Any change to rules governing Hong Kong's financial system must enshrine appropriate checks and balances that safeguard the interests of all market participants, Secretary for Financial Services and the Treasury Chan Ka-keung said yesterday. "For a new structure to come about, you have to first convince the market to believe in it. If a consultation on listing reform takes place, it needs to provide very specific recommendations to protect the interests of company management, big shareholders and small shareholders," he said at a year-end briefing. Chan's tentative support for the creation of a listing reform consultation committee appears to be a shift from his statements two months ago, when he said Hong Kong's rules on initial public offerings (IPOs) work fine and the stock exchange had no plans to consult the market on reforms. Potential reform of the city's listing rules became an issue in October after Alibaba Group failed to convince Hong Kong regulators to allow it to list with a so-called partnership structure that gives a coterie of top executives the power to nominate most of the firm's board members. Every place has its … legal structures. Hong Kong cannot [be overhauled] overnight CHAN KA-KEUNG The collapse of talks to secure the potential US$15 billion share sale, which may instead happen in New York, sparked handwringing among regulators who insisted they would not abandon the principle of "one shareholder, one vote" despite competition from the US where "dual-class" shares are permitted. Fears are growing in some quarters that Hong Kong, which relies heavily on listings from mainland firms, could start to lose its appeal as an IPO venue. Last month, the government's top financial advisory body, the Financial Services Development Council, began a review of the city's stock listing regime and ability to attract international IPOs. But Chan rejected allegations that Hong Kong was lagging behind and should imitate America's system. "Every place has its own history and established legal structures," he said. "America's Securities and Exchange Commission doesn't have a listing committee to review filings like the Hong Kong stock exchange does. The US may have 'looser' listing regulations, but they have developed other ways to protect shareholders, such as by allowing class action suits. Hong Kong cannot simply allow class action suits and overhaul our legal system overnight. "If you want to introduce new checks and balances in order to have a modified listing system in Hong Kong, you'd have to convince the market that those checks and balances would be enough to protect everyone's interests." Chan also said the outlook for China's market reforms is positive, and that mainland IPOs have been eager to "test the waters" in Hong Kong.