Hong Kong Proposes Tightening Rules on Stock, Bond Sales

Bloomberg2021-02-08

Hong Kong’s SFC issues consultation proposal on underwriting H.K. regulator warns of ‘inflated’ demand in market deals Hong Kong’s market regulator proposed to tighten rules for brokerages handling ...

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Comments

wanthebelo
2021-02-09
wanthebelo
Ok
Atwosome
2021-02-09
Atwosome
CNY expecting tighter cash flow and profit taking to celebrate niu year
- Atwosome:
  CNY effect
LeeWan
2021-02-09
LeeWan
Hmmm
- LeeWan:
  Hohoho
bluetrade
2021-02-09
bluetrade
Great
SSVC
2021-02-09
SSVC
Looking forward to better transparency with all the hype IPO
rofl
2021-02-09
rofl
Please like my comment
- LeeWan:
  Nice

Leave a comment

109

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It proposed that at least one of the lead underwriters in an initial public offering should also act as a sponsor and be held legally responsible for due diligence to align costs and incentives, according to a report released on Monday.\nThe move comes amid a boom in deals in the city, stoked by an inflow of mainland Chinese cash and high-profile company listings. The fundraising frenzy has attracted more than a million retail investors on some deals, including those of Yidu Tech Inc. and Kuaishou Technology and the withdrawn Ant Group Co. listing. One third of the 144 listings in Hong Kong last year dropped on their first trading day, data compiled by Bloomberg show.\nThe regulator has noticed “inflated or opaque demand” in some offerings, as well as preferential treatment, rebates and misleading “book messages,” it said. It proposed to codify good practices such as disclosures of discounts and conflicts of interest.\n“The general market perception is that more issuers were adopting fluid incentive structures (eg, the late determination of fee arrangements) which incentivize sell-side firms to compete more aggressively to join a syndicate, often at a late stage in an offering,” the SFC said.\nIn one debt offering, a broker placed an order for HK$20 million on behalf of a client who had only expressed interest in buying HK$5 million of securities, the SFC found in a review. “Submitting knowingly inflated orders or disseminating misleading book messages undermines the price discovery process and can mislead investors,” it said.\nThe proposal will also force banks to report their underwriting fee structures earlier to the SFC with an advised split of 75% fixed and 25% discretionary. The banks can alter the ratio if needed and report accordingly.\n“Having a fee ratio guidance will inevitably limit flexibility,” said Leon Xu, managing director at Huatai International. “It would be better to raise to one third. All in all, the principle of the base fee trumping the discretionary fee makes sense.”\nThe rules would create new underwriting categories, including naming an overall coordinator and capital market intermediaries. The OC should see to it that the pricing and allocation recommendations to the issuer fully take into account the proposed code, while the CMI needs to ensure credible price discovery and a transparent and actual order book.\nThis will avoid the unclear seniority and responsibilities under the various roles such as “joint global coordinators,” “joint representatives” and “billing and delivery banks,” the regulator said.\nThe new rule would cover IPOs, other share offerings, real estate investment trusts, placings oflisted sharesto third party investors followed by a top up subscription, and all types of debt offerings.\nMarket participants have until May 7 to respond to the 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forward to better transparency with all the hype IPO","listText":"Looking forward to better transparency with all the hype IPO","text":"Looking forward to better transparency with all the hype IPO","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/383947760","repostId":1134902557,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":383952970,"gmtCreate":1612832646890,"gmtModify":1704874736381,"author":{"id":"3571798867194715","authorId":"3571798867194715","name":"rofl","avatar":"https://static.tigerbbs.com/a782efba8e9be0ccc6a4a3b55e7ec507","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3571798867194715","authorIdStr":"3571798867194715"},"htmlText":"Please like my comment&nbsp;","listText":"Please like my comment&nbsp;","text":"Please like my comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/383952970","repostId":1134902557,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":3522373,"gmtCreate":1612834510835,"gmtModify":1680776187658,"authorId":3558097748623340,"author":{"id":3558097748623340,"idStr":"3558097748623340","authorId":3558097748623340,"name":"LeeWan","avatar":"https://static.tigerbbs.com/88769849d29a340fce73355c249755a4","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":383952970,"type":1,"supId":0,"prevId":0,"content":"Nice ","text":"Nice ","html":"Nice "}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":109,"commentSize":38,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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