SFC tells stock exchange to improve Chinese Wall

Business | Reuters and Avery Chen 3 Jul 2020

The Securities and Futures Commission has told the Stock Exchange of Hong Kong to improve its "Chinese wall" protocols among other changes to better manage potential conflicts of interest.

The exchange is both a front line regulator responsible for administering listing rules and regulating listed companies, and also a subsidiary of for-profit company Hong Kong Exchanges and Clearing (0388), which generates revenue from listing and trading fees.

The SFC said in the report that members of SEHK's Listing Department, which has a regulatory function, should not attend meetings with prospective listing applicants alongside HKEX business executives.

The report pointed out that some HKEX business executives sought to get the listing department to respond sooner to particular applicants by repeatedly referring to the desirability of those applicants or by copying HKEX chief executive Charles Li Xiaojia.

In a response included in the report, HKEX said it has been actively considering and reviewing, among others, the controls relating to the organisation and operation of the listing department, and that HKEX's business side no longer invites SEHK listing department officials to meetings with prospective companies.

In March, the SFC charged Eugene Yeoh Kim-loong, a former joint head of the bourse's IPO vetting team, with bribery linked to IPO applications.

Hong Kong ranked third in global charts for IPO fundraising last year, having raised US$24.2 billion (HK$191 billion), excluding Alibaba's US$12.9 billion secondary listing.

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