Who should regulate new listings of companies in HK?
New proposal which gives equal powers to SFC and HKEX gets mixed response from market circles as conflict of interest issues still remain unanswered
‘Who will bell the cat’ perhaps sums up the current predicament in Hong Kong capital market circles. In this case the cat in question is approval of new listings and the much asked question is whether it should be the HKEX, or the SFC, or both?
Though heated discussions on the subject have been going on for several years, with the latest round of discussions happening last week, there are still no clear guidelines on how the exact modalities are going to be worked out.
That said, there did seem a ray of hope last week when the Securities and Futures Commission and the Hong Kong Exchanges and Clearing decided to usher in listing reforms over the next three months with some drastic proposals like reducing the HKEX’s powers in listing matters and making the SFC fully involved in the process.
Adoption of these proposals could see HKEX chief executive Charles Li Xiaojia losing his place on the committee that approves new listings, while two newly formed committees with equal representation from the SFC and HKEX would handle the listing policy and complicated new listing applications.
The latest proposals, which sound good on paper, has, however, not met with the expected response from market circles, with some experts commenting that the reforms are not enough.