Making enhancements to Hong Kong’s world class listing regime
Written by
Jun 19, 2020

By Bonnie Y Chan, Head of Listing's Office, HKEX

Building on Hong Kong’s role as the world’s leading global listing regime requires a commitment to the constant enhancement of the HKEX offering, from accommodating new types of businesses, to adopting more efficient technologies, and strengthening our regulatory regime to ensuring that that we maintain our standards of integrity.


Hong Kong is home to the world’s most popular and robust market for initial public offerings (IPOs), and maintaining our leadership role requires constant investment in the listing regime and in market infrastructure. Recently, Hong Kong Exchanges and Clearing Limited (HKEX) has become more focused on such areas as digitising its processes and enhancing its regulatory regime, in order to make Hong Kong an even more attractive listing venue for international companies.

As HKEX celebrates the 20th anniversary of its own share listing we reflect on how our listing regime continues to adapt and innovate in order to maintain and reinforce its competitive advantage. There are several key themes defining our listing activities as the global markets leader in the Asian time zone in 2020, from the increase in “homecoming IPOs” as Chinese corporates seek listings closer to home in Asia, to our push to implement more streamlined processes through the adoption of new technology. Most important is our continued commitment to market quality.

Home and Away

Our goal at HKEX is to attract the highest quality companies from around the globe in order to create a diverse, sustainable and forward-looking market. HKEX anticipates that there will be considerable demand in the years ahead from Mainland Chinese corporates seeking a first time listing targeting international investors, or a return listing in the region, and Hong Kong will be the market of choice. This trend is fuelled by individual corporate preference, the strong reputation of Hong Kong’s markets in supporting debuts and growth ambitions through secondary fundraisings, and the macro-economic climate. The trend of homecoming IPOs bodes well for HKEX, and it reconfirms the importance of Hong Kong and its markets as the nexus of financial activity in Asia.

We are also always seeking to enhance our framework to ensure the ongoing quality of our market. We are reviewing our listing processes to make it more streamlined and efficient for international issuers, regardless of their home jurisdiction. However, we remain mindful that we must balance a warm welcome to companies, with the need to maintain quality and protect investors. That balance needs constant assessment and revision.

Attracting global corporates and market leaders to our markets encourages other businesses to our markets, which in turn deepens the liquidity and the opportunities for investors. They encourage more investment funds and managers to base themselves here, and drive demand for analysis and compliance work. This symbiotic relationship between all parties is the true nature of a strong market ecosystem.  


Digital Transformation

HKEX is also expanding and improving our infrastructure to prepare for future growth and change. Making our markets faster, more efficient, and easier to participate in is a key factor in attracting new listing companies. HKEX is undertaking numerous projects to digitalise our workflows and processes, which improves the experience for regional and international investors and issuers.

Our drive towards digitalisation creates greater visibility and transparency, which again makes it easier for international investors to access information about our rules and guidance.

These initiatives include moving towards a paperless IPO, with online applications and display of documents. HKEX is also exploring a platform that will modernise Hong Kong’s IPO settlement process in order to shorten Hong Kong’s T+5 IPO settlement cycle and reduce market risk for issuers and investors. All of these improvements increase our attractiveness to both international investors and companies.


Market Quality

A key part of HKEX’s legacy is its high standards for listing companies. Reviewing our standards, and adapting them to accommodate new industries, helps us future-proof our business while keeping our standards central to our credibility and attractiveness as a listing venue.

To complement this, we also look at the existing listings in terms of market quality. For example, we recently strengthened our reverse take-over regime to eliminate the improper use of shell companies. When companies do engage in unacceptable activities or behaviour we must respond in a timely manner that protects investors. We are therefore preparing to launch a market consultation in 2020 to review our disciplinary framework.


Creating Confidence

These trends and areas of change confirm HKEX’s role as the global markets leader in the Asian time zone. We always welcome new listings from quality companies, whether the company is celebrating a homecoming, a local success story, or they are extending their international outreach. It is our job to offer these companies an attractive, competitive market that has earned the trust and confidence of investors from around the world, and to do so while being mindful that no individual listing is ever worth putting that hard-earned reputation at risk.

We offer robust regulation, a deep and international pool of liquidity, stable market structures and close ties to one of the world’s largest economies. These features secure our position as the premier global IPO market. But we are not complacent and we will continue to adapt and evolve, just as we have done for the past 20 years. HKEX will continue to match the world’s leading companies with international investors in a stable, well-regulated market that generates benefits for all of our stakeholders.


Credit: This article first appeared in HKET on 19 June,2020