The webinar discusses the implementation of the Book Building Conduct Requirements as part of the SFC's Code of Conduct and the related amendments to the Stock Exchange's Main Board and GEM listing rules, which took effect in August 2022. These requirements arise from concerns identified by the SFC surrounding Hong Kong's book building and placing activities, including issues such as inflated demand and misaligned sponsor fees, leading to compromised due diligence.
A key feature includes the introduction of the "sponsor coupling" requirement mandating that at least one overall coordinator of Main Board IPOs also acts as an independent sponsor. The SFC found issues with transparency and the order book during its review, prompting the new conduct requirements to clarify roles and improve fee arrangement transparency. The conduct requirements define roles for intermediaries, known as Capital Market Intermediaries (CMIs), and establish clear guidelines for their operation in book building and placing activities to bolster transparency and accountability.
Specific obligations outlined for CMIs include providing detailed assessments of issuers, establishing governance processes for offerings, and ensuring proper documentation and early formal appointments defining roles and responsibilities. These measures aim to guarantee effective compliance with regulatory standards, mitigate conflicts of interest, and improve market practices for share and debt offerings in Hong Kong.
The dissemination and update of information are crucial, with OCs required to disclose certain details to the SFC four business days before the listing committee hearing to facilitate oversight and standardize processes. Additional guidelines and template forms have been provided by ASIFMA to aid CMIs in adhering to the new regulations, reflecting a comprehensive industry approach to improving the integrity and robustness of the capital markets in Hong Kong.
#BookBuildingRequirements #CapitalMarketIntermediaries #HongKongIPORegulations
Timecodes: 00:00 Introduction to Book Building Conduct Requirements 01:37 Concerns and Proposals by SFC 04:43 Misconduct and Market Manipulation in IPOs 06:25 Implementation of Book Building Conduct Requirements 09:39 Definitions and Scope of Book Building Activities 11:11 CMI Roles and Responsibilities 14:13 Conduct Standards and Issuer Assessment 15:59 Early Appointments and Fees 17:28 Sponsor Coupling and Its Importance 18:56 Marketing Strategies and Investor Targeting 20:14 Allocation Strategies and Transparency 21:48 Prohibition on Rebates and Preferential Treatment 23:18 Communication and Record Keeping 24:50 Conflict of Interest Management 26:34 Obligations and Reporting Requirements for OCs 31:07 Listing Rules and Regulatory Compliance 49:52 Conclusion 52:43 Closing Remarks
Charltons Law Firm: https://www.charltonslaw.com/
Julia Charlton https://www.charltonslaw.com/the-firm/people-culture/team-profile/julia-charlton/
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