Hong Kong Exchanges and Clearing Ltd is the holding company for the city’s stock exchange, futures exchange and clearing company. Its market capitalisation made it the world’s biggest listed bourse as of the end of 2012. In December 2012, the HKEx clinched the US$2.2 billion takeover of the London Metal Exchange, the world's biggest marketplace for industrial metals.
HKEx waives fees to help brokers
Charges on 10 terminals axed to lower operating costs for smaller players
Hong Kong Exchanges and Clearing will waive some terminal fees for brokers next year after fierce competition forced 14 brokerage houses to close this year.
HKEx chief executive Charles Li Xiaojia said on the sidelines of a seminar yesterday that the exchange would waive fees for real-time securities market data for 10 terminals used by each brokerage.
"This will bring the costs down for small and medium-sized brokers," Li said. "We hope the fee waiver will help them operate in a difficult environment."
The exchange has 502 brokerages in operation, with each, on average, running 50 terminals to provide real-time data to brokers and their customers.
The fee waiver for 10 terminals would reduce the average fee paid by the brokerages by 20 per cent each month, Li said.
"For the exchange, it will cost about HK$10 million every year but the exchange can afford to provide such a discount to help brokers," Li said. "It will not have a big impact on the exchange."
Christopher Cheung Wah-fung, the legislator representing the financial services industry, welcomed the fee waiver but called on the exchange to do more.
"It is a good first step to see Li and the HKEx doing something to help brokers cope with the difficult market environment," Cheung said. "We have seen some players forced out of the market this year. We hope the exchange and the government will help other players to cut costs and add business."
A report by the Securities and Futures Commission showed profits of the 400 or so smallest brokers stood at HK$522 million in the first half of this year, down 30 per cent from the second half of last year. That was despite market turnover having risen 36 per cent in the same period.
Cheung blamed the closure of the 14 brokerages this year on a price war, with some brokers and banks charging commissions of as little as 0.03 per cent following the abolition of the 0.25 per cent minimum fee in April 2003.
"The removal of the minimum brokerage commission has led to cutthroat competition," he said. "Some small players have found it hard to survive."
Li said the exchange would upgrade the trading platform and technology to help brokers through the tough times.