Hong Kong’s exchange backed off from a proposal to double or even triple the annual profit requirement for companies seeking to sell shares on its main board following opposition from banks.
The threshold will instead be raised 60% to HK$80 million ($10 million) in the recent three financial years, effective starting next year, according to a statement released on Thursday. The exchange had proposed more than doubling or tripling the level. The bourse and the Securities and Futures Commission also issued a joint statement vowing to crack down on suspicious IPO activities such as inflating the market capitalization, executing “ramp-and-dump” schemes and unusually high underwriting commissions. Continue reading “Article: Hong Kong Raises IPO Profit Minimum in Watered-Down Move”
The move will add to similar controls put in place since August 2016, first on extreme gyrations in equities and a year later on derivative products. They followed a series of events that provoked regulatory probes into market misconduct such as price manipulation and pump-and-dump scandals.
“The volatility control mechanism (VCM) has worked as intended without any negative feedback from the market,” said Tom Chan Pak-lam, chairman of Hong Kong Institute of Securities Dealers, the local brokerage industry body. “In many cases, sharp and sudden price movements were smoothed out as the cooling-off periods allowed participants to react while trading continued.”
Former UBS precious metals trader Andre Flotron was acquitted on Wednesday of market manipulation, a development that could spell trouble for similar cases against other Wall Street traders.
Authorities arrested Flotron late last year on charges he engaged in a Wall Street practice called “spoofing,” which involves placing and then immediately aborting trades to move prices. The acquittal follows January’s $46.6 million settlement with UBS, Deutsche Bank and HSBC over allegations traders at the banks worked to manipulate futures markets in precious metals between 2008 and early 2014.