NOT many people know it, but one of the first events to take place on the trading floor of the stock exchange was a cricket match. Prior to its official opening in 1985, two teams, representing the Securities Commission, as the SFC was then known, and Hongkong Land, which owns the building, donned whites and spent a few happy hours playing this most British of games in the hall that now holds terminals, fax machines and the memories of a few fortunes lost and made. Most traders feel emotive towards the floor. It has, after all, been the source of some of the more famous stories of Hong Kong legend. Long-term players recall the time when a trader of advanced years collapsed with a heart attack on the floor. Fellow traders loosened his tie and carried on trading until the ambulance arrived. Romantic, exciting and anecdotal the floor may be, but it will soon be obsolete. The time is rapidly approaching when the stumps will have to be pulled. After just six months, screen-based trading is accounting for approximately 45 per cent of turnover, and in another six months it is tipped to account for up to 90 per cent. The prime beneficiaries of this technological trend will be large international institutional brokerages. Institutional business is on the rise in Hong Kong, and the large brokerages will be able to process larger deals more rapidly via a screen than via a floor trader. They can also afford to set the systems up. In fact, in 1992, institutional business accounted for about 35 per cent of turnover, while today it is estimated to account for more than 50 per cent. What of the small sole trader? In the march towards building Hong Kong into an international financial centre, the fundamental role of the small sole trader has sometimes been overlooked. Those in charge of developing the exchange have understandably pushed for technological advances, selling the Hong Kong story strong and hard to global institutions, and deserve credit for the additional business they have generated. But markets need liquidity, and it is here that the role of the sole trader lies. Sole traders handle retail business, and the average Hong Konger is one of the most financially literate and active of investors in the world. The domestic retail market provides the exchange with a vital flow of funds in to and out of stocks - be they blue chips or second liners. Local investors are emotional. They are day traders. They buy on the trumpets and sell on the news, and they do it in huge volume. Institutions would find it very hard either to take or to dump their positions without this essential liquidity. It is entirely conceivable that the costs of setting up a screen-based trading system will drive some sole traders out of business. Their numbers are already in decline. In 1987 there were about 400 small brokerages. Today, there are about 120. This will have a detrimental effect on the Hong Kong market in general. While institutions may think the demise of the sole trader is an historical inevitability that will mean more business for them, it is an innocent argument. Hong Kong's institutional brokerages need sole traders. Without them, the market would be less liquid. It would not take long for international clients to start avoiding the territory's exchange if they could not be sure of being able to get out of their positions. Take a look at developed markets around the world and it is inevitable that trading floors are a thing of the past. Stories of days gone by aside, somehow the Hong Kong market is going to have to find a way of accepting this precedent while permitting the liquidity-giving sole trader the freedom to stay in business. Hong Kong will squeeze the retail investor out of the market at its peril.