HKEx renews trading hall lease for three years
An almost threefold rise in rent will keep the Hong Kong stock market's trading hall open for the next three years - despite only 0.5 per cent of all trades being conducted on the floor.
Hong Kong Exchanges and Clearing (HKEx), the listed holding company that operates the Stock Exchange of Hong Kong, agreed last week to renew its three-year lease on the 45,000 square foot trading hall in Exchange Square in Central for HK$3.58 million - up from HK$1.25 million.
The decision means Hong Kong will not follow other key markets that have shut trading halls made redundant by electronic trading. A little more than 0.5 per cent of all trades on the Hong Kong market are conducted using the 'open outcry' system in the hall.
Watchers questioned whether the HKEx should keep the trading hall open, noting that many countries had shut their halls - though the system is used in the United States and mainland markets.
Hong Kong's futures market, which had used open outcry to trade products, has gone fully electronic and its former trading hall has been turned into offices.
At its peak, the trading hall was packed with more than 900 traders but the change began in 2000 when the trading platform known as AMS/3 was introduced. The system allowed brokers to execute trades from their office computers which were linked to the platform.
Today, few brokerage houses bother to send traders to the hall, preferring to conduct the transactions from their office desks.
Statistics showed that last month just 0.56 per cent of all trading was transacted in the trading hall, with more than 99 per cent executed from brokers' terminals. In 2000, almost 20 per cent of trading was conducted on the floor.
The number of traders on the floor on any given day now stood at 184, down from more than 600 in 2000.
But veteran stock broker David Tung Wai, 79, the oldest trader in the city with more than 60 years of experience in the market, said the trading hall should be preserved.
'Although technology allows us to trade from the office, I still like to go to the trading hall almost daily to get a real feel for the trades,' Mr Tung said.
'The trading hall is an icon of the stock market. Companies have their listing ceremonies there and the media have on-site reports about the market's movement every day. Political leaders also visit the exchange floor all the time. We have to keep the trading hall to show the world about our stock market.'
Chim Pui-chung, the legislator for the brokerage industry, said the trading hall had symbolic meaning rather than practical value.
'It's a fact. Most brokers now conduct their trades through computers at their offices. But I don't think we should abandon the trading hall in the near future as it has advertising value for the HKEx,' Mr Chim said.
