New publication requirement under the new sponsor regime debuted smoothly

The new sponsor regime that took effect from 1 October 2013 and the related new publication requirement that took effect from 1 April 2014 have been working well, according to initial observations by Hong Kong Exchanges and Clearing Limited (HKEx).

"We are pleased to see that the new sponsor regime has been working smoothly to date and the market has adjusted well to the new process," said David Graham, HKEx’s Chief Regulatory Officer and Head of Listing.

The Stock Exchange of Hong Kong Limited (the Exchange, a wholly-owned subsidiary of HKEx) had received 82 listing applications¹ under the new sponsor regime as of the end of April and returned nine cases for a variety of reasons, including insufficient financial information, failure to include important information and failure to address the Exchange's guidance given at pre-IPO enquiries stage or the Exchange's comment in the refiled cases².  One of the nine returned cases received an accelerated review on request but the decision was upheld.  These returned cases happened prior to the new publication requirement which became effective on 1 April 2014.

Since 1 April 2014, an application proof, which is the initial proof of the listing document, will be published on the HKExnews website once it has been accepted for vetting after the Initial 3-day Check³.  Four application proofs had been posted on the HKExnews website under the new publication requirement as of the end of April.

The objective of the new sponsor regime is to encourage listing applicants to work with sponsors to submit high quality application proofs, with a consequent reduction in the vetting period and the number of regulatory comments.  Since the new regime became effective, the median vetting time and average number of regulatory comments have both been reduced by more than 50 per cent, from 133 days to 59 days and from 155 comments to 53 comments per case respectively.

Under the new regime, listing applications must not be submitted less than two months from the date of the sponsor's formal appointment and sponsors, once appointed, must notify the Exchange of their appointment as soon as practicable, regardless of whether a listing application has been submitted.  A total of 181 notifications were received by the Exchange between 1 October 2013 and 30 April 2014. "We had considerably more than the average number of listing applications in the month of March before the new publication requirement took effect.  However, listing applications continue to come in," Mr Graham said.  "We will continue to provide guidance to the market as appropriate.  As planned, we will conduct an implementation review after the first year of the new sponsor regime." 

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