HONG KONG, March 4 (Reuters) - Hong Kong Exchanges and Clearing Ltd has rejected a third of all companies applying to list on the city’s stock market since it introduced tougher measures in October, the exchange operator’s chief regulatory officer said on Tuesday.
Hong Kong’s Securities and Futures Commission last year introduced tougher rules for banks preparing companies for listing in an effort to improve the quality of initial public offerings in the city.
So far, six out of eighteen companies that applied to list in Hong Kong since the changes have had their applications returned because required documents were missing or incomplete, the exchange operator said.
“If we were returning five or ten percent of submissions that would show the market’s in the right place, but thirty-three percent is too high,” Chief Regulatory Officer David Graham told a media briefing.
“In the past, companies could initially submit applications that were around 60 percent complete. Now in reality we expect them to be 95 percent ready,” he added.
From April 1, companies that are rejected by the Hong Kong exchange will also face a two-month moratorium on submitting new applications, and their names will also be made public.
With nearly half of its market value wiped out in the last three years, the stock exchange has pinned hopes on a HK$3 billion ($386 million) technology upgrade, a push into yuan-denominated products and its $2.2 billion purchase of the London Metal Exchange in 2012 to give it a much-needed earnings boost.
Reporting By Lawrence White and Elzio Barreto; Editing by Miral Fahmy