SFC publishes review of SEHK’s performance in regulating listing matters

The Securities and Futures Commission (SFC) today released a report on its review of the performance of The Stock Exchange of Hong Kong Limited (SEHK) in regulating listing matters during 2022 and 2023 (Note 1).

During the review, the SFC assessed the general operations, processes and procedures of SEHK’s Listing Division. It also weighed up SEHK’s performance in handling issuers’ non-compliance with the Listing Rule requirements on the disclosure of material information, handling issuers’ unusual stock price and volume movements, and vetting initial public offering (IPO) applications.

The SFC noted in the latest review report that SEHK had taken steps to respond to its recommendations made in the 2022 report. In the meantime, the SFC identified several areas for improvement on this year’s review topics along with further recommendations for SEHK. The SFC will work closely with SEHK to implement the recommendations, in order to uphold the integrity of Hong Kong’s listing market and strengthen its resilience.

One of these areas is the notable number of listed issuers’ non-compliance with the notifiable and connected transaction rules. The SFC recommends, amongst others, that SEHK adopt measures beyond issuing guidance or warning letters to improve issuers’ compliance and standards in this area.

In handling unusual stock price and volume movements, SEHK has referred to the SFC cases involving suspected breaches of the Securities and Futures Ordinance. The SFC recommends that SEHK strengthen its internal procedures for making enquiries, staff training, and follow-up action after receiving issuers’ negative confirmations (Note 2).

In the area of processing IPO applications, there was a general improvement in SEHK’s processing time in 2023. To drive greater processing efficiency and transparency, the SFC and SEHK jointly enhanced the timeframe for the new listing application process in October.

The review report, which summarises the SFC’s findings and recommendations along with certain listing market data, has been published on the SFC website.

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Notes:

1. The SFC has a statutory duty under the Securities and Futures Ordinance to supervise, monitor and regulate the activities carried on by SEHK. To discharge this function, the SFC conducts periodic reviews of SEHK in its regulation of listing-related matters.

2. An issuer provides negative confirmation by confirming to SEHK that it is not aware of any particular reason for the significant price or trading volume movement and does not possess any undisclosed inside information.