The Securities and Futures Commission (SFC) of Hong Kong is intensifying its regulation of market soundings in securities and capital market transactions. The proposal for the new “Guidelines for Market Soundings” has been presented to the market and industry professionals in a consultation paper on October 11, 2023. These potential regulations are mainly aimed at intermediaries conducting such transactions, including private placements and block trades. This plan was brought to the public’s attention by Latham & Watkins LLP.
Market soundings are a common practice among intermediaries that help them assess investor interest before initiating significant transactions. Yet, they’re seen as potentially risky, capable of leaking inside information. To address these concerns, the proposed guidelines aim at establishing detailed standards and requirements for intermediaries in their market sounding practices.
It’s important to note that the proposal is still in the consultation phase. The SFC is actively seeking feedback and suggestions from industry professionals regarding the practicality, scope and potential consequences of the proposed guidelines. However, despite the ongoing consultation phase, the indication of stricter regulator attention towards market soundings in Hong Kong suggests a willingness towards solidifying best practices and ensuring transparency in the market.
To stay updated on this significant regulation overhaul and to participate in the consultation, all interested legal professionals are encouraged to regularly check the SFC’s official communications and announcements.