Legislators are demanding that regulators postpone the execution of a prolonged blackout period prohibiting directors of listed firms from trading the companies' shares.
The Legislative Council Panel on Financial Affairs will hold a special meeting on December 30 to discuss the Hong Kong Exchanges & Clearing (0388) plan to extend the blackout period to up to seven months from the current two months a year.
Abraham Shek Lai-him, a legislator for the real estate and construction sector, said HKEx did not consult widely enough and the consultation, which started last January 11, was a "black- box operation" that did not reflect industry opinion.
He urged the regulator to delay executing the new rule, saying it is too rushed to bring it in starting from next year and that HKEx should consult the industry again more comprehensively.
Shek said over 120 listed companies back him up and he expects to get hundreds of supporters on December 30.
The new rule is over-restrictive and will affect enterprises' appetite for Hong Kong listings, said Chim Pui-chung, a legislator for the financial services sector. It will also reduce the liquidity of shares, he said, and the Hong Kong bourse will lose competitiveness.
Shek said the blackout period extension is unnecessary because there are already plenty of regulations to control insider trading.
Some 30 responses to the consultation agreed to the extension while some 30 disagreed, Shek said, and he hopes regulators will listen to the opposing views. He said he will inquire with HKEx and Securities and Futures Commission representatives on the special panel on Tuesday and he hopes Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung will attend.
Corporate governance activist David Webb said on his website yesterday that some well-connected tycoons and company directors have launched an aggressive last-minute campaign to reverse the rule change.
A spokesman for the Financial Services and the Treasury Bureau said Chan has noticed the market concern over the extension of the blackout period and the secretary has related opinions to the SFC and HKEx, which are believed to be following up on the matter soon.