ASIA CAPITAL MARKETS INSTITUTE (ACMI) is an industry-wide capital markets educational initiative that promotes professionalism, efficiency and innovation for excellence in client service and in the long-term best interests of corporate issuers and capital markets integrity.
To breathe life into the spirit of these codes of conduct and rules that are so critical to capital markets integrity and transparency, ACMI has been established to provide an educational platform that aims to bring together leaders from all the relevant stakeholders across the capital markets ecosystem to promote professionalism, efficiency and innovation based on shared values of excellence in client service and market integrity
This is in line with the growing recognition globally by legislators and regulators, as well as senior industry leaders, that more regulations alone do not address the issues, and that education and a “tone from the top”, in conjunction with strong enforcement, play an important role in instilling an appropriate culture and developing skills and competence in professional judgment as opposed to “box-ticking exercises”.
In promoting professionalism, ACMI aims to foster collaboration for an industry-wide “race to the top” to serve the long-term best interests of corporate issuers and market integrity. This is in circumstances where both the regulators and the investing public have diminished trust and confidence in financial sector and corporate actors who in turn face a stressful and highly competitive operating environment, rising transactional costs and complex institutional settings.
Corporate disclosure professionals responsible for the timely disclosure to the market of price sensitive information include board directors, CEOs, CFOs, corporate secretaries and general counsel. Financial services intermediaries and service providers with important roles in capital markets and corporate finance include international, domestic and boutique banks and securities firms, accountants, lawyers, internal control consultants, forensic investigators, asset valuers and rating agencies. Yet it is equally critical that “buyside” investors (asset owners and managers), as well as enterprise owners (including state and family-owners and private equity), have prominent places at the table to ensure and improve the quality of disclosure and corporate governance on which market integrity and efficiency depends.
ACMI aims to provide:
highly practical industry-wide and bespoke educational programmes and workshops by a “senior professional bar” of industry leaders in corporate finance, capital markets and corporate governance. These are leaders who are proud of and care about their profession and the markets and are willing to share their experiences and encourage a “race to the top” in developing skills and competence in professional judgment and practices in areas such as the determination of material price-sensitive information, the identification of “red flags” and disclosure drafting with investors in mind. This will empower individuals to forge long-term and successful careers with professional pride;
multi-stakeholder collaborative leadership roundtables to promote professionalism, improve efficiencies and foster responsible innovation to “grow the pie” for the benefit of all key stakeholders; and
research regarding effective ways to promote transparent and efficient capital markets.
Background to ACMI’s approach:
As you would be aware, globally, more and sharper regulation has been introduced in conjunction with active regulatory enforcement, especially in the aftermath of the global financial crisis. Last year in Hong Kong, we have tougher new rules for IPO sponsors that became effective in October and directors and officers are personally liability for timely disclosure of price sensitive information that became effective in January.
Rather than “gaming of the rules” that will result in even more rules to bridge gaps and exacerbate “box-ticking” mindsets, ACMI aims to help restore trust in the capital markets by promoting that old-fashioned concept of professionalism in judgment.
Professionals have a long and honoured tradition. Doctors, lawyers and accountants arose from self-regulated guilds. Modern institutes of directors and officers such as corporate secretaries promote continuous professional training.
But what does it mean to be a “professional”?
First, a professional possesses specialised knowledge on which others rely for his or her expertise.
Second, a professional exercises critical judgment after analysis of the factual circumstances. Yet, how does a corporate finance professional acquire the ability and courage to exercise “professional scepticism” as required by the Hong Kong listing rules and Code of Conduct when conducting due diligence for prospectus preparation, and advise issuer clients on what they need to hear but may not want to hear? How do corporate disclosure professionals similarly analyse and communicate information that may need to be publicly disclosed to minority shareholders in circumstances where owners of many of Asia’s family and state-controlled listed companies may be resistant to such disclosure?
This is linked to the third element, namely that a professional belongs to a group of peers who collectively serve the public interest, which is and should be a source of pride in career and calling.
Hong Kong regulations have long recognised this public interest role of securities practitioners.
General Principle 1 of the SFC Code of Conduct clearly states that all licensed or registered persons should act “in the best interests of its clients and the integrity of the market”.
Capital markets integrity allows companies to raise capital for growth that in turn benefits the broader economy. By providing liquidity for capital allocation, it is relied upon by the broader financial industry from brokers to institutional investors managing investments and long-term liabilities, and private equity firms seeking investment exits.
Most importantly, it allows ordinary folk to have confidence to invest and save, directly and indirectly, for their lifestyles and retirements.
Traditionally, one did not learn professionalism at university. Apprentices traditionally learned the exercise of professional judgment on the job under the tutelage of their masters, with their collective professional peers and elders to look to for guidance.
Like a CFA Institute for the sellside and listed companies, ACMI is an educational platform to promote more than technical skills for rule compliance. It focuses on peer learning from senior professionals who are willing and able to help hone reasonable judgment, communication and tactical skills to give voice to their shared values of capital markets integrity and better connect professionals to their communities. Some of the techniques used are based on the work of Mary Gentile, one of ACMI’s board of advisors and whose Giving Voice to Values curriculum was developed in conjunction with The Aspen Institute and Yale School of Management and has been piloted in more than 300 institutions worldwide.
By focussing on professionalism to serve the public interest of capital markets integrity, a multi-stakeholder collaborative platform should comprise sponsor banks and securities firms, lawyers and accountants, as well as the buyside, regulators, the stock exchange, private equity promoters and the consultants who advise on internal controls, private investigations and asset valuations. Of critical importance are the listed company corporate disclosure professionals such as directors, officers and senior management such as CEOs, CFOs, corporate secretaries and general counsel who are ultimately responsible for ensuring the timely disclosure of material price sensitive information.
As an educational professional body, ACMI aims to also be an industry-wide capital markets platform to improve efficiencies to reduce transactional costs and promote innovation to responsibly “grow the pie” to benefit all stakeholders.
Many senior industry professionals and stakeholders have already stepped forward to support and to act as faculty for this initiative to reinforce Hong Kong’s role as a leading and China’s global financial centre. This demonstrated leadership from seasoned professionals collectively within the financial industry, listed companies, the buyside and the regulators should overcome the prisoner’s dilemma to coral stakeholders in Hong Kong and elsewhere to work together to regain pride in being capital markets professionals.