FINI fails to red-flag multiple IPO subscriptions

Staff reporter

Hong Kong Exchanges and Clearing's (0388) digital initial public offering settlement platform FINI was found failing to identify multiple IPO subscriptions made by some mainland users, local media reported, citing brokerages.

The report said certain mainland investors were suspected of repeatedly applying for popular IPOs using multiple identification documents, such as mainland identity cards, Hong Kong identity cards and passports, through multiple brokerage accounts.

A local Chinese newspaper said one of its reporters successfully tested this loophole by opening accounts at two local brokerages with separate Hong Kong and mainland IDs and submitting IPO applications for Chifeng Jilong Gold Mining (6693) without triggering any duplicate alerts.

Futu Securities and Bright Smart Securities confirmed to the newspaper that their submission processes functioned normally, with IPO allocations based solely on selection probability.

While Hong Kong investors can typically submit only one IPO application with a Hong Kong ID, most brokerages allow mainland investors to open multiple accounts using different forms of identification.

A review of six major brokerages found that only Huatai International does not accept account openings with mainland ID cards, while Futu Securities, Tiger Brokers, Phillip Securities, Bright Smart Securities and Valuable Capital allow them under varying conditions.

The Securities and Futures Commission responded that brokerages are responsible for ensuring compliance with FINI's requirements.

HKEX stated IPO issuers and sponsors have a duty to eliminate duplicate applications.

Recently, Hong Kong's new listings have recorded substantial oversubscriptions.

Chinese toymaker Bloks' (0325) tranche was nearly 6,000 times oversubscribed in January, the highest on record after Most Kwai Chung's (1716) 6,288 times in 2018 and Herbs Generation's (2593) 6,083 times in October last year.

FINI was launched in 2023 by HKEX.