The merging of Hong Kong's two derivative clearing houses with the stock clearing mechanism offers no economies of scale and is not being talked about seriously within the financial industry, the Hong Kong Futures Exchange chief says. Chief executive Randy Gilmore said he was keeping an open mind on ways to reduce costs and boost capital utilisation in Hong Kong's clearing mechanisms, but stock and derivative clearing had little in common. 'They are different animals. One is an exchanger of assets the other is a risk manager. It has not been talked about seriously in the industry,' he said. He said overseas experience showed there was no need to merge stock and derivative clearing. 'The big overseas markets keep equity and derivative completely separate, and Hong Kong is a big market,' Mr Gilmore said. His comments come at a critical time, as the exchanges are in the final stages of determining a model for restructuring Hong Kong's three clearing houses. Hong Kong's financial market leaders are split over whether the three clearing houses should be merged. The issue was important in the Stock Exchange of Hong Kong's last council election. The Financial Services Bureau is pushing for the merger of the three houses, because of what it sees as the increased efficiencies this would bring. During his policy address last year, Hong Kong chief executive Tung Chee-hwa called for the issue to be examined. It seems likely the futures exchange's clearing house and the stock exchange's stock option clearing house will introduce a system of cross-margining for their respective members. The system could be a precursor to a merger if it proves successful. Mr Gilmore said a number of issues needed to be resolved before the stock options clearing house could be merged with the stock exchange's clearing house. One complication was that members of each clearing house were registered as different legal entities because of the single purpose requirement for dealer registration. Mr Gilmore said the futures exchange had for a number of years supported having just one derivatives clearing house in Hong Kong. Securities and Futures Commission executive director David White, who chairs the inter-markets risk committee, has said that a new clearing mechanism could be in place before the end of the year.