Cheaper and easier conditions for Growth Enterprise Market-listed companies to migrate to the main board are among proposals to revamp the under-performing GEM. The stock exchange listing committee's plans for reform, revealed by Hong Kong Exchanges and Clearing chairman Charles Lee Yeh-kwong in Beijing yesterday, come as capitalisation and turnover on the GEM have fallen to less than 1 per cent of the main board's. But Mr Lee denied the second board market, launched in 1999, was a failure. 'It is a fact that the market capitalisation of the GEM has dropped during the past two years as a result of some big players such as Tom Group switching to the main board,' Mr Lee said. 'These types of switching activities, however, show that the GEM has fulfilled its duty to act as a nursery for newly-established small players to raise funds. Without the GEM, new firms like the Tom Group may not survive.' HKEx chief executive Paul Chow Man-yiu said GEM firms applying to list on the main board must now have a combined $50 million profit over three years. Mr Chow said this profit requirement would not change, but some types of information disclosure - that may be required in a main board listing prospectus - might be relaxed. Mr Lee said the GEM had fulfilled the government's aim of helping young talent to set up businesses. 'Cheung Kong (Holdings) started as a small firm with a market cap of only $120 million when it first went public in the 1970s and now it is a giant player. The exchange welcomed any quality companies to list, regardless of size,' he said. 'There may be some failures on the GEM, but it is the characteristic of the second board as it is a market for newly-established companies and so has a higher ratio of failures. Hong Kong's GEM has outperformed its overseas counterparts.'