The Hong Kong Government has denied that it knew about the stock exchange's plan to de-list penny stocks, which caused panicked investors to sell off cheaper issues on Friday, and led to an embarrassing volte-face by the exchange on Monday.
Government officials called Hong Kong Exchanges and Clearing officials to a meeting on Monday. Secretary for Financial Services and the Treasury Frederick Ma Si-hang and Securities and Futures Commission chairman Andrew Sheng met exchange chairman Charles Lee Yeh-kwong and chief executive Kwong Ki-chi, as well as representatives of several major brokers' associations. Afterwards HKEx said that it was responding to the public outcry by reconsidering the scheme to cancel the listing of stocks priced below 50 cents, contained in consultation proposals issued last week.
At a press conference on Monday, exchange chairman Charles Lee Yeh-kwong said that Part C of the exchange's original consultation paper - which set out 11 delisting criteria, including the contentious suggestion to drop firms which trade below 50 cents for 30 consecutive days - was being put on ice. Mr Lee said the exchange would be open-minded in making changes to the proposed 50-cent threshold, and would also consider introducing an over-the-counter trading mechanism for de-listed shares.
Financial Secretary Antony Leung Kam-chung said that Mr Ma's Financial Services and Treasury Bureau had not been told in advance about the details of the exchange's consultation paper. Mr Ma said he was told by the exchange and the Securities and Futures Commission (SFC) on Wednesday that the proposals would be released on Thursday, but he was not given a copy of the proposals until Sunday. Mr Ma said the government supported a delisting mechanism, but it should conform with the needs of the market.
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