Market Turnover


Exchange Publishes Consultation Conclusions on (1) The Main Board Profit Requirement and (2) Review of Listing Rules Relating to Disciplinary Powers and Sanctions

20 May 2021
  • Conclusions focus on market quality and on investor protection
  • Profit Requirement to increase 60 per cent, with effect from 1 January 2022
  • Proposals relating to disciplinary powers and sanctions to be implemented with effect from 3 July 2021


The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Thursday) published conclusions to its consultations on (1) the Main Board Profit Requirement1, and (2) review of Listing Rules relating to disciplinary powers and sanctions2.

Each consultation received around 100 non-duplicated responses from a broad range of respondents representing stakeholders across the Hong Kong capital market. Having carefully considered each respondent’s views, the Exchange has drawn together its conclusions set out in more detail below, which seek to further strengthen and enhance the quality and integrity of Hong Kong’s capital markets. The Rule amendments to be implemented, combined with the approach being taken by the Exchange and the Securities and Futures Commission as set out in the Joint Statement published today, will help to address issues of regulatory concern, and provide further protection to the investors.

The two Consultation Conclusions, together with the Joint Statement, underscore the Exchange’s efforts to adopt a holistic approach to further raising the quality of the Hong Kong market.

“We are committed to upholding and enhancing market quality as well as to promoting investor protections,” said Bonnie Y Chan, HKEX’s Head of Listing. “Robust gatekeeping, together with targeted post-listing regulation, are crucial in achieving this, providing more clarity and transparency to the market on our regulatory and enforcement responsibilities. We believe the revised rules will benefit the Hong Kong capital markets as a whole, further strengthening the city’s role as Asia’s premier international financial centre.

Profit Requirement Consultation Conclusions

The Profit Requirement is one of the three pivotal financial eligibility tests forming part of the robust qualitative and quantitative assessment the Exchange performs to determine the suitability of applicants seeking to list on the Main Board. The Profit Requirement has, however, remained at its current level since its introduction in 1994. As noted in the Consultation Paper, and further described in the Joint Statement, this has been exploited in some cases of misconduct, which threaten to undermine the quality of the market, and which highlight the need for the Profit Requirement to be re-evaluated.

Respondents to the consultation agreed on the importance of maintaining a high level of market quality, and ensuring that the Main Board attracts companies with quality profiles, and acknowledged that the risk of misconduct must be addressed to protect the interest of investors. However, there were diverse views on the quantum of proposed increase in the Profit Requirement and the proposed timing of implementation. The majority of respondents indicated that the Exchange should consider alternative requirements, such as a lower level of increase.

After careful consideration of all feedback, the Exchange has modified the proposal in the Consultation Paper and will adopt the following approach: (a) a 60 per cent increase in the Profit Requirement and amend the profit spread (the Modified Profit Increase)3 ;(b) the implementation date of the Modified Profit Increase will be 1 January 2022; and (c) providing flexibility by granting relief from the profit spread on case-specific circumstances.

In addition, the Exchange will continue to work with the SFC in combating the regulatory issues identified in the Consultation Conclusions through robust review of listing applications, and placing heightened scrutiny on cases displaying features as described in the Joint Statement. There will also be an increased emphasis on holding individuals accountable in relation to Listing Rule breaches, including those who participate in the problematic behaviour described in the Joint Statement.

The Exchange will also launch a review of GEM to consider, amongst other things, comments received regarding GEM’s positioning, market perception, and viability as an alternative to the Main Board.

Disciplinary Consultation Conclusions

The Exchange will implement all the proposals relating to disciplinary powers and sanctions, with minor modifications as set out in the Disciplinary Consultation Conclusions.

The implementation of these proposals will augment the range of reputational sanctions available.  It will also ensure that disciplinary action can be brought against a broader range of individuals, including members of senior management, if they cause or knowingly participate in a contravention of the Listing Rules. Overall, the amended Rules will strengthen the Exchange’s powers to hold accountable, and impose appropriate sanctions on, individuals responsible for misconduct and Listing Rule breaches. The revised Listing Rules set out in the Disciplinary Consultation Conclusions will be implemented with effect from 3 July 20214.

Jon Witts, Head of Enforcement of the Listing Division, said, “These Rule amendments will help to ensure that the disciplinary framework remains robust and effective, to enhance market quality, and to protect the interests of investors, by holding to account those individuals who break the rules or engage in misconduct.”

The Profit Requirement Consultation Conclusions and Disciplinary Consultation Conclusions and copies of the respondents’ submissions can be downloaded from the News – Market Consultation section of the HKEX website.



  1. The Profit Requirement Consultation Paper was published on 27 November 2020.  The consultation period ended on 1 February 2021.
  2. The Disciplinary Consultation Paper was published on 7 August 2020. The consultation period ended on 9 October 2020.
  3. Under the Modified Profit Increase, the minimum amount of profit attributable to shareholders for a Main Board listing applicant will be (a) $35 million in the most recent financial year; and (b) $45 million in aggregate in the two preceding financial years during a three-year trading record period, with an aggregate profit of $80 million.
  4. Parties currently involved in disciplinary proceedings will be contacted regarding any applicable transitional arrangements.


About HKEX

Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets.  HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.

HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited.  This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange (QME), in China, in 2018.

HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.



Updated 16 Dec 2021