HKEx considers risk leagues for listed companies

The segmentation of listed companies would involve the creation of separate boards with different listing criteria, while the exchange is also considering attaching differing prefixes to stock numbers indicating companies with characteristics that might imply different levels of risk.

“Hong Kong’s Main Board covers a huge range of companies, from global concerns to small local enterprises,” said the exchange. “Through such segmentation, the better quality companies could be more readily differentiated and companies which fell below certain thresholds would have an incentive to climb up the ‘ladder’.”

However, the exchange acknowledges that the creation of a risk league is fraught with difficulties – not least of all the difficulty in determining the criteria for the various market tiers, and the likely resistance from companies that are ‘relegated’ to lower leagues.