Banks said to split from investors on Hong Kong’s IPO overhaul

HONG KONG (Sept 8): A plan to change how Hong Kong’s initial public offerings are screened is pitting the city’s securities firms against some of the world’s biggest money managers.

Banks and brokerages are generally opposed to a plan announced by the Securities and Futures Commission and the exchange in June that would move key powers to a new SFC-dominated committee, and are planning to sign submissions aimed at halting or watering it down, according to two people familiar with their thinking and three different drafts seen by Bloomberg News. Their concerns include perceived regulatory heavy-handedness and increased costs, but they are unsure of how aggressively to voice their disapproval, said the people, who asked not to be named because the discussions are private.

The banks would be going against large investors, who say they want more transparency and protection for shareholders, as well as possible support from individuals in mainland China. At stake is who calls the shots on listings in the world’s second-largest IPO market, as the proposals would move key powers to a new SFC-dominated committee. The issue is controversial enough that some securities firms may hold off signing any of the submissions, one of the people said.

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