Hong Kong extends listing reforms consultation to quell a turf war among brokers, officials

SFC and HKEX agree to extend deadline for consultations to November 18

PUBLISHED : Friday, 09 September, 2016, 7:09pm
UPDATED : Friday, 09 September, 2016, 11:35pm

Hong Kong’s securities regulator and stock exchange operator agreed to extend a consultation period for amending the listing rules on the city’s bourse, to pacify a turf war among accountants, bankers, stockbrokers and politicians over who gets to set the agenda for companies seeking to raise capital.

The Securities & Futures Commission and the Hong Kong Stock Exchange on Friday said they will extend until November 18 the deadline for wrapping up the public consultations aimed at refining and updating rules to attract more companies to list in the city.

“In light of the great deal of interest and a wide range of views expressed since the publication of the consultation paper, and given that much of the consultation period coincided with the summer season, an extension will give all interested parties further time to file their submissions,” according to a joint statement by the SFC and HKEX.

The two bodies recommended in June the creation of two equally represented committees to set policies and approve new listings under complicated circumstances, upending the current structure where the HKEX approves IPOs and set policies, while the SFC grants its approval at the final stage.

The recommendation has sparked heated debate in Hong Kong, with opponents arguing that the new structure gives the SFC more say in the listing process, adding to its veto power.

Hundreds of brokers signed a petition in August to oppose the proposal, saying the change could hand more control at an earlier stage to the SFC.

“The proposed reform will lead to over regulation and kill off the IPO market,” said Mike Wong, chief executive of the Chamber of Hong Kong Listed Companies, representing publicly traded companies opposed to amending existing rules. “We agreed that we would let the market have two more months to give their comments” regarding proposals for the listing reforms.

Hong Kong’s Secretary for Financial Services & The Treasury Chan Ka-keung, the SFC’s founding chairman Robert Owen and its chief executive Ashley Alder, have all openly supported the proposed changes.

Stockbrokers could agree to let the SFC have more say in setting policies, said Christopher Cheung Wah-fung, Hong Kong’s lawmaker representing brokers.

“But we continue to oppose the SFC having more involvement in individual listed company approvals,” Cheung said.