Hong Kong Strengthens Research Analyst Rules
Wednesday, July 6, 2011
Hong Kong’s Securities and Futures Commission (SFC) has published the
consultation conclusions on proposals to expand the scope of conflicts-of-interest
requirements governing research analysts.
One of the new requirements stipulates that sponsors of listing applicants
are to take reasonable steps to ensure that all material information, including
material forward looking information, disclosed to analysts is contained in
prospectuses or listing documents.
Changes will be made to the code of conduct for persons licensed by or registered
with the SFC, as well as the corporate finance adviser code of conduct, to implement
the proposals. The changes will be implemented with effect from September 1,
2011, except for the requirements in relation to new listings. In the case of
a new listing applicant, the new requirements will apply to any new listing
where the listing application is submitted to the Stock Exchange of Hong Kong
on or after August 1, 2011.
The new requirements will enhance the integrity and objectivity of pre-deal
research reports and prevent them from being used by listing applicants to disseminate
information without formal prospectus liability. The SFC will proceed to extend
to real estate investment trusts (REITs) and listing applicants the requirements
governing analyst conduct in preparing investment research reports.
In light of the recent interest in listing business operations that are not
established in a corporate form, such as business trusts, the SFC also will
extend the conflicts-of-interest requirements to analysts conducting research
for business operations that are constituted in a form other than a corporation
or a REIT.
“Ensuring equal dissemination of information flow is a key function in
maintaining Hong Kong’s status as an efficient and successful capital
market,” said Alexa Lam, the SFC’s Acting Chief Executive Officer.