Hong Kong's IPO regime has served the city well, says HKEx chief

Hong Kong Exchanges and Clearing Ltd Chief Executive Charles Li looks on before an event celebrating the 16th anniversary of HKEX in Hong Kong on June 28, 2016.
Hong Kong Exchanges and Clearing Ltd Chief Executive Charles Li looks on before an event celebrating the 16th anniversary of HKEX in Hong Kong on June 28, 2016.PHOTO: REUTERS

HONG KONG (BLOOMBERG) - Hong Kong's system for overseeing initial public offerings (IPOs), which is facing change by the city's authorities, has worked well for the market, according to Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd.

The Securities and Futures Commission is working with HKEX on a consultation that would change how one of the world's largest IPO venues screens applicants. Under the current system, the Listing Committee, staffed by finance and legal professionals appointed by the exchange, reviews firms for approval. The proposals published in June would reduce the Committee's power and give the SFC a stronger grip, some industry analysts and lawmakers have said.

"The Listing Committee is a very unique, very structurally Hong Kong phenomena that has served this market extremely well for many, many, many years," Mr Li said at a lunch hosted by the Hong Kong Securities and Investment Institute on Thursday. "Is this system perfect? Obviously not. Could this system by improved? Absolutely."

Mr Li urged Hong Kong bankers, fund managers and lawyers to submit their feedback on the proposals. He denied, however, that there is a conflict within the exchange on the consultation. Vincent Lee, a non-executive director at HKEX, opposed the proposed IPO changes, South China Morning Post reported July 31. The change effort has been almost entirely driven by the SFC, a person close to the Listing Committee has said.

"The SFC want to twist this way, the exchange want to twist that way," Mr Li said. "Is this the only solution? I don't know, probably not. Is it the best solution? I don't know, probably not. But is this the solution where we find ourselves in agreement? Yes."