Hong Kong Exchange Proposes to Optimise IPO Price Discovery & Open Market Requirements, Consultation Period for 3 Months Until 19th March 2025
24th December 2024 | Hong Kong
The Hong Kong Exchange (HKEX) has released a consultation paper proposing to optimise IPO price discovery & open market requirements, with the consultation period open for 3 months until 19th March 2025. HKEX (19/12/24): “The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Thursday) published a consultation paper seeking market feedback on proposals to optimise IPO price discovery and open market requirements (the Consultation Paper). The consultation window is open for a three-month period, concluding on Wednesday, 19 March 2025. The Exchange’s proposals represent a holistic reform of its regulatory framework relating to the IPO price discovery process and open market requirements, ensuring its listing mechanism remains attractive and competitive for existing and prospective issuers. In particular, the Exchange proposes to: 1) Optimise the price discovery process for IPOs to increase the participation of “price setting” investors, thereby reducing the likelihood of the final offer price being set at a large disparity to the actual trading price when dealings in those shares commence. 2) Review open market requirements, ensuring issuers will have sufficient shares in public hands that are available for trading at listing, whilst relaxing certain percentage thresholds which would imply a bar that may be too high in absolute dollar value … … In developing its proposals for consultation, the Exchange engaged a broad range of stakeholders, including representatives from investment banks, public institutional investors, private equity firms, retail brokers, and both existing and prospective listed issuers. The Exchange is seeking market feedback on its proposals and the proposed Listing Rules to implement them. The public comment period ends on Wednesday, 19 March 2025. Interested parties are encouraged to respond to the Consultation Paper by completing and submitting a questionnaire on the HKEX website.”
“ Hong Kong Exchange Proposes to Optimise IPO Price Discovery & Open Market Requirements, Consultation Period for 3 Months Until 19th March 2025 “
HKEX Head of Listing, Katherine Ng: “At HKEX, we are committed to maintaining a robust and competitive new listing and ongoing listing framework, underpinning Hong Kong as a global leading capital raising centre. We are delighted to be proposing new requirements to enhance the IPO pricing and offering mechanism, supporting high quality companies from around the world to list and thrive in Hong Kong’s vibrant capital market. As part of our ongoing efforts to ensure that our listing regime is fit for purpose and meets the needs of a constantly evolving market, we are also proposing changes to the open market requirements that will solidify our reputation as an open, transparent and attractive market to issuers and investors around the world.”
Notes:
- Securities of an issuer that are held in the hands of the public (see Main Board Listing Rule 8.24 and Notes 2 and 3 to GEM Listing Rule 11.23 for the meaning of “the public”).
- Securities of an issuer that are not subject to any disposal restrictions (“lock-up”) upon listing.
- “A+H issuers” refers to issuers incorporated in Mainland China with domestic shares listed on a stock exchange in Mainland China (i.e. A shares) and shares listed on the Exchange (i.e. H shares).
- Investment in an IPO by investors (“cornerstone investors”) to whom offer shares are preferentially placed with a guaranteed allocation irrespective of the final offer price.
- Offer of securities in an IPO for subscription by persons (“placees”) selected or approved by the issuer or intermediary.
- A mechanism through which investors place orders (including expressions of interests) as to the number of shares they wish to subscribe for and the price at which they are willing to pay for them, with no commitment to do so until the final offer price is determined.
- The part of the placing tranche not taken up by cornerstone investors in an IPO.
- Offer of securities in an IPO for subscription by the public.
- The clawback mechanism reduces the proportion of shares that can be allocated to investors in the bookbuilding placing tranche (who are generally considered as key “price setters” of the final offer price). In this circumstance, the issuer may be able to set a high final IPO offer price that would not have been acceptable to sufficient investors in the bookbuilding tranche at its original size. This may increase the risk of the IPO being mispriced.
- A mechanism that allows issuers to adjust the offer price by a prescribed percentage from the indicative offer price or offer price range after the close of the public subscription tranche in an IPO. Existing requirements only permit downward adjustment to offer price.
Hong Kong Exchange Proposes to Optimise IPO Price Discovery & Open Market Requirements, Consultation Period for 3 Months Until 19th March 2025
Sign Up / Register
Caproasia Users
- Manage $20 million to $3 billion of assets
- Invest $3 million to $300 million
- Advise institutions, billionaires, UHNWs & HNWs
Caproasia Platforms | 11,000 Investors & Advisors
- Caproasia.com
- Caproasia Access
- Caproasia Events
- The Financial Centre | Find Services
- Membership
- Family Office Circle
- Professional Investor Circle
- Investor Relations Network
Monthly Roundtable & Networking
Family Office Programs
The 2025 Investment Day
- March - Hong Kong
- March - Singapore
- July - Hong Kong
- July - Singapore
- Sept- Hong Kong
- Sept - Singapore
- Oct- Hong Kong
- Nov - Singapore
- Visit: The Investment Day | Register: Click here
Caproasia Summits
- The Institutional Investor Summit
- The Investment / Alternatives Summit
- The Private Wealth Summit
- The Family Office Summit
- The CEO & Entrepreneur Summit
- The Capital Markets Summit
- The ESG / Sustainable Investment Summit
