Terminals at exchange spell end of trading hall
By NOEL FUNG and NICHOLAS REYNOLDS
THE days are numbered for the stock exchange's trading hall with the introduction of a second terminal system yesterday.
This means some brokers can now operate from their offices without having to be on the trading floor.
Brokers believe the trading hall may survive for some time to meet the needs of smaller brokers.
About 400 second terminals yesterday started operation in brokers' offices, on top of the about 900 on the exchange's trading floor.
Members will have to pay $3,000 more each month to use the second terminals.
Nial Gooding, head of sales at Kleinwort Benson Securities, said: 'This is the beginning of the end of the trading floor but there is a long way to go.
'Has it affected the way we operated today? No. It is only part of a whole series of changes that are going on.' Howard Gorges, director of South China Brokerage, said: 'You can now deal from your office without going to the floor. Gradually it will probably cause a shift away from the stock exchange.
'But in a bull market people may miss the gossip going on. My feeling is the floor may hold its own.' Exchange chief executive Paul Chow Man-yiu said it was a matter of market forces.
Bigger brokers would find it cost-efficient to trade from their offices while the smaller ones would conduct most of their business in the trading hall.
Smaller brokers usually have sales and dealing staff in the trading hall used as an extension of their offices.
Bigger brokerages, which incur higher costs in their back offices, may resort to maximising the use of the expensive floor space.
'Whether the trading hall will be needed will be decided by market forces,' Mr Chow said. 'We will review later.' He said the second terminal would prove most useful when the market was active because one terminal would not be able to handle the large volume of transactions.
Brokers were less impressed by the new system, saying it had little effect on their business yesterday.
But most said it was a step in the right direction and should provide more tangible benefits in the long run. Others said the system was overdue, adding that Hong Kong remained one of the least technologically advanced markets in the region.
One dealer said a main difficulty with the second terminal was that it eliminated one layer of checks and balances. 'It will make a difference but we are not using it yet,' he said. 'The main problem is that it will eliminate the floor trader so there is one less check and balance in the system.' 'It will take more time to get used to it.' Exchange chairman Edgar Cheng Wai-kin said the second terminal would strengthen the exchange's ability to face any competition brought about by the possible evolution of other forms of securities trading.