From Yahoo Finance: 2025-03-21 05:30:00

Hong Kong’s market watchdog is cracking down on stock brokerages for risky IPO funding practices. Firms must now collect a 10% deposit from clients who don’t fully pre-fund orders to mitigate financial risks. Retail investors borrowed over HK$1.8 trillion for Mixue and HK$474 billion for Blok Group IPOs, causing alarm.

Regulators are concerned about risky financing practices following oversubscribed IPOs. Brokerages exposed clients to financial risks by accepting orders without verifying resources. The SFC issued a circular urging caution after similar concerns in 2023. Brokers offered zero-interest margin financing loans to attract customers.

The SFC reminds licensed corporations to prevent multiple IPO orders and verify client data accuracy. Financial institutions must manage IPO financing risks carefully. The cautionary circular follows oversubscribed IPOs and imprudent financing practices in Hong Kong’s market. Market regulators are urging prudent risk management by financial institutions.

Read more: Hong Kong’s SFC orders brokers to end ‘imprudent’ margin financing to pre-empt IPO madness