Reform on regulation of listing sponsors wins wide support

Outgoing chairman says the SFC will decide how to implement the plan within this year

PUBLISHED : Thursday, 18 October, 2012, 12:00am
UPDATED : Thursday, 18 October, 2012, 4:47am

The Securities and Futures Commission's controversial plan to tighten regulation on sponsors of new listings has gained community support, according to outgoing chairman Eddy Fong Ching.

Fong said the regulator was likely to reach a conclusion on how to implement the sponsor regulatory reform in late November or early December.

The SFC earlier conducted a three-month consultation proposing civil and criminal liabilities on investment banks or brokers that act as sponsors for new listings but fail in their due diligence duties. The proposed reform came after a number of newly listed companies experienced problems shortly after their listings.

"The majority of comments we have received show support for tightening the regulation on listing sponsors in a bid to safeguard the interests of investors," Fong said. "I agree on the reform. If we cannot ensure the quality of the new listings, international investors will not invest here."

Fong said the SFC would also decide at the end of this year on how to best use its huge reserve. Lawmakers have criticised the commission for declining to scrap or cut the 0.003 per cent transaction levy on share transactions, which has helped accumulate a HK$7.4 billion reserve.

"This is a happy problem but we should not abolish the levy hastily … We have to keep the money for the rainy days," he said.

Fong, a veteran accountant who has been the first non-executive chairman of the SFC since 2006, will retire tomorrow. He will be succeeded by Carlson Tong Ka-shing, KPMG's former chairman for China and Asia-Pacific.

"As a non-executive chairman, I have to be careful not to involve myself too much in the daily operations, but then I also have to keep close contact with the management of the commission. This is almost a full-time job," he said.

Reviewing the past six years, he said the global financial crisis and the Lehman Brothers minibond fiasco were the most unforgettable moments.

When he first became chairman, Fong vowed to enhance investor education, but six years on, a planned investor education council has yet to be set up. "This is mainly due to the lengthy legislation process. I am confident the education body will be introduced this year," he said.