HKEx, SFC clash over penny stocks
Hong Kong Exchanges and Clearing chief executive Kwong Ki-chi has locked horns with Securities and Futures Commission chairman Andrew Sheng over who was to blame for the penny-stock fiasco, showing tension between the HKEx and the SFC has escalated.
Mr Kwong said he did not accept some of the findings in the report on the incident written by accountant Gordon Kwong Chi-keung and barrister Robert Kotewall, which put more criticism on the exchange and Mr Kwong than other parties involved in the incident.
Mr Kwong said the SFC had forced the exchange to set the 50 HK cents delisting threshold which triggered the penny-stock slump, while Mr Sheng said HKEx had not listened to much of the advice of the commission.
The two most senior regulatory officials yesterday attended a Legco meeting on the penny-stock report, which reviewed why investors dumped more than 200 stocks on July 26.
The sell-off came a day after HKEx released a consultation paper suggesting the delisting of poorly performing shares, including counters that traded below 50 HK cents for 30 successive days and failed to consolidate their shares within a year.
Mr Kwong told the Legco meeting that although the law did not say the SFC had the ultimate power to intervene in the final decisions of the exchange, the commission was deeply involved in producing the delisting consultation paper, particularly on the 50 HK cents delisting threshold.
'If it was not for the pressure of the SFC, the HKEx would not have set the threshold at 50 cents,' Mr Kwong said. 'The HKEx suggested a consolidation threshold at 10 cents.'
The SFC has said it wanted to set the threshold at HK$1 while HKEx wanted it at 10 cents, and that 50 cents was a compromise.
Mr Kwong said many legislators and brokers had claimed the report applied double standards in that it made harsh criticism of himself and HKEx while placing no responsibility on the government or the SFC.
Mr Sheng said the commission had asked HKEx to make it clear 50 HK cents was a consolidation threshold and not a delisting threshold, but the HKEx press release on the paper had not emphasised it.
Mr Sheng apologised to the public for the SFC's failure in living up to public expectations of its role as a regulator. He became the third official to say sorry to investors, following Mr Kwong and the Secretary for Financial Services and the Treasury Frederick Ma Si-hang.
