HONG KONG: Global banks are pushing back against China's proposal to tighten offshore listings for Chinese firms, worried that bankers would face mounting regulatory risks and compliance burdens.
In a letter to the China Securities Regulatory Commission CSRC, the Asia Securities Industry and Financial Markets Association said that Beijing's move would create more regulatory uncertainty.
In December of last year, the CSRC issued draft rules on China's offshore listings that included a requirement that banks manage a Chinese firm's offshore listing register with the regulator.
The CSRC may have to deal with offshore regulatory authorities if the CSRC introduces another set of rules, according to ASIFMA's feedback letter.
ASIFMA, which has 52 banks and other financial institutions among its members, doesn't want to comment.
Bankers warned that China's plans to impose stricter measures on offshore listings would result in increased compliance work and the risk of being caught in between them.
ASIFMA said the moves would affect the willingness of offshore securities companies and professionals to participate in Chinese companies' offshore listings, and add to the compliance burden of all parties including the issuers. Beijing has been ramping up its supervision of overseas listings after July's US $4.4 billion IPO of ride-hailing giant Didi Global, after which US listings by Chinese firms fell to a halt.
ASIFMA said in a letter seen by Reuters that it hoped that the CSRC would weigh the pros and cons to avoid regulatory tightening on offshore capital market stakeholders over practices of individual companies. It urged the regulators to remove a requirement for banks to file annual reports by Jan 31 and detail the offshore listings of Chinese companies they worked on during the year.
Market participants had until Jan 23 to give their feedback.