IPO settlement platform - Modernising Hong Kong's IPO Settlement Process - HKEX Group
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Not for Distribution
IPO settlement platform
Modernising Hong Kong’s
IPO Settlement Process
Listing Division
Grace Kan
Maria Chan
Geoffrey Tong
Erin Chung
December 2020
What is FINI ?
Objectives of FINI
Reduce HK IPO settlement time to as short as T+1
less market risk for investors & issuers
Going paperless, stay inclusive and embrace digital change
a more efficient process and robust technology for the future
Liquidity relief for the market
reduce interbank money movement
3
Agenda | 1 What is FINI | 2 How Will Impact Impact You | 3 The Way Forward
What is FINI
A new web-based service operated by HKEX
Investors Issuers IPO investors and issuers
Existing relationships & connectivity
Retail Share IPO Underwriters &
Market participants
brokers registrars sponsors distributors Will use FINI to exchange information and complete
tasks related to IPO settlement
New IPO settlement platform
Operated by HKSCC, will coordinate and streamline
IPO settlement workflows between offering initiation
and the start of trading in the newly listed shares
Regulatory authorities
SEHK Listing Will use FINI to review IPO settlement progress and
HKSCC SFC
Division provide certain approvals before the listing
5
Timeframe of IPO settlement under FINI
(Positive)
Public offer Deadline to Approve Start
Post-Hearing
book-close price IPO allotments trading
Letter issued
Vetting of IPO
3 business day public offer Complete bookbuild Submit placee lists
application
@ T-1 12pm by T 10am by T 5pm @ T+1 9am
23 hours
45 hours
Current IPO settlement FINI IPO settlement
From IPO price
determined to
commencement of trading ~ 5 days / 120 hours ~ 23 hours
70 to 80%
The proposed timetable provides both SPEED and FLEXIBILITY to issuers
6
Operations in one place & Golden Source of IPO Data
Operated by HKSCC
IPO reference data Market participants
Intelligent workflows Retail IPO
Brokers Sponsors
IPO status dashboards Underwriters
Share
&
Registrars
Distributors
Dynamic reports
Regulatory authorities
Real time risk alerting
SEHK SFC
(Listing Div.) (Corp. Fin.)
Access from anywhere
Tasks will be streamlined and automated under FINI
7
Liquidity relief for the market
Public offer subscriptions TODAY
Retail
Public Investors Brokers Receiving Banks
Refunds any surplus
May use cash or borrow Must pre-pay 100% of
subscription money to
money to subscribe for investors’ subscription
retail brokers after
IPOs value to the issuer
balloting
Liquidity lock-up
Large amounts of liquidity are unnecessarily “locked up” during Hong Kong IPOs
8
8
Liquidity relief for the market
Public offer subscriptions with FINI
Retail
Public Investors Brokers Receiving Banks
May use cash or borrow Confirm to the retail Will collect only actual
money to subscribe for broker’s designated bank share allotment value
IPOs that sufficient funds are from retail brokers after
(No Change) available for settlement balloting
~70% pre-funding levels ~98% money movement
9
How Will FINI Impact You?
How Will FINI Impact You?
Initiating the IPO settlement process on FINI after Listing
Committee Hearing
Placee allocation and Placee lists
Regulatory Submission Review and Comment
Handling of concurrent IPOs for each user
Ability to access real-time IPO Data
11The following FINI interfaces and IPO
workflows are in the design stage and are NOT
FINALFINI IPO Initiation – Workflow
Unique Digital Key:
AFAEEESS
1
2
Sponsor FINI
Positive Post Hearing OR pass to
Letter Sponsor’s
Counsel
IPO process
starts
Party that unlocks FINI Will review the
HKSCC
will complete and submit submitted e-Form on
the e-Form onto FINI. FINI and release when
But the sponsor is public offer begins
responsible for accuracy
13IPO Initiation – e-Form Filled by Listing Division
14e-Form – IPO Reference Data The e-Form will have
various sections
Total around 70 data
fields to be completed
by 9 am on the day
public offer opens
BIOTEXA – B (3758)
10%
Data fields will be blocked if not applicable.
E.g. Listing by Introduction: Offering related info and certain advisers
(e.g. distributors) will not needed to be filled in
15IPO Initiation – e-Form
No paper subscription
for retail investors to
1 Disclosure/ information to FINI users subscribe through
brokers
FINI system
calculation and pre-
2 Downstream workflow automation filling data fields on
forms and templates
3 FINI as the golden source of Hong Kong IPO data On a per IPO Basis
16What will the Institutional Offering workflow
look like?
17Institutional Offering – workflow Clients/
Sub-distributors
After the Public Offer book closes.
