All but one of the five receiving banks offered online IPO applications for the MTR issue as well as distributing the forms through their branches. HSBC, Standard Chartered, Hang Seng Bank and Bank of China were joined by other local banks such as DaoHeng and Bank of East Asia, who have also added online IPO application services to their websites.
Richard Kimber, head of personal e-business Asia Pacific at HSBC, says his organisation was very happy with the response it received for the new service.
“As a first, you never know what’s going to happen with these things,” he says. “It was surprising in terms of people’s awareness of the online channel. We expected that the majority of people would still go offline, which they did. But we took 150,000 applications, almost 30,000 of which were online.”
Hong Kong Securities Clearing Company (HKSCC) also ran a website to provide individual investors with an additional electronic mechanism for submitting applications. Payment in this case was handled through accounts with participating Joint Electronic Teller Services (JETCO) or Electronic Payment Services Company (EPSCO) member banks, through online channels, telephone phone or the ATM network.
Whether a particular IPO can be applied for online is subject to the issuer's decision, but given the success of the MTR sale, any issuer offering a significant retail tranche is likely to want to use the online infrastructure now in place. HKSCC, for its part, says it “will try to work out with issuers in order to allow investors to apply for new shares via our website.”
HSBC, as a regular receiving bank for IPOs in Hong Kong, is also keen to get as much use as possible out of their infrastructure investment. “The various banks connected their systems into the Computershare share registry system. What we did there was make sure our system had the first link – we actually designed a lot of the linkages. And we actually have an arrangement there where we can continue to use that style of service for other share applications,” says Kimber.
Johnny come lately
Some observers might find it a little odd that the admittedly conservative HSBC has played a role in the development of online IPO processing in Hong Kong. After all, the bank launched its first online retail banking initiative only two months ago as compared to Bank of East Asia, for example, which launched its in 1997.
But Kimber says the response to the online IPO service, as well as the number of bank accounts registered online since launch, shows that the late entry isn’t much of a liability. “I think it’s shown it’s not necessary to be first. It’s also important to make sure you have things that are value added,” he says.
“Given our strong retail position here, hopefully this can lead to other roles, particularly in the primary market.”
