Mainland China brokers banned from promoting Hong Kong SPACs – Reuters

China's securities regulator barred mainland investment banks from sponsoring special purpose acquisition companies in Hong Kong, Reuters reported March 10, citing three people with knowledge of the matter.

The China Securities Regulatory Commission imposed the ban as it tightens its grip on domestic issuers seeking to raise funds outside the mainland amid concerns over risks associated with the blank-check companies, the unnamed sources said. They added the regulator relayed the order to the investment banks earlier in 2022.

While institutions affiliated with Chinese commercial banks can act as advisers for the listings of SPACs, Chinese brokerages have been lobbying the regulator to allow them to act as promoters for SPAC IPOs as well, one of the sources said.

Investment banks from mainland China will likely face tougher scrutiny as part of authorities' tightening of cross-border capital raising regulations. As promoters, they would have the opportunity to acquire shares from SPACs at lower costs, according to the report.

The securities regulator and the China Banking and Insurance Regulatory Commission did not immediately respond to requests for comment, the newswire said.