Hong Kong Stock IPO License Holders Reach 38,000, Yet Only 20% Are Active Practitioners. New Recruits Fail to Keep Pace with Attrition, Brokers Struggle to Break Deadlock with Expansion

Cailian Press, March 12 — (Reporter Zhao Xinrui) Due to a shortage of qualified investment banks for Hong Kong IPOs, various banks are calling on Hong Kong regulators to relax staffing requirements.

Data shows that the number of new licensees under the sixth license is limited, and the active proportion among existing licensees is relatively low, further highlighting the “supply and demand” dilemma for sponsors.

How many qualified IPO sponsors are there in the Hong Kong market? How active are they? What new changes have occurred in the overall investment banking personnel structure by 2025? Multiple data surveys reveal the addition of IPO sponsor qualifications and shifts in the landscape in Hong Kong and Mainland China.

Holding an “Active” License Is a Business Qualification for IPO Participation

According to Hong Kong regulations, engaging in Hong Kong stock IPOs requires holding a Category 6 (providing advice on institutional financing) regulated activity license. Services include acting as sponsors for listed companies, providing listing compliance advice, and advising on mergers and acquisitions.

Further details specify that possessing a license alone is not enough; the license must be in an “effective/active” status, meaning it continuously meets the regulatory requirements set by the Hong Kong Securities and Futures Commission (SFC) to genuinely participate in IPO activities.

Under the Securities and Futures Ordinance (Chapter 571), “effective/active” primarily means continuously satisfying regulatory standards without any circumstances that could invalidate the license. The specific criteria include:

1. The license source is legal and within validity. The license/registration must be officially approved by the SFC, not expired, and renewed as required (since there is no automatic renewal; renewal must be actively applied for).

2. Continual compliance with “fit and proper” standards. This includes financial stability (such as maintaining minimum capital), integrity (no major violations or criminal records), professional competence (qualified personnel), and operational compliance (internal controls).

3. Strict adherence to statutory regulatory obligations. This involves timely payment of annual fees, submission of annual declarations and business reports, ensuring responsible personnel are on duty and meet supervision requirements, and personal licensees must complete at least 10 hours of ongoing training annually.

4. No circumstances of invalidation or restrictions. The license/registration has not been suspended, revoked, or canceled by the SFC, and licensees have not voluntarily surrendered their licenses nor had their licenses restricted due to misconduct such as operating beyond scope or false statements.

The reason Hong Kong regulators specify that only “active” licenses can serve as sponsors for Hong Kong IPOs and conduct related activities is to ensure ongoing compliance and to screen qualified practitioners. This strict qualification requirement effectively regulates the conduct of IPO market participants.

Beyond Holding an “Active” License, Additional Conditions Are Needed to Participate in Core IPO Activities

Amid tightening regulation of Hong Kong IPO markets, holding a Category 6 license in an “active” state remains a basic entry requirement but is not a “passport” to core activities.

Sources indicate that to become a key IPO personnel with project signing authority and supervisory rights, one must meet more stringent additional qualification requirements. This has become a key reason why investment banks are actively seeking regulatory relaxation of the qualification standards for core personnel.

To standardize IPO sponsor practices, Hong Kong regulators have defined three clear qualification schemes. Individuals must meet at least one to lawfully perform core IPO sponsorship duties. This means that merely holding an “active” license is insufficient; practical experience has become a critical factor for core roles.

Specifically:

• Scheme 1 requires applicants to have at least five years of experience related to listing on the Main Board or GEM of the Hong Kong Stock Exchange, with at least two IPOs sponsored in the past five years.

• Scheme 2 targets professionals with overseas IPO experience, requiring them to have led IPOs in Australia, the UK, or the US, with extensive due diligence experience, and to have completed relevant refresher courses or passed the SFC’s Paper 15 exam within the past six months. The sponsoring institution must also have at least one IPO main person meeting Scheme 1.

• Scheme 3 requires applicants to have actively participated in at least four completed Hong Kong IPO due diligence projects in the past five years, possess at least five years of relevant listing financing experience, have passed the Paper 15 exam within six months, and have at least one IPO main person meeting Scheme 1.

