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

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March 12, 2023, China Securities Journal (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 holding the Type 6 (advice on corporate financing) 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 bank personnel structure by 2025? Multiple data surveys reveal the qualification additions and pattern shifts of IPO sponsors in Hong Kong and Mainland China.

Holding an “active” license is a prerequisite for participating in IPO business

According to Hong Kong regulations, engaging in Hong Kong stock IPOs requires holding a valid and active Type 6 (advice on corporate finance) regulated activity license, which covers services such as acting as sponsors for listed companies, providing listing compliance advice, and advising on mergers and acquisitions.

Further detailed regulations specify that possessing a license alone is not enough; it must be in an “effective/active” state, meaning it continuously meets the regulatory requirements set by the Hong Kong Securities and Futures Commission (SFC). Only then can one truly participate in IPO activities.

Under the Securities and Futures Ordinance (Chapter 571), the core of “effective/active” status is continuous compliance with regulatory standards without any circumstances that could invalidate the license. The specific criteria include four points to prevent license expiration:

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

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

3. Strict fulfillment of statutory regulatory obligations. This includes timely payment of annual fees, submission of annual reports and business reports, ensuring responsible personnel are on duty and meet supervision requirements, and individual licensees completing at least 10 hours of ongoing training annually.

4. No invalid or restricted circumstances. The license/registration has not been suspended, revoked, or canceled by the SFC; licensees have not voluntarily surrendered their licenses, nor have they been 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 IPO sponsors and conduct related business is to ensure ongoing compliance and to screen qualified practitioners. This strict qualification requirement helps regulate the conduct of IPO market participants effectively.

Besides holding an “active” license, additional conditions are required to participate in core IPO activities

In the context of tightening regulation of Hong Kong’s IPO market, holding an “active” Type 6 license remains the basic entry threshold but is not a “passport” to the core areas.

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 is one of the main reasons why investment banks have recently been lobbying regulators to relax the qualification standards for key personnel.

To standardize IPO sponsorship quality, Hong Kong regulators have outlined three clear qualification schemes. Individuals must meet at least one to legally perform core IPO sponsorship duties. This means that merely holding an “active” license is not enough; practical experience has become a key factor for core roles.

Specifically, Scheme 1 requires applicants to have at least five years of experience in institutional financing related to the Main Board or Growth Enterprise Market (GEM) listings on the Hong Kong Stock Exchange, with at least two IPOs sponsored in the past five years.

Scheme 2 targets candidates with overseas IPO experience, requiring them to have led IPOs in Australia, the UK, or the US, with extensive due diligence experience, completed relevant refresher courses or passed the Securities and Investment Institute’s Paper 15 exam within the last six months, and their sponsoring firm must have at least one key IPO personnel meeting Scheme 1 standards.

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 institutional financing experience on the Main Board or GEM, pass the Paper 15 exam within six months, and have at least one key IPO personnel meeting Scheme 1 standards.

The rising qualification thresholds, coupled with stricter regulatory scrutiny, are intensifying the talent shortage in Hong Kong’s IPO industry. Market information indicates that the Hong Kong regulators have suspended some license applications, making it difficult for some brokerages to fill core positions, leading to recruitment freezes and delays in inviting senior underwriters.

Some industry insiders note, “In the past, Hong Kong investment banking roles were overlooked; now, it’s congested.” Amid frequent listing applications, many brokerages are reallocating A-share team members to support Hong Kong IPOs, and some personnel are shifting from A-shares to Hong Kong, further exacerbating talent mismatches and qualification risks.

Before approving IPO sponsor licenses, regulators require institutions to demonstrate sufficient junior staff and comprehensive training systems. For individuals with expired licenses seeking re-entry, past IPO project experience is scrutinized to prevent non-compliant personnel from resuming practice.

Only 20% of licensed sponsors in Hong Kong are “active,” and talent supply remains tight

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

Data from the Hong Kong Securities and Futures Commission shows that, to date, there are 38,832 individuals holding a Type 6 license under the Securities and Futures Ordinance, but only 8,219 are “active,” accounting for 21.17%. This indicates that over 70% of licensees are dormant, with significant license resource idle.

The situation among institutions is similarly concerning. Currently, 1,526 firms hold a Type 6 license, but only 310 are “active,” with an activity rate of 20.31%, similar to individual licensee activity levels.

More critically, regulations stipulate that personnel holding a Type 6 license must operate through registered entities also holding the same license, further narrowing the actual workforce capable of engaging in IPO activities and intensifying talent shortages.

In terms of new license issuance, the short-term outlook remains bleak. Public data shows that, on average, only 1 to 3 new responsible persons are licensed each month among 119 licensed sponsors and 442 responsible persons. In February 2026, only 48 new 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, meaning a net loss of 43 licensees that month, with new license issuance far lagging behind attrition.

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

In 2025, the number of sponsor representatives decreased by 2.31%, but the number of brokerages expanding their sponsor teams increased to 42

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

According to data from the China Securities Industry Association, as of the end of 2025, the securities industry employed 368,700 people. Among them, sponsor representatives numbered 8,526, accounting for 2.31% of total securities practitioners.

Looking at the longer term, the number of sponsor representatives at the end of 2025 decreased by 285 from 2024, a 3.23% decline—the first annual decrease since 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, indicating that while the industry overall shrank, some firms are expanding their sponsor teams to improve quality and efficiency.

The recruitment boom started at the end of 2025, with both leading and mid-sized firms actively competing for talent. Different firms have distinct hiring priorities aligned with their strategic needs, avoiding uniform talent structures.

A senior executive at a brokerage revealed that their Hong Kong team has expanded from 30-40 to over 100 members, significantly boosting IPO staffing. Moreover, regulators’ concerns over declining IPO quality have led some top firms to withhold approval for projects submitted before May, emphasizing the importance of sponsor quality and raising higher professional standards for investment banks.

Long-term, balancing sponsor quality with market efficiency remains key to the healthy development of Hong Kong’s 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 listing quality.

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