HKEx Li: To make the best decision for Hong Kong

, Chief executive Officer, Hong Kong Stock Exchange

Beijing Time September 25 news, Alibaba listing plan caused the industry's close attention. This morning, there was news that Alibaba and HKEx have broken down, will be transferred to the U.S. IPO.

The HKEx did not comment. However, this afternoon, Li, chief executive of the Hong Kong Stock Exchange, published a new diary entitled "The Talk of investor protection" in his column on the HKEx, "Small Plus blog". The journal has commented on HKEx's listing rules, investor protection, equity structure, etc. But the views expressed are quite insinuating.

Li in the article, the decision on the listing or policy changes of individual companies does not depend on me or the board of HKEx, "in the final, we need to make decisions that are best suited to Hong Kong and most conducive to Hong Kong, not the safest and easiest decisions." ”

The article also notes that the listing rules of Hong Kong are very clear and that if amendments are to be made, they must be conducted in accordance with prudent procedures. When there is a conflict between "public interest" and the interests of the shareholders of HKEx, we should always put the public interest first. It was in the "public interest" that I decided to take part in this important discussion.

The full text reads as follows:

A talk on investor protection

In recent weeks, there has been a lively discussion of the Hong Kong investor security, the shareholding structure and shareholder voting rights. I have been listening carefully to these different voices: Some voices are louder, and some of the smaller ones cannot be ignored. Every time I try to calm down and think about the security of investors, these voices always linger in my ear, lingering.

One night, I tossed and turned, and my ears rang with these arguments. In a trance, the arguments of these voices unfold ...

The first one to speak is a strong and heroic tradition. Sir, he is very satisfied with the existing market system in Hong Kong and does not feel the need to change it at all. "The Hong Kong system has been operating very smoothly for a long time, why change now?" The market here is so successful because our investor protection mechanism is well known. Hong Kong's listing rules are very clear, and anyone who wants to come to Hong Kong will be treated equally. We have been the world's leading financial centre and have repeatedly topped the list of IPOs in recent years. It is no problem for us to attract issuers to raise money, and we have never set a precedent for any company. Why change? Mr. Traditional shook his head and sat down heavily.

At this time, Mr. Innovation could not help but to speaker. He was an edgy young lad with a passion and speed. "Traditional sir, you forget it." What is the problem with multi-layer shareholding structure? Most of the world's exchanges are allowed to do so, and only Hong Kong is entrenched and unwilling to accept it. Look at the technology companies listed in the U.S., the largest companies such as Google and Facebook, who maintain the status of the founders with special voting rights. People invest in these companies because they believe that the company founder's unique vision, performance record and reputation! Founders are concerned about the company's long-term development and interests, compared to those who rely on short-term arbitrage to make money from hedge funds and self-righteous but do not know how to operate innovative technology companies, mergers and acquisitions snipers are much better! Look at the apple company! Didn't jobs get kicked out of the ' perfect ' corporate governance process, almost making Apple bankrupt? In the end, Steve Jobs was not invited to preside over the overall situation before creating the myth of science and technology on Earth! ”

Mr. Innovation gushed, and the sober-sounding disclosure of Mr. "Calm down, Mr. Innovation. The crux of the matter now is not the merits of innovative founders and enterprising investors, but the disclosure of information. Regulators only need to set a good system to ensure that information is disclosed accurately and that offenders are penalized. Don't forget that if a company is listed with such a shareholding structure and considers unequal voting rights, the price investors are willing to pay for them will naturally be compromised. The market will decide what the founders of the company want to have special voting rights and what prices investors are willing to pay for the structure. The system has been successful in the United States and elsewhere, without damaging corporate values or affecting investors ' interests. It is time for the Hong Kong market to evolve. ”

"But there is one thing to remind everyone," the disclosure continued, "The United States ' multi-layer equity system is working well because of their disclosure-oriented market mechanism, combined with the sophisticated institutional investors and the collective litigation culture, which all play an important role in constraining Can counteract the negative effects of different rights in the same stock. If Hong Kong is to learn, there must be a sufficient set of matching combinations to give the founders sufficient impetus and to ensure that they are honest and trustworthy. If you ask my opinion, I think a gradual change is better than a wholesale copy of the American system. ”

"Wait a minute." Another voice came. "You're all talking about protecting investors, why don't we just ask investors and see what they want?" "Good idea," everyone said in unison. They asked the big fund first. "I don't care if a company is listed in Hong Kong or in New York, because I can invest there." I only care whether the company is a good company. I don't like to share different rights, but I know how to value a company if it has to be listed in such a framework. "However, the other side of the small retail lady is very embarrassed:" I can not invest in the U.S. stock market ah, so, if there is a good company, please do not take away my investment opportunities ah! But then again, I really do not like the different rights of the company, which is unfair to us. I hope that the regulatory authorities can help me to take care of my interests. ”

Then I heard another voice, a pragmatic lady. "Hey, everybody, let's talk a little bit about reality!" We in Hong Kong have always been renowned for their pioneering and pragmatic approach. We have boldly introduced H-shares and red-chip companies and have been successful, and we are in a timely grasp of the opportunities for small private enterprises to come to Hong Kong for listing. This time, let's open our arms to the new economy company! If Hong Kong misses the next big wave of China's IPO, we will all lose! Not only the exchanges and the SFC will lose the transaction fees and levies, the government loses stamp duty, the broker also loses the billions of dollars Commission, the investor will lose invests in this time the development fastest, the most potential company's huge opportunity! How can Hong Kong miss this! ”

