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Hong Kong Online Broker Urges Changes To Boost Trading

by Carla Johnson, Investors Offshore.com

30 October 2001


Following the release of a Securities and Futures Commission survey last week in which it was found that only 10% of respondents had traded stocks online, a leading Hong Kong online broker is urging the government to drop the minimum commission on trades in order to rescue the flagging industry.

Although the Hong Kong stock exchange has announced plans to drop the 0.25% minimum commission from next April, traditional brokers have called for the deadline to be postponed, fearing that it will accelerate consolidation within the industry and hasten their demise.

However, Peter Randall, consultant to the online joint venture between JP Morgan and Pacific Century CyberWorks, 2Cube Securities, believes that if the region is to regain its pre-eminance as a financial hub, changes must be made, and fast. According to a recent report in the South China Morning Post, Hong Kong lags far behind its Asian rivals in online trading, with 60% of trades in South Korea being conducted via the internet, and 40% in Taiwan.

'We don't want to break anyone's rice bowl, but one can't stand in the way of market changes,' he explained. 'Hong Kong needs to change to keep its markets in line with international practice.'

According to Mr Randall, due to greater automisation and efficiency, in the online trading markets of many other financial centres, minimum commissions are sometimes as low as 0.125%, leading to increased interest from the investing public. 'According to overseas experience, the removal of the minimum commission will boost overall turnover- which will benefit all brokers,' he said reassuringly.


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