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The
exchange is both a front line regulator responsible for
administering listing rules and regulating listed companies, and
also a subsidiary of a for-profit company Hong Kong Exchanges
and Clearing <0388.HK> (HKEX), which generates revenue from
listing and trading fees.
The Securities and Futures Commission (SFC) said in the report,
published on Thursday, that members of SEHK's Listing
Department, which has a regulatory function, should not attend
meetings with prospective listing applicants alongside HKEX
business executives as this "may give an impression that the
Listing Department is assisting the HKEX business side to win
business."
It also said that the listing department should take steps to
improve its "Chinese wall" arrangements as the current protocol
"contains numerous ambiguities ... and may be difficult for
Department staff to interpret and follow."
In a response included in the report, HKEX said it has been
actively considering and reviewing, amongst 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.
The SFC periodically reviews the exchange's performance.
Hong Kong ranked third in global charts for IPO fundraising last
year, having raised $24.2 billion, exculding Alibaba's 12.9
billion secondary listing, according to Refinitiv data.
In March, Hong Kong's anti corruption watchdog charged Eugene
Yeoh, a former joint-head of the bourse's IPO vetting team, with
bribery linked to IPO applications.
Yeoh declined to comment on the charges when approached by
Reuters last month outside a Hong Kong magistrates court where
his case was "mentioned".
(Reporting by Alun John; Editing by Simon Cameron-Moore)
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