(Bloomberg) -- Hong Kong’s struggling smaller brokers and advisers have formed a union-like association to prod the government for more support as the city suffers through a drought of initial public offerings and sagging trading.

Officially kicking off on Tuesday, the Association of Hong Kong Capital Market Practitioners is organized by 29 smaller brokers and advisers to nudge regulators to loosen the tight grip they have put on the city’s small-cap market. The group has backing from some of the financial hub’s key politicians, including Executive Council convener Regina Ip. 

Following a broad crackdown against the murkier side of the city’s markets, Hong Kong’s small-cap exchange GEM has stagnated without a listing since 2021. The city recently offered reforms for the market, including allowing a more streamlined path to the big board, but smaller brokers say that’s not enough.

Regulators are too focused on the needs of big business, according Arnold Ip, the group’s chairman who runs the listed parent of corporate adviser Altus Capital Ltd. Authorities need to focus on GEM on its own merits and offer ways to boost liquidity, according to Ip, the nephew of Regina Ip.

“We hope to revive Hong Kong as a more inclusive market for companies big and small as long as they call it home, regardless of where they are from,” Ip said in an interview. “Once issuers and talent leave the market, it will take forever to rebuild the traction as an international financial center.”

A spokesperson for Hong Kong Exchanges & Clearing Ltd. said the bourse is committed to a listing framework for “quality” small- and medium-sized enterprises while ensuring robust standards to protect investors. The city’s market regulator, the Securities and Futures Commission, said GEM reforms will be “appropriate and suitable for Hong Kong.”

The GEM market was plagued by scandal, including insider dealing, market manipulation and wild swings in share prices. Now the city has exported some of those same issues as many smaller firms have chosen to list on the Nasdaq, raising concerns among US regulators.  

The wild trading of the past is a consequence of the low liquidity of the GEM platform, Ip said, adding the association supports the development of a market making mechanism for the board and strong enforcement against market manipulation. 

Besides Regina Ip, the association is backed by local lawmakers in the financial services, banking and legal sectors, according to her nephew. HKCMP has “strong views and sensible suggestions,” Regina Ip said in a text message, adding that she has endorsed the group in a personal capacity.

At least 19 Hong Kong-based firms have listed on Nasdaq since 2021, including brokerages AMTD Digital Inc. and Magic Empire Global Ltd., as well as a lesser known locksmith and an air-conditioning installer. AMTD, for example, has seen wild price swings and at one time was valued more than even Goldman Sachs Group Inc., before plunging again. 

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There are “extreme difficulties” in getting GEM IPO applications through because the performance targets set by the exchange aren’t tailored for smaller listings, according to Julia Charlton, the group’s vice chairman.  

“In other markets, smaller deals tend to have policy support, she said. “But in Hong Kong, bigger issuers tend to be faster to list. The fact that Hong Kong is difficult to list makes listing status a premium, leading to shell activities.” 

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The situation has long been dire for local brokers, with more than 96 local brokers ceasing trading since 2021. 

“More and more companies are actively thinking of alternatives to a Hong Kong listing, which should be their natural home base,” said Arnold Ip. “This is a crisis for us all.” 

Gordon Tsang, a partner at law firm Stevenson, Wong & Co., has advised nine Hong Kong and China-based companies to list on Nasdaq in the past three years and has more than a dozen clients preparing paperwork. 

“There are more practical concerns and higher financial threshold to list in Hong Kong, whereas the US is more market driven and accessible,” said Tsang, who’s not a member of the new coalition. “Local SMEs with funding needs have almost no choice but to head for the US.”

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