Hong Kong’s market regulator has intensified its scrutiny of staff at banks that sponsor initial public offerings, according to people familiar with the matter.

Inspections of bankers to serve as point people on deals, known as IPO principals, have been stepped up significantly this year following warnings by the Securities and Futures Commission and the stock exchange over IPO submission quality, according to people familiar with the matter who asked not to be identified because they are not authorized to speak publicly.

The shift has some brokerages struggling to fill positions as the regulator has put applications on hold and some are casting a wider net to get senior people to apply for principal roles. At the same time, some returnees to the industry and principals who have shifted banks are finding their applications in limbo, other people said.

Regulators are looking closer at licensing amid concern over deal quality and have lambasted banks for not having enough staff as Hong Kong IPOs hit a four-year high in 2025 and are off to the busiest-ever start of a year. Banks had pared down staffing during a dealmaking trough that lasted several years, and are now trying to build capacity back up.

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The SFC recently exercised tighter interpretation of rules and regulations before clearing senior bankers’ licenses, including requiring banks to show they also had enough junior staffers in place and capacity to train them, the people said. The regulator is closely examining bankers with inactive licenses who are seeking to rejoin the industry, being more cautious about the employment history of applicants, and asking more questions about past engagements, the people said.

An SFC spokesperson said it has “concerns” over a “lack of sufficient regulatory knowledge, experience and resources, and that certain principals are overstretched or not suitably qualified.”

“To address this, RA6 license applications and principal submissions must now include clear evidence of adequate resourcing, appropriate seniority within transaction teams, and manageable supervision workloads, supported by concrete documentation of actual IPO experience,” the spokesperson said. 

Currently 119 firms engage in sponsoring work with a total of 442 principals, according to SFC data. While a steady 1 to 3 responsible officers are licensed each month across the industry, the overall type 6 new licensee number dropped significantly to just 28 in February, from an average of 235 a month in the latter half of 2025.

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For bankers to become a principal to sign off an IPO deal, they must hold a type 6 license to advise on corporate finance, pass securities examinations and training, and have at least five years of experience while playing a substantial role in advising on at least two IPOs.

Overseas bankers must pass a local examination. A bank must maintain at least two signing principals to engage in IPOs, according to the SFC guidelines.