No need for an overhaul of Hong Kong’s listing regulatory system

The Hong Kong stock market has, in recent years, seen new listings of varying quality and performance, particularly those on the Growth Enterprise Market board. There have been drastic share price fluctuations, companies reporting business losses right after listing, directors “jumping ship”, and back-door listings through shell companies. Consequently, the Securities and Futures Commission (SFC) and the Hong Kong Exchanges & Clearing (HKEX) have jointly launched a consultation proposing efficiency “enhancements” to listing regulation.

The three-month consultation is closing soon and market opposition to the proposed changes is fast gaining momentum.

Investor interest must come first in battle between regulators

Among the proposals is the creation of two new committees. A listing policy committee will initiate, steer and decide listing policy, while a listing regulatory committee will oversee suitability concerns of listings and broader policy implications.

The proposals evidently seek to substantially increase the SFC’s regulatory powers, prompting diverse reactions. Generally speaking, the strongest opposition has come from smaller firms. Chinese firms are sympathetic to the rationale of the proposed changes but have made counterproposals.

Turf war over Hong Kong’s stock market regulation: watchdog chief attacks critics of reform

The recent remark that there’s “no plan B” by SFC chief executive Ashley Alder indicated the watchdog’s determination to have the proposals adopted. This has apparently added fuel to the debate and has even prompted pro-government incumbent lawmaker Christopher Cheung Wah-fung, who represents stockbrokers and is currently seeking re-election, to join the ranks of the opposition.