What the market wants SFC chief Ashley Alder to do now that he’s in the job for another three years

PUBLISHED : Monday, 24 April, 2017, 6:56pm
UPDATED : Monday, 01 May, 2017, 2:34pm

With Ashley Alder being reappointed as chief executive of the Securities and Futures Commission for the next three years, the market has handed him a wish list ranging from promoting more new listings to developing fintech in the brokerage industry.

The appointment, announced by the Hong Kong government last Friday, will see Alder’s contract renewed for three years when the current one expires in September. He first took up the post in 2011.

Government sources told White Collar that under Carrie Lam Cheng Yuet-ngor’s term as Hong Kong chief executive, which starts from July 1, there will be a strong push for market development. That being the case, it will be interesting to see how the SFC under Alder’s third term can facilitate that process.

We have seen some moves in this direction recently. The SFC last week issued guidance saying it would adopt a flexible approach to approving the listing of infrastructure projects under Beijing’s Belt and Road Initiative. The initiative launched in 2013 by Beijing is aimed at building roads, power plants and other infrastructure projects in 60 countries to promote trade and transportation, with funding needs expected to reach US$8 trillion through to 2020.

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Alder has the experience of leading the SFC for six years, while his international credentials include currently serving as chairman of the board of the International Organisation of Securities Commission, which has also helped boost international confidence in the Hong Kong market.

Before Alder’s renewed appointment, there was speculation the government may not reappoint him due to his tough stance on market misconduct and because of the SFC’s controversial listing reform consultation paper.

It was good to see the government did not bow to this pressure. For one thing, Alder was hired to crack down on market misconduct to maintain Hong Kong’s reputation as an orderly market. So he should not be blamed for being tough on “bad guys” in the market. Rather, it would be a problem if he was too soft on them.

Regarding the SFC’s listing reform proposals – yes, they were controversial. But those who opposed the reform had complete freedom to express their views and this shouldn’t be a reason not to appoint a regulator who is doing his job.

The consultation from June to November last year received 8,000 opposing views, representing 94 per cent of all 8,500 received. The proposals suggested setting up two committees – one for approving complicated new listing applications, and one for setting listing policies – with each committee having an equal number of representatives from the stock exchange and the SFC. However, critics saw the two committees as stealing the jobs of the stock exchange’s listing division and listing committee, and giving the SFC more frontline roles in listing matters.

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The SFC said the reforms would enhance regulatory efficiency but listed companies, brokers and lawyers believed it would see the SFC becoming too powerful. With the majority of public comments opposed to the changes, it would be hard to proceed with the reform anyway.

To move things forward, it would be more important to see a faster launch of a separate, new consultation on the Growth Enterprise Market and proposed new third board to attract more technology companies to list in the city.

This is seen as a must because the city has a shortage of new economy companies listing, while Hong Kong’s worldwide ranking as an initial public offering market dropped to fourth place in the first quarter, losing out to New York, Shanghai and Shenzhen. The city was No 1 in IPOs in the past two years but this was mainly on the back of big banks listing on the Hong Kong exchange.

Hong Kong is also seen as lagging behind Singapore in developing fintech, which refers to financial firms using technology to enhance their services.

After securing his new employment contract, we expect Alder to come up with some development plans in these areas.