Hong Kong‘s securities regulator warned investment banks and other intermediaries against arrangements that may artificially inflate demand for initial public offerings, signaling further scrutiny of the city’s resurgent listings market.

In a circular published Tuesday, the Securities and Futures Commission said it has identified cases in which listing applicants may have entered into undisclosed arrangements with investors, including financing share subscriptions, guaranteeing returns, or pre-arranging allocations to selected investors.

The regulator said such practices could create the appearance of investor demand, distort price discovery and undermine market integrity.

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Hong Kong is experiencing a rebound in IPO activity. The SFC was intensifying scrutiny on book building and IPO allocations, after it detected patterns of inequitable allocation that led to artificially inflate public demand, people familiar told Bloomberg in July.

More than 610 listing applications were in the pipeline as of the end of September, up from more than 420 at the end of January, the SFC said. The number of sponsors working on listings rose to 64 from 53, while signing principals increased to 325 from 261.

Initial public offerings, placements and block trades raised $47.5 billion in July-September, the biggest haul ever for the period, according to data compiled by Bloomberg.

The SFC said it was particularly concerned about arrangements that may extend beyond the IPO process into post-listing trading. These include efforts to maintain market capitalization, generate trading turnover, or conceal the identity of ultimate investors, potentially through derivatives or nominee structures.

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Under the guidance, sponsors, overall coordinators and capital market intermediaries are expected to investigate red flags, conduct additional inquiries and report suspicious arrangements to the SFC and Hong Kong Exchanges & Clearing Ltd. Firms are expected to reject suspicious orders when concerns cannot be resolved.

The SFC reiterated that listing quality remained a concern, despite its warnings earlier in January. Between January and September, regulators suspended the vetting of 65 listing applications, with only 14 later resuming after issues were addressed.

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The watchdog separately raised concerns over 13 applications involving 11 sponsors, citing issues including inadequate due diligence.

At the same time, the regulator said its earlier efforts to address resource constraints among IPO sponsors appear to be working.