Hong Kong Stock Exchange

Veteran Hong Kong broker and lawmaker calls for suspension of listing reform proposals

PUBLISHED : Monday, 22 August, 2016, 10:06pm
UPDATED : Monday, 22 August, 2016, 10:46pm

A veteran broker seeking Legco re-election has called for suspension of the controversial listing reform proposals that sparked a turf war between Hong Kong’s two market regulators, while two rival candidates in the election also voiced their opposition to the plans.

Christopher Cheung Wah-fung, incumbent lawmaker for the financial services sector who is seeking re-election, sent a letter to Securities and Futures Commission (SFC) chief executive Ashley Alder calling for suspension of the proposals and asking the regulator to not move forward with the plan.

“The proposals would only create more duplication and overlapping in listing approvals and the listing policy setting process. It would damage Hong Kong as an international financial centre,” Cheung wrote in the letter to Alder, which was circulated to the media on Monday afternoon.

“There is a lot of opposition to these reforms. The SFC should put the reform plans on hold until it can negotiate with all sectors to get a consensus,” he said.

A spokesman for the SFC said he had no comment on the letter.

The controversial consultation process was jointly launched in June by the SFC and HKEX.

Under the proposed reforms, a listing regulatory committee and a listing policy committee would be created with equal representation from both regulators, effectively involving the SFC in the listing process at an earlier stage.

Opponents argue that the new arrangements would give the commission more say in the listing process rather than just the ability to veto decisions made by the exchange.

Ricky Chim Kim-lun, a Legco candidate competing for the same seat as Cheung, also opposed the reform. “The proposed reform would lead to over-regulation and would discourage companies to list in Hong Kong,” he said.

Gordon Tsui Luen-on, another candidate for election in the financial constituency, is also opposed to the reform.

However, Hong Kong Securities Association chairman Benny Mau on Monday voiced his support for the proposals. “It is important for the SFC to tighten regulations and to discourage poorly performing companies to list here. We want to have many new listings but at the same time we also want only good quality companies to list here,” Mau said.

“HKEX is just like a supermarket. The exchange is like the store manager in that it has the duty to make sure all products are safe and of good quality. The SFC is like the government food safety department to check that HKEX is doing the job. Likewise, the SFC has the duty to make sure HKEX checks on the quality of the new listings,” he said.

Mau said the reforms allow the SFC to be involved in the listing approval process at an earlier stage so it can speed up the approval process.

The turf war between HKEX and the SFC over listing reforms has generated heated debates over the past few years.

Secretary for Financial Services and the Treasury Chan Ka-keung last week publicly supported the SFC in the reform debate, saying it could enhance communication between the two regulators. His view is echoed by SFC founding chairman Robert Owen and MTR chairman Frederick Ma Si-hang, who is former secretary for financial services and the treasury.

However, HKEX director Vincent Lee and Chamber of Hong Kong Listed Companies vice-chairman Lo Ka-shui also separately publicly slammed the reforms, saying they may lead to the SFC becoming too powerful and “may kill off the IPO market”.