Hong Kong Regulator Steps Up Scrutiny of IPOs as Bookbuilding, Allocation Concerns Surface

Hong Kong's Securities and Futures Commission (SFC) is tightening oversight of the city's IPOs over concerns of artificially created investor demand and unfair allocation, The SFC has asked the relevant investment banks to provide plans for remediation, according to two of the people. The move reportedly came after the regulator identified instances of funding by affiliates of a company going public, resulting in the misleading illusion of strong investor demand. Regulators have subjected allocation lists submitted by investment banks to scrutiny in the past and stopped listing, however, banks manage to defend their decisions on the basis of commercial judgment, two people said and Detailed investigations by watchdogs into bookbuilding and allocation are also hindered by expedited IPO timelines, one of the people said. A spokesperson said in a statement that the regulator refrains from commenting on individual cases and will share regulatory observations and expectations with the market as when needed, The SFC did not immediately respond to a request for comment. (Market.