In addition to taking more time to negotiate, atypical agreements used by individual companies have not been subject to sufficient scrutiny for many years, with ambiguous or inappropriate clauses and conditions. Unlike New York and London, until now there were no standard forms for legal agreements between insurance unions in Hong Kong. Unions take advantage of the market when share issues are too large to be managed by a single company, allowing multiple companies to sell an offer quickly and in full; However, inefficiencies are traditionally due to the use of atypical agreements between union members. In addition, in the absence of industry standards, companies tend to develop agreements based on agreements they have used previously and that may or may not have been reviewed in recent times. This can lead to unnecessary and outdated conditions that may not be relevant to the current formation of trade unions, which increases the legal complexity of documents and slows down the negotiation of terms and conditions. The standard agreements govern the relationships between the different insurers and between the different insurance unions. The use of standardized language also promotes efficiency by reducing the need to prepare, execute and print custom agreements for each transaction, and by providing a base rate of largely undisputed terms, which probably require little negotiation and familiarize long-term practitioners when the standard becomes common practice. This in turn should reduce the costs of external counsel and certain legal risks. The agreements are structured so that the terms and conditions are defined in a timetable of the agreement. In practice, this benefits the market itself within the standard language of the agreement, as the unresolved conditions do not prohibit the agreement from being executed during the pricing phase, which ensures that rights and obligations are granted in a timely manner to insurers and union members, which is so important if many other variables change during a typical IPO process. One of its longer-term projects was the culmination of ASIFMA for Equity Capital Markets (ECM), which adopted a series of standardized agreements for use by insurers.
They are free for any practitioner to use via the ASIFMA WEB website. Committee members felt that it was seen as a key area for efficiency gains and market improvement. Negotiating non-standard agreements takes longer, which can lead to increased risks for insurance banks in the period between fixing the bank`s prices for a deal and signing syndicated contracts. Hong Kong`s prices reached an eight-year peak of HK 300 billion in 2018, with the Special Administrative Region retaining its position as one of the world`s largest IPO markets. With such large numbers at stake, even small efficiency gains can be essential in this important market. Hong Kong is one of the world`s largest capital training markets and attracts numerous IPOs each year. The vitality of the Hong Kong market depends on the fact that the market operates efficiently and in the best interests of investors and capital applicants. In practice, this means ensuring healthy competition between insurance banks, with providers diring themselves in terms of high value-added activities within the insurance lifecycle. However, in other areas, the sector – including issuers and end investors – can benefit from improved efficiency achieved through standardization.