Small brokers only want level playing field, not cartel to fix prices
I refer to your editorial ("Let market forces dictate success", November 24).
As the representative of the financial services sector in the Legislative Council, one of my duties is to give suggestions to the government to promote our unique status as an international financial hub.
My proposal to set up a statutory stockbrokers' association is not aimed at safeguarding the interests of small and medium-sized brokers. Indeed, my concern is the same as you express when you refer to "cutthroat competition leading to ever-plummeting commission rates" and say that such "low rates are, understandably, loss-making and counterproductive".
With commission rates as low as zero, the only outcome of this cutthroat competition is to squeeze small brokers out of the market. Can we still call it the fair competition or level-playing field that the Competition Ordinance passed by Legco on June 14, 2012, is supposed to promote and safeguard?
It is in individual investors' interests that they continue to be served by the brokers with whom they have maintained a long relationship. Most investors know they can only obtain instant or up-to-date market information or advice through brokers and cannot expect to enjoy this professional service without paying reasonable rates.
It is the government which abolished minimum rates and allowed newcomers to offer zero commission to lure investors to open accounts and trade stocks in banks. Should the small and medium brokers be blamed for this?
In fact, small and medium brokers have fought hard to survive by upgrading their IT support by providing online trading and raising their management standards. They simply want a fair and level playing field. Therefore, I am not asking for a cartel organisation to safeguard anybody's interests. But if there is such a self-regulatory body of stockbrokers, like other professional bodies, such as lawyers, doctors, accountants and insurance brokers, it will help upgrade the professional standard or services provided by stockbrokers and foster the healthy development of the industry.
Last but not least, we are not asking for any subsidies from the government but only administrative and statutory support. Indeed, the government is facilitating the establishment of a private wealth management association to promote and encourage the growth and development of the private wealth management industry in Hong Kong. I think stockbrokers deserve due regard from the government.
Christopher Cheung Wah-fung, legislator (financial services)