Why proposed listing reform bill will slow down market development in Hong Kong

PUBLISHED : Thursday, 15 September, 2016, 4:47pm
UPDATED : Thursday, 15 September, 2016, 10:24pm

We refer to Shirley Yam’s Money Matters column (“Political undercurrent makes listing reform look gloomy”, September 10).

It links the development of the listing regulation reform with politics. This only muddies the picture without helping readers focus on the real defects of the reform package.

The column makes no attempt to analyse the issues at stake and why it would draw widespread opposition from the market, including the Financial Services Development Council and the General Chamber of Commerce.

In our view, the reform package errs in trying to concentrate all powers of listing policy and listing applications in the two new Securities and Futures Commission-dominated committees, which would function as a small circle without checks and balances; with minimal market experience and perspective, and driven by a bureaucratic mindset. As such, a slowdown of market development is to be expected.

As for market problems, such as quality of companies and price swings due to manipulations, referred to in the article, they should be dealt with by rigorous enforcement by the SFC as protecting investors’ interests is the SFC’s primary role under the Securities and Futures Ordinance. The reform package, however, would give the SFC deciding power over listing applications and listing policy, which falls into the realm of market development, for which SFC only has a secondary role.

At a time when clear delineation of responsibility and accountability is upheld, such blurring of roles is far from ideal.

Lastly, the column referred to the forum organised by the Chamber of Hong Kong Listed Companies on September 7 and described the panel speakers and attendees as “royals” and “cowboys”.

While colourful as a choice of words, it is misleading. The panel speakers are respectable market people who have made a tremendous contribution and the author’s insinuation that they are linked with “shell companies” is irresponsible.

The over 150 attendees included lawyers, accountants, investment bankers (many of them present and past listing committee members), brokers and even staffers of Hong Kong Exchanges & Clearing. At a poll at the forum, between 80 and 90 per cent of this group disagreed with the direction of the reform and worried that it would drag down Hong Kong’s competitiveness and pace of market development.

Whether this represented a cowboy’s views dictated by self-interest or a genuine worry about where the reform would take Hong Kong is up to everyone’s own judgment.

Mike Wong, chief executive officer, Chamber of Hong Kong Listed Companies