Clearing house scraps $200 fee
Hongkong Clearing is to scrap the $200 minimum monthly fee for investor accounts after receiving a lacklustre response to the new service, the latest indication of nervousness on the part of retail investors.
The service allows investors to keep their shares in accounts in the clearing system rather than having their broker hold the shares for them.
It was introduced after several brokers used their clients' shares without their permission, ultimately undermining confidence in the probity of local brokers and endangering investor protection.
When the service was launched on May 8, it was forecast up to 5,000 investors would open accounts, but the figure to date has been just 699.
Clearing house chief executive Stewart Shing Shin-cheung said initial market research indicated a monthly fee of $200 would attract up to 28,000 investors in the longer term.
Scrapping the fee is designed to increase the number of users and help pave the way for the introduction of electronic initial public offering (IPO) services by the end of this year.
'Low market turnover, the economic downturn and the monthly fees are the reasons for the low number of applications,' Mr Shing said.
He hoped waiving the fee would attract 5,000 applications initially and a further 40,000 in time.
The move has yet to be approved by the Securities and Futures Commission.
Investors will still be charged for other services such as custody, nominee fees and money settlement fees.
An annual fee of $200 will be charged if the account does not generate any of the above service fees for 12 months.
The clearing house would review the policy when it received 5,000 applications and in 12 months, Mr Shing said.
Meanwhile, the clearing house plans to launch electronic IPOs at the end of this year for investors who have opened accounts in the clearing house.
The new service allows investors to apply for new share issues through the clearing house telephone system.
All money transfers and share allocations will be done electronically.