Determine the Place to clients
Final Determine the and sub-place
Institutional final offer price to other
Principal bookrunner/ Offer size distributors
• Including any over-
lead broker
allocation
&
Underwriters
18Control List – Overview of the placing network
Distributor: Rosselyn
Role: Principal Lead Broker/ Lead Underwriter
22,500,000
(number represent shares that the distributor placed to its own clients)
BIOTEXA – B (3758) Allocated shares as a
21,670,000
% of total Institutional
Offer Size
0.22%
Tallies
21,670,000
19Placee Lists – FINI functions
Current – Common comments from FINI Functions
regulators
1 Missing Information 1 Completeness check
E.g. 1: No beneficial owners for corporate placees Cannot submit an incomplete placee list
E.g. 2: No address
2 Incorrect Information 2 Data Validation
E.g. 1: Incorrect no. of allotted shares to placees Reconciliation of data
E.g. 2: HKID with 3 digits/ characters Information must be reasonable
3 Suspicious applications 3 De-duplications
E.g. 1: Multiple applications in Flag placees with subscription:
Retail subscription vs. Institutional tranche • Between retail and institutional tranches
• Within the institutional tranche
20Placee Lists – Methods of Submission
Data validation and Reconciliation
Online entry Excel file upload
Both methods will be Pre-defined template similar to the
supported concurrently existing one
Distributor: Rosselyn
System validation upon upload
System validation during input
Placee tags to prompt special workflows
21Placee Lists – Distributor’s View Will be seen by distributor itself only
Distributor: Rosselyn
21,670,000
Will be seen
by Regulators
BIOTEXA – B (3758)
Comments
raised by
Regulators
directly to
the
distributor
Details of
the placee
entry
expanded
22Placee Lists – Submission Time and Notifications
Earliest time for creating Earliest time for Latest time for submitting
placee entries: submitting placee entries and making changes to
to Regulators: placee entries:
PUBLIC OFFER OPEN IPO PRICED At 2 PM 1 BUSINESS DAY
before Listing Date
>= 3.5 business days >= 4 hours
Public Offer Opens IPO price determined 2 PM, 1 business day
before Listing Date
Web notifications:
Principal Leader Broker, Distributors and Sponsors will receive notifications
on outstanding items prior to the submission deadline on FINI and via e-mail
23Regulatory submissions that FINI can cover
24Regulatory Submissions – Automated Documents
Parties Involved Documents can be covered by FINI
• Sponsor’s Declaration (Form E)
Sponsor(s) • Transaction Levy Form
• Allotment Results Announcement
• Marketing Statement (Form D)
Lead Broker(s) / Distributor(s)
• Letter of Independence
Issuer’s Counsel • Issuer’s Declaration (Form F)
Time Period under T+1:
Immediately after Placee Lists have been cleared by Regulators before Listing
25Regulatory Submissions
Workflow for Forms with High Degree of Automation
Revert to submitter
for amendments
(if necessary)
Pre-populated Make amendment
Submit to Regulators
template (if necessary)
Final
Documents in consideration:
Marketing Statement, Letter of Independence, Transaction Levy Form & Sponsor’s
Declaration, allotment result announcement
26Regulatory Submissions
BIOTEXA Inc.
BIOTEXA – B (3758)
22,500,000 HK$22,500
25,000,000
22,500,000 HK$121,500
HK$144,000
2,500,000 HK$2,500
2,500,000 HK$13,500
HK$16,000
27Regulatory Submissions
Workflow for Forms with Certain Degree of Automation
Pre-populated Tailor the forms to Upload and submit to
Download the form
template suit their own needs Regulators via FINI
Return to submitter
Cleared and Final for amendments
(if necessary)
Documents in consideration:
Issuer’s declaration
28Handling of concurrent IPOs for each user
29Homepage
Filtering Function
Company Name Offer Price Range
& Stock Code
Unread Notifications
Deal Status
Create New IPO
30The Way Forward
Transition to mandatory use of FINI, if supported
We expect to launch FINI no earlier than Q2 2022.
Concept Paper feedback period
System development and testing
Market readiness
Amendment of rules and procedures
Sometime in
2022
2020 2021 2021 2021 2021 2022 2022
4Q 1Q 2Q 3Q 4Q 1Q 2Q
32The Concept Paper
Inviting market feedback on the FINI concept
We are asking three questions:
1) Do you support the proposed reform?
2) Any comments on specific proposed features of FINI?
3) Anything not included that you would like to see?
2 months for responses: 15 Jan 2021 deadline
We welcome your feedback.
33www.hkex.com.hk/fini
You can also read
