Brokers hard-pressed to repeat protest success

PUBLISHED : Tuesday, 15 November, 2011, 12:00am
UPDATED : Tuesday, 15 November, 2011, 12:00am


Hong Kong's small brokers abide by the adage that the squeaky wheel gets the oil. They like to protest and their past efforts have shown that to be a successful strategy.

A prime example was in 2002, when thousands of them took to the streets, armed with 6,000 signatures on a petition opposing the government scrapping the minimum brokerage commission. They managed to delay the change for a year until April 2003.

Learning from experience, the small brokers this year used similar tricks to protest against longer trading hours and shorter lunch breaks. After a street march in July, about 200 brokers collected 3,000 signatures for their petition outside the trading hall last Monday. They used colourful banners to explain their grievances - the stock exchange's plan to extend trading time by another 30 minutes and cut their lunch breaks to one hour from one hour and 30 minutes.

But it appears they will be hard-pressed to repeat their 2002 success.

There was more sympathy among market players and government officials for small brokers in the 2002 protest. The abolition of the minimum brokerage commission, which was set at 0.25 per cent of the value of the trade, was a serious threat to income.

Scrapping the commission allowed many banks and brokers to freely negotiate how much to charge their clients and smaller players were squeezed. Bigger banks and brokers could afford to offer incentives and discounts to win clients while small brokers faced the prospect of laying off staff.

That was why the government and the exchange agreed to delay the move by a year.

This time, however, things are different. The extended trading hours will not lead to job losses but could instead create opportunities as brokerages have to hire more staff to handle the longer hours.

Then there is the lunch issue - even after their lunch breaks are reduced brokers will still get an hour for lunch, in line with many industries. And they will still be better off than their counterparts in other cities such as London, New York, Sydney and Singapore, where there is no lunch break at all.

Brokerage executives and bosses are not too worried about the longer hours for the simple fact that they are not on the front line themselves. Some brokers see more business opportunities under extended trading hours when the market bounces back.

It is the front-line staff working at smaller firms who are most vociferous on this issue. Their bosses probably will not hire extra staff to cope with the longer hours. If the exchange wants these brokers to stop protesting, they should lobby their bosses to urge them to take on more front-line staff.

Some say longer trading hours are here to stay. Overseas bourses now trade six to eight hours a day, which is much longer than in Hong Kong. Before the initial extension of trading in March, the bourse only opened for four hours a day - the shortest hours of all exchanges. It now opens five hours a day.

If Hong Kong is to become an international market, the long lunch should become a thing of the past. Walker joins Barclays Capital Former insurer Jeff Walker has joined investment bank Barclays Capital as its managing director and Asia-Pacific head of insurance and financial institutional group. Based in Hong Kong, he will handle development and risk management for the group's insurance clients in the region.

Walker is no stranger to Hong Kong as he spent most of his career at New York Life and has been president and chief executive of New York Life Hong Kong, which has now been sold and renamed ACE. Before joining Barclays Capital, Walker was managing director and Asia-Pacific head of insurance at Japanese firm Daiwa Capital Markets Hong Kong.