The Government has signed letters of exchange with mainland authorities on regulatory co-operation, paving the way for the first mainland companies to list on the forthcoming Growth Enterprise Market (GEM). The signing took place in Beijing. Despite the move, GEM listing committee chairman Lo Ka-shui said yesterday that the first listing was unlikely to take place this year under Beijing's guidelines governing mainland companies issuing shares on the GEM. Mainland-based companies were expected eventually to become GEM's major components, he said. In June, the China Securities Regulatory Commission (CSRC), the mainland's securities watchdog, and the SAR's Securities and Futures Commission signed a memorandum of regulatory co-operation (MORC). The MORC provides the framework for regulatory co-operation between Hong Kong and the mainland. The SFC said the letters of exchange signed yesterday reaffirmed relevant provisions of the MORC and provided for further steps specifically related to the GEM as supplementary arrangements between the CSRC and SFC within the MORC framework. 'Such steps include providing assistance in terms of supervision, inspection and investigation required for the enforcement of the regulation of the GEM,' the SFC added. 'Such assistance may include investigation of interests in the securities of mainland GEM issuers and supervision of sponsors, financial advisers and other intermediaries.' CSRC chairman Zhou Zhengqing said: 'The signing . . . is conducive to . . . promoting the healthy development of GEM in Hong Kong.' SFC chairman Andrew Sheng said: 'The SFC attaches great importance to GEM as a financing market for [mainland enterprises] and fully recognises the need for mutual consultation . . .' On Tuesday, Beijing announced its first national regulations governing mainland companies issuing shares on the GEM, laying the regulatory framework on vetting and approving mainland companies for GEM listings. The guidelines detail the key criteria for GEM listings, the documents to be prepared and the vetting procedures. Mr Lo welcomed the CSRC's new guidelines because it put the vetting procedures in a definite framework.
