SFC willing to listen to all sides in listing reform consultation

The regulator’s chairman Carlson Tong says it could study a new board proposal before the review on listing reform is completed

PUBLISHED : Wednesday, 07 September, 2016, 7:00am
UPDATED : Wednesday, 07 September, 2016, 7:00am

The Securities and Futures Commission will be open-minded to changes suggested by stakeholders during the ongoing listing reform consultation, while listening to market views on setting up a new board to attract tech firms to list in Hong Kong, according to its chairman Carlson Tong Ka-shing.

His comments would seem to indicate a softening of tone in the debate over reforms, which has been seen by some as a turf war between the SFC and Hong Kong Exchanges and Clearing (HKEX) over the listing regulatory regime.

The chairman, who previously said the review over a possible third board should come after the review of the Growth Enterprise Market, now says he could accept consultation on both ideas together.

“It is not a change of mind, it is just that the market may have mistakenly believed that the SFC is not willing to consider market views,” said Tong in an interview with the South China Morning Post. “I am here to clarify that the SFC is open-minded and willing to listen to what the markets say about the reforms to revamp the GEM listing rules and the possibility of launching a new market tailor-made for start-ups.”

HKEX chief executive Charles Li Xiaojia said last Thursday that the exchange will explore all options including launching a new board to encourage new start-ups to list. His pledge came after regional competition heated up with the announcement that the rival Singapore Exchange has approved plans to allow companies with a dual-class shares structure to list.

The ban on dual-shares structures in Hong Kong is seen by many observers as a barrier to listings, particularly among technology firms which tend to favour the arrangement.

Tong said the third board reform and GEM review could go out for market consultation without having to wait for the completion of the current controversial consultation on listing reform.

The joint consultation of the SFC and the HKEX, scheduled for completion on September 19, would create two new committees - a listing policy committee and a listing regulatory committee - with equal representation from both sides to approve complicated new listings and set new policies.

Tong said this arrangement would speed up the approval process, enhance decision making and be good for the development of the local market.

Tong sought to allay fears that the listing reform may introduce tougher rules such as abolishing or reducing the 20 per cent ‘general mandate’ or requiring minority shareholders to appoint independent directors.

He said: “I would like to assure the market that we absolutely have no agenda for pushing for these changes.”