Wait, someone really can't listen! It turned out to be a moral man, and he was angry that everyone was talking about money in stark detail. "What do you mean, you ... You ...! "he said aloud. "It's a simple matter--one vote, no need to discuss!" What makes you claim that the founder can enjoy special treatment! Don't forget that the founder also has an old day--when his mind is not clear and selfish, you still willing to give him the opportunity to powers, endlessly squeeze the interests of the company? In order to win one or two large companies, you must sell the spirit of Hong Kong? What about the reputation we've worked so hard to build? Why does Hong Kong study America? Look at how big a global financial crisis the Wall Street people are making in the guise of financial innovation. Hong Kong's system is such that people who do not like it can roll up their bedding and leave. "One more thing," Mr Moral continued, "Why does the HKEx consider this option?" Is that what the Chinese government wants? It needs to be checked. ”

I felt the atmosphere began to tense up and everyone was restless, but no one dared openly oppose the moral sir, because ... Mr. Moral is always right. However, I had been listening to the music of the future Miss, but now take off the headset, to the moral Mr said: "Let's do this for the sake of personal attack." The world is changing, China is changing, and Hong Kong should change. Ten years ago, Hong Kong missed the chance of technological innovation. Looking ahead, China will emerge with a large number of companies representing the new economy, especially in the Internet, which could revolutionize China's economic outlook for the next decade. This is a good opportunity for Hong Kong to integrate the Chinese story with the new economy and truly grasp global leadership. At this moment, the future miss straight to the moral, said: "Of course you do not care, you have been named Cheng, but think of our generation of Hong Kong people." ”

Mr. Moral is unwilling, retorted: "But for the future, do you have to give the founder privilege?" ”

"If the privilege of the founder is the only way to attract these new economic companies to come to Hong Kong for listing, then give them a good one." "You have no right to deprive us of our future," the future Lady replied. Let's not forget that the big companies you invest in today are likely to be completely replaced by these new economy companies. ......”

The next lady was evidently irritable. At this point, I have heard the dream of the cold sweat ...

"Well, well, don't be so excited," said the man. I heard a familiar voice calling everyone to calm down. Thankfully, the program is here, it's a man's name, and the program is always thoughtful.

Mr. Program continued his comments: "The whole thing is not about who's right or wrong, it's not about whether the special equity structure is good or bad for the market, not to say that the founders and enterprising hedge funds who can create value or destroy value." Everything can be proven to be both good and bad. The whole thing is not about whether Hong Kong should embrace tomorrow or live in the past. Everyone wants to embrace tomorrow. ”

At this time, saw everyone sat down, listening to the program Mr. Speech. "This matter is closely related to the prudent procedure. "Mr. Program said. "The listing rules in Hong Kong are very clear and it must be done in accordance with prudent procedures if the provisions are to be amended." Our credibility will vanish if we are to adapt to the new arrivals. So what is a prudent procedure? That is, if the changes required by the company are ' limited, moderate and balanced ', the exemption or approval may be considered in accordance with the provisions of the existing overall listing mechanism in Hong Kong or the spirit of reasonable treatment. This is also one of the work of the listing Committee and the SFC. We should also consider whether the exercise of discretion can be summed up as a precedent. This is important because Hong Kong is the rule of law, and regulators need to draw up a clear line of law for other listed applicants seeking similar treatment in the future, and to elaborate on the reasons for the demarcation. ”

"If the requirement exceeds the limited discretionary scope permitted under the listing rules, then the rules and policies will have to be revised after appropriate public consultation to ensure that the changes can stand the test of time," Mr Law added. This is Hong Kong's fine tradition and must be upheld. ”

Alas, in the dream I can't help asking, what is the answer? "Why don't you ask the answer, sir?" "It was suggested. "Yes, good idea!" Everyone in unison.

I desperately want to hear the answer, Sir, but I woke up!

In reality, where is the answer, sir? We can only rely on collective wisdom to make our own decisions. What is most needed here is to look at things objectively, not to be affected by negative emotions, to be unaffected by accusations, or to be influenced by individual companies or specific circumstances of the case. In the final, we need to make decisions that are best suited to Hong Kong and most conducive to Hong Kong, not the safest and easiest.

At the moment, I have completely awakened from the dream and returned to the office. I can't wait to write these voices down in this blog, was about to be finalized, but clearly heard another voice whispered to me: "Xiao Jia Ah, people have criticized the exchange on this issue has a vested interest not to participate in the discussion, although you think this argument is unfounded, but it is not better to stay silent at this moment?" "I pondered for a long time but decided to continue this blog, the main reasons are three:

First of all, yes, I am the group chief executive of the Hong Kong exchange, and it is part of my duty to promote and protect the interests of the shareholders of the exchange. However, as stipulated in our Constitution, when there is a conflict between the "public interest" and the interests of the shareholders of HKEx, we should always put the public interest first. It was in the "public interest" that I decided to take part in this important discussion.

Secondly, decisions on the listing or policy changes of individual companies do not depend on me or the board of the HKEx. They are all decided by the listing Committee and the SFC, and I am just a small member of the many voices. The other 27 members of the listing committee are the elite talents of Hong Kong's financial community who selflessly dedicate their valuable time, wisdom and experience to the interests of Hong Kong. This decision-making process and the SFC's supervisory arrangements are designed to protect Hong Kong's best interests.

Finally, I would like to say that I do not intend to use my blog to change anyone's ideas or to promote any position. I just hope that we can have a sincere, open, balanced and respectful discussion on this important issue of public interest. Whether you are a personal investor or a large organization head, as long as forthright, as long as the best interests of Hong Kong to express their views in good faith, should not be involved in this discussion and feel shy, afraid or guilty, because everyone's opinion, is equally valuable to us!