Hong Kong Exchanges and Clearing Ltd (HKEx), which holds the monopoly to operate the city's stock exchange, has proposed creating a third board for technology startups that do not qualify to be listed on either the main board or the Growth Enterprise Market (GEM).

HKEx Chief Executive Charles Li Xiaojia described potential third board candidates as startups with zero track records and owned by entrepreneurs who're like "mountain climbers striving to reach the highest peak", according to a newspaper report. "How can Hong Kong help people on that path to Mount Everest? Hong Kong needs to do something because it's a long, hard, lonely road," he said.

Li is asking a lot from Hong Kong people who are more attuned to investing in real estate. Of course, there's no shortage of local and foreign speculators in the stock market. But, they are punters who cannot be counted on to provide long-term funds needed to nurture a new industry.

Noting the murky role of the GEM, regulators are known to have reservations about the idea of a third board. Early last year, Securities and Futures Commission (SFC) Chairman Carlson Tong Ka-shing was quoted as saying that the GEM's role should be clarified before a third board can be discussed to avoid a potential overlapping of functions.

A third board could seriously tax the SFC's resources that are already stretched to the limit, arising from controversies surrounding the buying and selling of shell companies and other irregularities. Without adequate supervision and vigorous enforcement, a third board could be used by unscrupulous parties to lure unwary investors with promises of unrealistically high returns.

It's widely recognized that the difficulties in securing funding are a major stumbling block that inhibits the development of Hong Kong's technology industry. A third board can potentially help startup entrepreneurs raise the capital needed.

But, extra care must be taken to prevent the board from being turned into an unruly casino that can cause irreparable damage to the SAR's reputation as an international financial center.

(HK Edition 06/09/2017 page9)