Again here, some listing rules in Hong Kong would have to be circumvented if HKEX is to clinch Aramco’s IPO, according to one person involved in pitching Hong Kong to the oil giant.

Currently, the rules do not allow companies to list less than 15 percent of their total number of issued shares, while Saudi is also not currently an accepted jurisdiction of incorporation for Hong Kong listed entities. A secondary listing could also be tricky since HKEX does not currently recognize Saudi’s Tadawul as a legitimate primary listing venue.

Regulatory sources said the exchange does have discretion over how the rules are applied and is able to grant waivers in special circumstances as it did in the case of some Chinese bank listings. Russia’s Rusal was also able to create a Jersey-incorporated entity in order to raise $2.2 billion through its Hong Kong IPO in 2010, they added.

“Even so, I think the Hong Kong Securities and Futures Commission (SFC) will have issues with the lack of disclosure around Aramco,” said one of the sources involved in pitching a Hong Kong listing. “This could set the HKEX up for another clash with the SFC.”

HKEX’s Li did not respond to a question on the regulatory challenges the IPO could pose for the exchange.

The SFC declined to comment. Aramco did not immediately respond to a Reuters query for comment.

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