Hong Kong exchange focuses on growth areas

Exchange poised to expand into clearing and commodities as the listing business slides

PUBLISHED : Friday, 05 October, 2012, 12:00am
UPDATED : Friday, 05 October, 2012, 3:43am


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Hong Kong Exchanges and Clearing has stepped up hiring for new units in clearing and commodities trading while streamlining other departments.

A senior HKEx executive told the South China Morning Post the exchange had started to hire more people in newly developed business lines such as commodities trading and over-the-counter clearing, as well as people with technological expertise.

"HKEx is in the process of restructuring to shift its focus from only equities trading to other business lines, such as clearing and commodities trading," he said.

"This is why some departments that have excessive staff will be streamlined and staff re-allocated to the newly developed business lines."

Market rumours say the bourse has plans for big lay-offs after the number of initial public offerings declined sharply this year. Eric Landheer, the head of issuer marketing, who was responsible for bringing IPOs to the exchange, left last month.

A HKEx spokesman denied the lay-off plan but said the exchange "is in the process of restructuring, relocating resources to the new business lines".

Hong Kong is expected to drop out of the world's top 10 destinations for IPOs this year after having held the top ranking for the past three years. New listings in the first eight months raised just under HK$43 billion, down 77 per cent over the same period last year, and a 10-year low.

In January, exchange chief executive Charles Li Xiaojia announced a strategy of diversifying beyond its core business of share trading and IPOs to developing commodities and clearing businesses.

In June, HKEx proposed to spend £1.39 billion (HK$17.36 billion) to acquire the London Metal Exchange, the world's largest metals market. The deal, due for completion next month, is pending British regulatory approval.

The exchange also is relocating staff or hiring people for its over-the-counter derivatives clearing house, which is awaiting regulatory approval to start operations. More technical staff were hired to expand a data centre and upgrade its trading system.

Edward Au, of accounting firm Deloitte, said that apart from the capital market slowdown, the exchange had also expanded. "When they reach a certain size, it makes sense to look if there are overlapping functions and see if they can streamline them to become more efficient," Au said.