Western banks flag concerns over China's draft offshore listing rules

HONG KONG: Global banks are pushing back on China's proposal to tighten offshore listings for Chinese firms, concerned that bankers would face mounting regulatory risks and compliance burdens.

In feedback to the China Securities Regulatory Commission (CSRC), the Asia Securities Industry and Financial Markets Association, the top financial sector lobby group, said Beijing's move would create more regulatory uncertainty.

CSRC issued draft rules in late December on China's offshore listings that included a requirement that banks managing a Chinese firm's offshore listing register with the regulator.

"If the CSRC introduces another set of rules, the CSRC may run into conflicts and clashes with offshore regulatory authorities due to differences in regulatory mechanisms in different jurisdictions," ASIFMA's feedback letter says.

ASIFMA, which counts 52 banks and other financial institutions among its members, declined to comment.

Bankers have previously warned that China's plans to impose stricter measures on offshore listings would result in scrutiny by Chinese and offshore regulators, resulting in increased compliance work and the risk of being caught in between them.

ASIFMA said the moves would "greatly impact 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 supervision of overseas listings since July's $4.4 billion IPO of ride-hailing giant Didi Global, after which U.S listings by Chinese firms ground to a halt.

ASIFMA said in the letter, which was seen by Reuters, that it hoped the CSRC would weigh the pros and cons to avoid "an across-the-board regulatory tightening on offshore capital market stakeholders over practices of individual companies."

It urged the regulator to remove a requirement for banks having to file annual reports by Jan. 31 and detail the offshore listings of Chinese companies they worked on during the year.

CSRC had given market participants until Jan. 23 to send their feedback.