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Hong Kong's market regulator to step up oversight on IPO underwriters

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Hong Kong's market regulator to step up oversight on IPO underwriters

Hong Kong's Securities and Futures Commission is tightening its oversight of underwriters to limit irregularities during IPOs and bond sales, the South China Morning Post reported Oct. 21, citing Julia Leung Fung-yee, deputy CEO of the commission.

Leung said there was a need to tighten oversight of lead underwriters as there have been "concerns about the competitive pressures to get a share of the often lucrative IPO underwriting fees" and that underwriters may be pushed "to generate a lot of orders at the expense of quality."

The SFC will issue guidelines for underwriters of IPOs and bond sales, Leung said. She, however, did not disclose when the proposed rules will be issued. The regulator is also reviewing the book building process in both stock and debt markets.

As part of its crackdown on market irregularities, the SFC has imposed more than HK$900 million worth of fines on eight sponsors and three key staff of investment banks in the last 30 months.