Hong Kong’s financial watchdog has identified systemic deficiencies in initial public offering (IPO) applications and announced stepped-up scrutiny of listings as the city’s capital markets experience a surge in deal volume.

The Securities and Futures Commission (SFC), together with the Hong Kong Stock Exchange, has suspended the vetting of multiple listing applications that failed to meet regulatory standards and has asked major sponsors to undertake comprehensive reviews of their internal procedures to ensure compliance with listing requirements.

In an unusually firm move, the SFC and the exchange have instructed thirteen sponsor banks to examine how they prepare and oversee IPO filings, requiring them to submit detailed reviews within three months.

The vetting process for sixteen applications was halted after regulators found documents and submissions lacking in quality, clarity or adherence to established rules.

The wave of warning letters began in December, reflecting growing concern that the booming IPO market has stretched sponsors’ capacity and diluted quality oversight.

SFC Chief Executive Julia Leung emphasised that the sponsor’s gatekeeping role is “critical to maintaining the quality” of the capital market and investor confidence.

She warned that over-commitment by sponsors — particularly where principals are designated to work on six or more active applications simultaneously — undermines rigorous review and may attract restrictions on the number of applications they can handle.

Regulators also indicated that individuals involved in sponsor work will face tightened examination requirements after some banks were found to have allowed less experienced or ineligible staff to take on critical responsibilities.

The warnings come amid a record volume of listings in Hong Kong, which last year led global IPO fundraising, and a pipeline of applications that has put pressure on sponsors to balance quantity with quality.

Regulators have emphasised that maintaining high standards is essential to uphold the reputation of Hong Kong’s markets and protect investors, signaling that further enforcement actions or thematic inspections may follow if corrective measures are not implemented.