The increase in qualification thresholds, combined with stricter regulatory scrutiny, is intensifying the talent shortage in the Hong Kong IPO industry. Market information indicates that the Hong Kong regulators have suspended some license applications, making it difficult for some brokerages to fill key positions, leading to recruitment freezes and delays in inviting senior professionals for lead underwriter roles. Some returning industry practitioners and applicants for lead underwriter licenses have also faced delays, hampering hiring progress.

“A few years ago, no one cared about Hong Kong (investment banking roles); now it’s congested,” said a senior investment banking executive at a securities firm. Amid a surge in company listings, many brokerages are reallocating A-share team members to support Hong Kong IPOs, and some project personnel are shifting from A-shares to Hong Kong, further exacerbating talent mismatches and qualification risks.

It is understood that before approving IPO sponsor licenses, regulators require firms to demonstrate sufficient junior staff and comprehensive training systems. For those with invalid licenses seeking re-entry, past IPO project experience is scrutinized to prevent non-compliant personnel from re-entering the industry.

Only 20% of Hong Kong IPO Licensed Persons Are “Active,” Talent Shortage Persists

Hong Kong’s increased regulatory requirements for IPO sponsors have also driven a surge in related exam demand. However, the number of “active” Category 6 license holders remains low, and new licensees are insufficient to meet the growing listing demand.

Data from the Hong Kong Securities and Futures Commission shows that, to date, there are 38,832 individuals holding a Category 6 license under the Securities and Futures Ordinance. Among them, only 8,219 are “active,” accounting for 21.17%, meaning over 70% are dormant, with significant license idle time.

The situation among institutions is similarly bleak. There are 1,526 licensed entities, but only 310 are “active,” with an active rate of 20.31%, roughly matching the individual active license rate.

More critically, regulations stipulate that personnel holding a Category 6 license must operate through a registered institution also holding the same license to legally conduct IPO-related activities. This linkage further narrows the pool of qualified practitioners, intensifying talent shortages.

In terms of new license issuance, the short-term outlook remains bleak. Public data shows that, as of now, 119 sponsor institutions and 442 responsible persons are licensed, with only 1 to 3 responsible persons licensed per month. In February 2026, 48 new Category 6 licensees were added, a sharp decline from an average of 235 per month in late 2025—a drop of over 70%.

Meanwhile, 91 licensees and institutions were removed in February 2026, indicating a net loss of 43 licensees that month. The pace of new licenses cannot keep up with the rate of attrition.

In the short term, the recruitment difficulties for Hong Kong investment banks are likely to persist.

In 2025, IPO Sponsor Numbers Declined by 2.31% Year-on-Year, but the Number of Sponsor Firms Increased to 42

During periods of industry downturn, investment banks have cut staff. Now, with booming Hong Kong IPOs and stricter regulatory review, they are actively rebuilding teams.

Data from the China Securities Industry Association shows that, as of December 2025, the total registered securities practitioners numbered 368,700. Among them, IPO sponsors numbered 8,526, accounting for 2.31% of the total.

Looking at the longer term, the number of IPO sponsors at the end of 2025 decreased by 285 from the end of 2024, a 3.23% decline—the first annual decrease after eight consecutive years of growth since 2017. However, among brokerages, 35 firms increased their sponsor headcount in 2024, and this number rose to 42 in 2025, a 20% increase year-on-year. This indicates that while the industry overall shrinks, some firms are expanding their sponsor teams to improve quality and efficiency.

Talent recruitment has heated up since late 2025, with both leading and mid-sized firms actively competing for IPO talent. Their hiring priorities reflect strategic needs, avoiding uniform talent structures across the industry.

A senior executive at a securities firm revealed that their Hong Kong team has expanded from 30–40 to over 100 members, significantly increasing staffing for Hong Kong IPOs. Moreover, regulators’ concerns over declining IPO quality have led some top firms to reject projects submitted before May, further emphasizing the importance of sponsor quality and raising the bar for professional standards.

Long-term, balancing sponsor quality and market efficiency remains key to sustainable development of the Hong Kong IPO market. Some foreign investment banks believe that, in the short term, this may pose challenges for aggressive hiring but will ultimately enhance overall market professionalism and the quality of listed companies.

For practitioners, this means that professional competence will be increasingly valued, and a rigorous track record will become the most valuable “passport.”