Scott Murdoch and Alun Johnson

HONG KONG (Reuters – Hong Kong can now list Blank-cheque companies, known as SPACs, starting January 1, 2017, the stock exchange operator announced on Friday. This is the most recent global bourse that taps demand for these investment vehicles, even though interest has waned in comparison to earlier this year.

Participants in the market said that Hong Kong hoped investors from mainland China would be attracted to it by listing SPACs. These special-purpose acquisition companies raise money to acquire private firms, and then take them public.

After a slowdown in Chinese listing in America, the U.S. government has been closely monitoring SPACs.

Friday’s Hong Kong Exchanges and Clearing statement included adjustments to the proposals for SPAC that were published this year in a consultation document. This allowed some of these initial rules to be relaxed.

These tweaks include stating that securities from a SPAC should be distributed to at least 20 institutional professionals investors, not just 30, and changing the rules that restrict investors’ ability to redeem shares in a SPAC.

Some investors banks and corporate advices felt that the original proposals for the regime were too complicated and Hong Kong would be uncompetitive. The adjusted rules, however, are more strict than those of the United States.

Victoria Lloyd is a partner with Baker McKenzie’s Hong Kong capital markets practice. She expects a pickup in listing activity by 2022. But, Lloyd added that “The question remains whether this level will be sustainable due to the more strict Hong Kong SPAC regulations.”

One Hong Kong Capital Markets Banker welcomed the new changes. The exchange took into account the market, making this system commercially viable and practicable now. “It won’t work like the U.S.A, but we expect decent interest,” he stated.

Others, however, have opposed opening up SPACs.

The Asian Corporate Governance Association stated that SPACs were not suitable for Hong Kong, which had historically been affected by manipulation of shell stock stocks.

SPACs gained popularity in the United States around a year ago, however capital raising has slowed due to investors taking a more prudent approach and the failure of some SPACs and a U.S. Securities and Exchange Commission regulatory crackdown.

Many firms are planning to list SPACs at Singapore Exchange (OTC) which recently changed its rules.