A conflict is looming between the Government and the stock exchange over moves by some brokers to charge high fees for clients wanting to lodge scrip directly with the Hong Kong Securities Clearing Co.
Government sources expressed anger that a number of broking firms were charging either $200 a month or per transaction fees of more than $100 to clients wanting to lodge scrip in the clearing house for safe keeping.
Last week, Hongkong Clearing announced it would scrap its $200 monthly fee in an effort to boost lagging investor interest.
Many brokers are opposed to the scheme, saying it increases their risk if a client runs into financial difficulty. Subsequently, brokers have declined to promote the scheme to clients, blamed as a key factor in the scheme's lukewarm performance.
'It's well within the rules to charge for the service. It's a free market,' one broker said.
When the service was launched on May 8, it was forecast up to 5,000 investors would open accounts, but up to last week only 699 accounts had been opened.
The source said the Government was concerned brokers would raise the fees to counter the expected increased investor interest.