HK regulator lifts suspension of UBS Securities to act as sponsor

Maria Nikolova

The licence, which allows UBS Securities Hong Kong to act as a sponsor, was suspended as part of the SFC’s disciplinary action against UBS announced in March 2019.

Hong Kong’s Securities and Futures Commission (SFC) today announces the lifting of the suspension of UBS Securities Hong Kong Limited to act as a sponsor for listing applications on the Stock Exchange of Hong Kong Limited (SEHK).

The licence, which allows UBS Securities Hong Kong to act as a sponsor, was suspended as part of the SFC’s disciplinary action against UBS AG and UBS Securities Hong Kong when they were sanctioned on March 14, 2019 for their failures to discharge their obligations as one of the joint sponsors of three listing applications.

In line with the agreement, UBS has engaged and cooperated with an independent reviewer to review its policies, procedures and practices in relation to the conduct of its sponsorship business.

The reviewer carried out a 10-month review of UBS’s enhanced governance processes from the acceptance of a sponsorship mandate to the listing of a listing applicant and concluded that UBS’s governance and control processes applicable to the relevant area are generally well-designed, and that its assessment took account of a number of key controls, such as a framework of processes, reviews, governance and oversight within the first line of defense to support the transaction team’s compliance in the relevant area and to enable effective management oversight.

As part of the review, the reviewer also examined UBS’s sponsor work in its two most recent listing applications, which were completed in 2017 and 2018, respectively. UBS was found to have implemented the above-mentioned controls in the two listing applications and performed adequate and effective due diligence in discharging its sponsor responsibilities as required by the relevant legal and regulatory requirements.

In making its decision to lift the suspension, the SFC has taken into account the reviewer’s findings regarding UBS, including obtaining from the reviewer the supporting documents for its findings, as well as seeking from the reviewer explanations for its conclusions about the adequacy and effectiveness of UBS’s governance framework and control processes.

The SFC stresses that the standards assessed in the case of UBS are equivalent to those that are expected to be adopted by all licensed sponsors. In addition, the regulator notes that it is important that all licensed sponsors understand that regulatory compliance ultimately depends on the ability of a firm to apply and operate these controls effectively in practice when executing all IPO mandates, which requires close management attention and supervision.

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