Asifma comfort letter initiative to speed up HK deals

Author: Ashley Lee | Published: 11 Jun 2014

The Asia Securities Industry and Financial Markets Association (Asifma) is drafting an umbrella agreement to supplement Hong Kong’s comfort letter standard. It is expected to speed up negotiations between underwriters and auditors.

The Hong Kong Standard on Investment Circular Reporting Engagements 400 (HKSIR 400), which was revised in December 2012, sets out the form and substance for comfort letters and bring-down letters.

Since HKSIR 400’s revision, Asifma has been having discussions with its members regarding an umbrella agreement to supplement the HKSIR 400 form for debt capital markets deals.

The umbrella agreement is between the managers of a deal and the Big Four accounting firms as to the content that they will or won’t give credit for. "What’s happening now is that the scope of comfort changes on a deal-by-deal basis," said Chander, adding that the umbrella agreement is meant to standardise and streamline the engagement’s format....