SFC chairman Carlson Tong Ka-shing: “I would like to assure the market that we absolutely have no agenda for pushing for these change.” Photo: Edmond So
White Collar
by Enoch Yiu
White Collar
by Enoch Yiu

The market needs to hear everyone’s views on reforms to make consultation process meaningful

HKEX and its listing committee, particularly, and the staff from within its listing division must stand up and be counted

The controversial listing reform consultation period is being extended for two more months.

While it still may not be easy to get a consensus among the different parties involved in the process, the extension should at least allow more time for all concerned to give their views, particularly the Hong Kong Exchanges and Clearing and its listing committee.

Jointly launched by the Securities and Futures Commission and HKEX in mid-June, the consultation was expected to close on September 19

But the two regulators last Friday announced a new end date, November 18, due to the conflicting views still held on the proposals.

The reforms suggest creating two committees, a listing policy committee and a listing regulatory committee, on top of the existing listing committee, with equal representation by the SFC and the HKEX, to approve complicated new listings and set listing policies.

This extension is a wise move, especially as many stockbrokers had indicated they planned to hold a street march protest on September 18, the day before the original deadline.

Now the closing date has been delayed, the march has been cancelled and many believe that the softer tone being adopted by SFC chairman Carlson Tong Ka-shing in an interview with the South China Morning Post last week, shows the commission remains willing to rethink the proposals.

Tong has insisted the commission is willing to make changes, according to market views.

“I would like to assure the market that we absolutely have no agenda for pushing for these changes,” he told the Post.

Various parties have expressed their views on the reforms at market forums, press conferences, and interviews in recent weeks, but the two main sides involved, the SFC and HKEX, still remain poles apart.

The highest profile support for the changes have come from SFC founding chairman Robert Owen and the Secretary for Financial Services and the Treasury Chan Ka-keung, who believe they would allow the SFC to express its views on listings at an earlier stage, and this would enhance communication between the SFC and the HKEX, and speed up approval process.

But strong opposition has also been voiced by the Chamber of Hong Kong Listed Companies, individual brokers and some accountants who believe the changes would only lead to the SFC barring listings at an earlier stage, and would effectively kill off Hong Kong’s initial public offerings market.

So who should we hear more from over the extended two months?

It has to be HKEX and its listing committee, and the staff from within its listing division.

HKEX chief executive Charles Li Xiaojia. Photo: Jonathan Wong
So far the only HKEX director brave enough to express his view has been Vincent Lee, who is a broker.

The other board members, HKEX chairman Chow Chung-kong and chief executive Charles Li Xiaojia have refused to say a word on what they think.

Not a single member of the listing committee, whose power would be seriously reduced within the reforms, has said anything publicly.

Do they agree the changes would enhance communication between the two regulators or would they simply lead to the committee becoming a rubber stamp for the SFC?

The public wants to hear their views.

The listing division staff, many of whose jobs will be seriously affected by the reform, also have to tell us what they think.

They may have different points of views, but that’s why we need a consultation, so everyone can have the chance of expressing their views to allow the SFC to accurately make any necessary changes to the reform plan.

If, however, people refuse to speak up, it would only suggest that those opposing the reforms are right.

If the SFC is allowed to continue leading the discussion, without others expressing their opinions, then this will not be a true and accurate consultation process.

It is also vital that we launch the consultation process for the new third board and the Growth Enterprise Market reform review as soon as possible, so more startups can be attracted to list in Hong Kong.

As Tong said last week, these reforms do not need to wait until the listing reforms have been completed, adding 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”.

The longer we wait, however, the more likely it is that Hong Kong will lose out, and startups will chose to list instead in the US or Singapore.

Singapore has already agreed to start consulting on dual shares listing, while many mainland start ups have gone to list in the US.

Hong Kong needs to catch up, and move quickly.

This article appeared in the South China Morning Post print edition as: Listing reform talks should include all stakeholders’ views