25% Of HK Stockbrokers May Face Axe In April

by Carla Johnson, Investors Offshore.com

03 January 2002

According to the Hong Kong Stockbrokers Association, up to 25% of the region's brokers may face the sack when the minimum brokerage commission is axed in April of this year.

Hong Kong Exchanges and Clearing is set to abolish the 0.25% commission on stock trades in order to bolster the competitiveness of the SAR's stockmarket. However, following a poll of 195 Hong Kong firms, the results of which were submitted to the Secretary for Financial Services, the HKSbA has estimated that around 1,400 brokers will be sacked if commission income falls by 20%, while as many as 7,424 will face the chop if it drops by 60%.

Speaking to the South China Morning Post on Wednesday, Wilfred Wong Wai-sum, Chairman of the stockbrokers' lobby group warned that the removal of the minimum commission would be likely to spark a price war amongst the region's brokers, which would force the smallest players out of business.

'If commissions go down a little bit it would not benefit investors much as the sums involved are not high, but it would seriously hurt the profit of the brokerage houses,' he told the SCMP.

However, the organisation's pleas for a two-tier system with negotiable commissions for large trades and a fixed rate for trades under HK$500,000 appear to have fallen on deaf ears. According to Mr Wong, the Financial Services Secretary, Stephen Ip Shu-kwan, was unmoved by the results of the survey, insisting that the minimum brokerage commission must be abolished in order to maintain the region's competitiveness.

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