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Magic Circle Firms Lead Opposition To Hong Kong Stock Exchange Reform Proposals

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Magic Circle Firms Lead Opposition To Hong Kong Stock Exchange Reform Proposals

Linklaters and Slaughter and May are among a raft of major law firms to have raised concerns over proposed changes to Hong Kong Stock Exchange regulations, amid fears the proposals will lead to a reduction in the number of listings taking place.

The changes, which are detailed in a joint consultation issued this June by Hong Kong’s Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing – include a proposal for the establishment of two new exchange committees, one of which will set listing policy and the other which will decide on IPO and post-IPO matters that have “suitability concerns”.

Linklaters Asia corporate head Robert Cleaver told Legal Week that the firm is submitting a response opposing the suggestions, alongside feedback from banking clients.

Cleaver said: “Broadly speaking, what we are saying is that we think the proposals, while well intentioned, are supposed to be simplifying the whole thing. But it seems to us to be complicating the thing, because they are creating two extra committees.”

Cleaver also cited concerns about the impact two new committees would have on the role of the current listing committee, making it less attractive to potential members.

Slaughters is also submitting a consultation response which questions aspects of the proposals. The firm is advising ‎the Asia Securities Industry & Financial Markets Association – an independent trade association for financial institutions - on its reply, with a team led by Hong Kong partners John Moore and Roger Chang.

Ashurst capital markets partner Stuart Rubin said: “There is some concern that the SFC as a regulator may adopt an even higher level of conservatism than currently accompanies Hong Kong listings.”

Rubin also referred to concerns in the market that such a move may lead to Hong Kong becoming a “less attractive listing destination, particularly if the proposed listing process is as not as efficient as anticipated”.

Others, however, have taken a more positive view of the proposals. One Hong Kong capital markets partner said: “Personally, I am in favour of it. You can’t have the exchange vetting applicants when they need to encourage more companies to list.”

Davis Polk & Wardwell and Freshfields Bruckhaus Deringer are both submitting responses on behalf of international investment banks.

Freshfields’ submission says the proposals give rise to concerns about the impact on the timetabling of listings and listing applicants, saying: “These concerns serve to potentially further negatively impact the view of potential listing applicants and the appeal of the Hong Kong market as a whole.”

The deadline for submissions for the consultation is 18 November.

Source: Legal Week

By Pathay Singh on 11/08/16