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As many as 25pc of workers face axe

As many as one in four local stockbrokers - about 7,500 - will lose their jobs when the minimum brokerage commission is scrapped in April, according to a survey by a stockbrokers' lobby group.

The poll of 195 firms indicated 1,400 brokers would be laid off if commission income fell 20 per cent and 7,424 would go if commission income fell 60 per cent.

The Hong Kong Stockbrokers Association (HKSA) has submitted its findings to the Secretary for Financial Services Stephen Ip Shu-kwan but says he rejected its calls to halt market liberalisation.

Hong Kong Exchanges and Clearing, under Government pressure, will abolish the 0.25 per cent minimum brokerage commission on April 1 in an effort to make Hong Kong a more competitive market place.

However, the HKSA said the removal of the minimum commission would spark a price war among brokers and force the smallest players out of business.

HKSA chairman Wilfred Wong Wai-sum said commission income was the lifeblood of the brokerage industry.

'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 said.

Many brokers would be laid off, he said.

The association has proposed a two-tier system that would see commissions freely negotiable for large transactions but the fixed 0.25 per cent commission maintained for trades of less than HK$500,000.

According to Mr Wong, after receiving the survey result, Mr Ip was unmoved, arguing that minimum commissions have to go since, along with Malaysia, Hong Kong is the last market using the system.

If Hong Kong did not abolish the minimum brokerage commission, the SAR market would lag behind others, Mr Wong quoted Mr Ip as saying.

By the same logic, Mr Wong said, the Government should stop charging the 0.2 per cent stamp duty on share transactions.

'Hong Kong is also the last market in the world to still have the stamp duty,' Mr Wong said.

'[The Government] should take the lead by stopping the collection of stamp duty.'

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