SFC intensifies scrutiny of IPO sponsors: Bloomberg

The Securities and Futures Commission has intensified its scrutiny of staff at banks that sponsor initial public offerings, a move that exacerbates the talent shortage of Hong Kong's brokerages, Bloomberg reported.

Following the warnings from the SFC and the Hong Kong Exchange over the quality of IPO prospectuses, inspections of bankers serving as IPO sponsors have intensified significantly, the report said.

As the regulator has halted applications for certain roles, some brokerages are facing hiring challenges and are forced to widen their recruitment scope.

Besides, the SFC has recently adopted a stricter approach to vetting senior bankers' licenses, including mandating banks to demonstrate they possess sufficient junior staff and the necessary training capacity before approvals are granted.

For the bankers with inactive licenses who wanted to rejoin the sector, the watchdog will be cautious and ask more questions about their past working experience.

A SFC spokesperson said that there are concerns regarding the lack of sufficient regulatory knowledge, experience and resources, and that certain principals are overstretched or not suitably qualified.

“To address this, RA6 license applications and principal submissions must now include clear evidence of adequate resourcing, appropriate seniority within transaction teams, and manageable supervision workloads, supported by concrete documentation of actual IPO experience,” the spokesperson added.