holdings were suspended from trading in April last year just 64 days after its listing, as the SFC accused the company of overstating its profits in December 2009.
'In reference to the private companies in China, there are some very good ones and there are some not so good ones,' Alder said yesterday in his maiden speech as head of the SFC. 'That is the reality and the listing sponsors have the responsibility to ensure they bring the right [companies] to market. The SFC is looking at a regime of regulation and it will come out in the next few months with new proposals.'
A Hong Kong resident since 1989, Alder was the SFC's executive director of corporate finance from 2001 to 2004. He is also law firm Herbert Smith's former head of Asia.