Government backs SFC in new-listings turf war with HKEX

Secretary for Financial Services and The Treasury Chan Ka-keung dismisses suggestions reforms would add power to the SFC, or lead to over-regulation

PUBLISHED : Sunday, 14 August, 2016, 8:18pm
UPDATED : Sunday, 14 August, 2016, 10:47pm

A senior Hong Kong government official has thrown his weight behind the Securities and Futures Commission (SFC) in its ongoing turf war with the city’s stock exchange over public company listing reforms.

The latest comments, by Secretary for Financial Services and The Treasury Chan Ka-keung, come days after hundreds of stockbrokers signed a petition underlining their opposition to the planned moves, which could hand more control at an earlier stage to the financial regulator.

Chan emphasised the government would like to see more “new-economy companies” — referring to technology and innovative-industry businesses — to list in the city, adding there are now likely to be further reviews next year on how to attract them.

“The proposed reforms would help achieve a one-stop platform for the SFC and Hong Kong Exchanges and Clearing (HKEX) to discuss new listing applications.

“I do not agree with some commentators that the reforms would add power to the SFC or that they would lead to over-regulation,” Chan said.

“The SFC has the power to reject any listing policies or listing application under the current law.

“The reforms would only clarify the roles between the SFC and the HKEX, and would add accountability.”

Chan said much of the opposition is due to a misunderstanding of the proposals, and called on all parties to “sit down and talk to each other to find a solution”.

The controversial consultation process was launched jointly in June by the SFC and the HKEX, suggesting the creation of a listing regulatory committee and a listing policy committee, with equal representation from both regulators, effectively involving the SFC in the listing process at an earlier stage.

The SFC has the power to reject any listing policies or listing application under the current law. The reforms would only clarify the roles between the SFC and the HKEX, and would add accountability
Chan Ka-keung, Secretary for Financial Services and The Treasury

At present, HKEX and a listing committee approve new listings and set policies, while the SFC grants approval at the final stage.

Cititics say the new set up would allow the SFC more of a say in the listing process instead of its ability to only veto decisions made by the HKEX.

Last week, a large group of stockbrokers took to social media to call on all their colleagues to sign a petition to oppose the reforms.

All three candidates running for Legislative Council election in the financial services constituency — incumbent lawmaker Christopher Cheung Wah-fung, Ricky Chim Kim-lun and Gordon Tsui Luen-on — have also said they oppose the reforms.

The trio have arranged a forum on Monday to debate the proposals.

Chim, the elder son of veteran golden banker Chim Pui-chung who formerly took the seat, said he is only running for election, as he strongly opposes the listing reforms.

“The SFC is aiming to take away more power from the HKEX. This would result in over-regulation, drive away technology firms from listing here, and hurt the competitiveness of the local market,” Chim said.

Tsui added that the SFC should be focusing on “cracking down on market malpractices and not on approving new listings, which should be the job of the HKEX, and the market”.

Cheung voiced his opposition last Wednesday, too, warning the ongoing turf war between the two organisations would seriously damage the city’s appeal for new listings, and break the “rice bowls” of the city’s 450 brokers.

Earlier, HKEX director Vincent Lee and Chamber of Hong Kong Listed Companies vice-chairman Lo Ka-shui have also separately publicly slammed the reforms.

Lo said the move would result in over-regulation and “may kill off the listing market”.

The SFC’s founding chairman Robert Owen and its chief executive Ashley Alder, have vociferously rejected those claims, and support the changes.

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