Money and power struggle behind listing reform deadlock
The tug of war between the supporters and opponents of the controversial proposals to put more listing power into the hands of the SFC shows no sign of abating
Hong Kong’s little success in introducing listing reforms over the years is an age-old story of money and power struggles.
Once again, the latest listing reform proposals were overwhelmingly rejected by the majority of respondents to a consultation paper, as many were worried that the changes arming the Securities and Futures Commission with more power, could kill the city’s multibillion dollar initial public offering market.
The proposals issued in a joint consultation paper in June last year by the SFC and the Hong Kong stock exchange, would allow the SFC to take a bigger role in the early stages of listing matters.
Central to the reforms is the establishment of two new committees - a listing regulatory committee and a listing policy committee - with equal representation from the SFC and HKEX. The regulatory committee will handle applications deemed complicated by the exchange’s listing division. The second panel will decide on policies.
The new structure will replace the current system in which the SFC can only reject the policies or listing approvals made by the stock exchange and the 28-member listing committee that comprises representatives of listed companies, bankers, brokers, lawyers and accountants.
The controversial proposals which underwent consultation from June to November, would have been difficult to proceed. A staggering 94 per cent of respondents - or 8,000 out of the 8,500 submissions received - said no to reforms, with listed companies, brokers and lawyers being the biggest opposers while support came from accountants and fund managers.