The Stock Exchange will not ban small investors from trading in companies listed on the proposed second board despite the fact that companies listed on overseas second boards have demonstrated a higher ratio of failure than main board companies. Exchange executive director Lawrence Fok Kwong-man said yesterday the exchange would issue a consultation paper on the launch of the second board by the end of this month. The exchange's new market development working group has already devised a blueprint for the second board's regulatory framework. Mr Fok said one of the primary concerns about the second board is that the companies listed on it were likely to have a much higher failure rate than their main board listed counterparts. 'Companies listed on the proposed second board would have lower capital requirements than the main board companies, and they won't need to have any profit record before listing,' he said. 'Therefore the companies listed on the second board will have a higher chance of collapse than main board companies. 'In some overseas markets, up to 70 per cent of the second board companies have collapsed after listing.' Chief Executive Tung Chee-hwa last year called for a second board to help small firms raise funds to encourage growth of the high-technology sector in Hong Kong and the mainland. Despite the risks, Mr Fok said the exchange would not ban small investors from trading in the second board. 'I don't think it is a correct approach to allow only institutional investors to trade in the second board market. 'The exchange would ensure the second board companies have tougher disclosure requirements than main board companies for investors to make their investment decisions.' He said Hong Kong must introduce the second board as soon as possible as other regional countries had set up such trading facilities.