Hong Kong's securities regulator and stock exchange on Friday, 9 September, extended the deadline by two months for responses to a consultation on reforming the city's listing regulation, sparking fears the proposal may be in jeopardy.
The decision to extend the deadline to 18 November comes amid growing controversy over the proposal, which has pitched the city's banks and The Chamber of Hong Kong Listed Companies, who oppose the changes, against international asset managers, who are in favour of reform.
"In light of the great deal of interest and a wide range of views expressed ... and given that much of the consultation period coincided with the summer season, an extension will give all interested parties further time to file their submissions," the Securities and Futures Commission ("SFC") and Hong Kong Exchanges & Clearing ("HKEx") said in a statement.
In June, the two bodies had proposed changes to Hong Kong's stock market listing regime that could curb the regulatory powers of the exchange and hand more authority to the watchdog.
The proposals aim to address possible conflicts of interest in the current framework where HKEx acts as both the profit-driven market operator and regulator of initial public offerings ("IPOs").
The Chamber of Hong Kong Listed Companies and the banking sector are pushing back on the reforms, which they fear could give the SFC too much power and potentially stymie the IPO market, according to industry insiders and local media reports.
This has put them at odds with asset managers and corporate governance activists, including BlackRock, the world's largest asset manager, and ICI Global, the international body representing asset managers, who have both come out publicly in favour of reform.
Michael Cheng, a consultant solicitor at law firm Andrew W Y Ng & Co in Hong Kong, and former SFC and HKEx executive, said the strong opposition to the proposal would make it tough for the SFC and HKEX to stick to their original plan.
"Even if the regulators are trying to take a robust position, due to the level of opposition they have reached a stage where it may be challenging to move into the next phase of the consultation. This could mean the proposal is potentially at risk," Cheng added.
David Webb, Hong Kong's leading investor activist, said in his consultation response published this week that the Hong Kong law still allows SFC to take more control of the listing function despite the opposition, provided the government has the "courage and foresight to back the SFC".