19 September 2019
Carlson Tong says market misconduct has been getting serious this year. Photo: HKEJ
Carlson Tong says market misconduct has been getting serious this year. Photo: HKEJ

SFC reviews rules to curb misconduct in back-door listings

Hong Kong’s securities watchdog is reviewing the listing regulations with a view to barring potential misconduct that might eventually lead to deterioration in market integrity, the Hong Kong Economic Journal reported Friday.

Securities and Futures Commission chairman Carlson Tong Ka-shing said market misconduct has been getting serious this year and that prompted the review it is conducting along with Hong Kong Exchanges and Clearing Ltd. (00388.HK).

Tong pointed at recent trends toward speculating on companies listed on the Growth Enterprise Market, a high concentration in ownership and back-door listings.

No fixed timeline and agenda have been established for the review, said Tong.

He said it is likely to be focused on the listing rules themselves, instead of considering the issue whether the authority for approving listings should be shifted from the exchange to the SFC.

A spokesman for the stock exchange, meanwhile, said the bourse has been in close communication with the SFC to ensure that the listing rules and policies in place can safeguard market order, fairness and transparency.

Firms listed on the GEM board should be banned from undergoing a change of control to turn themselves into shell companies within their first three years as listed entities, said lawmaker Christopher Cheung Wah-fung, who represents the financial services sector.

Former lawmaker Chim Pui-chung urged the exchange to require a minimum portion of a firm’s stock to be sold to the public when it seeks a listing on the GEM board while raising the threshold for listing candidates to go public by acquiring shell companies.

[Chinese version中文版]

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Hong Kong Economic Journal