The Hong Kong Stock Exchange is planning to launch a new private market to provide early stage companies with a blockchain-based share registration and transfer platform for the conduct of pre-IPO financing off-exchange and clear of the regulatory remit of the Securities and Futures Ordinance.
Set for launch in 2018, the HKEX Private Market will serve as a “nursery” for early stage companies before they are ready to enter public markets.
In an open letter soliciting feedback on the proposals, HKEX chief Charles Li says the new venture will aim to create a supportive ecosystem in Hong Kong for early-stage startups and their investors.
It's part of a package of measures launched by the Exchange to reform the existing Growth Enterprise Market and cater for an emerging class of 'new economy' companies, creating three separate boards with a staggered approach to regulatory restrictions. This will entail the new unrelated private market, a lightly-regulated 'New Board Pro' for professional investors, and a publicly available 'New Board Premium', with stringent listing criteria and profits requirements.
"Hong Kong has to find ways to...change its DNA. These creative and new economy companies represent the future and we have to make Hong Kong a welcoming home for these companies and their investors from China and everywhere else," says Li. "The key principle is to identify companies whose businesses are in sectors where people rather than investment capital is the key, and creativity, innovation, technology, intellectual property, and new ways of commerce in totality are the primary drivers for its growth and business successes."