The stock exchange has decided to proceed with plans to run a proposed second board even though a government threat to let another body operate the new exchange has not been resolved. The Government confirmed on Tuesday that it might let another organisation manage the second board in a bid to introduce competition. The move would end the 13-year monopoly of the stock exchange. Rules give the exchange a monopoly over running traditional forms of exchange but do not apply to markets launched on the electronic trading system or Internet. The second board, providing a market for small- and medium-sized firms, would have a lower capital requirement than the main board. Certain stock exchange council members have expressed reservations over the proposal, saying the second board would be more risky than the main board. Under the threat of losing its monopoly status, the exchange council yesterday decided to establish a Second Market Working Group to proceed with the project. The group would be headed by independent council member Lo Ka-shui, deputy chairman and managing director of Great Eagle Holdings. A government source said it would wait for the exchange to submit detailed proposals for a second board before deciding if the exchange should run it. 'The Government has not yet ruled out another body running the second board,' the source said. 'It depends on whether the exchange can demonstrate it is the best party to launch the project.' Exchange chief executive Alec Tsui Yiu-wa said the working group would decide on the timetable for the launch of the second board and prepare the requisite regulations, trading systems, marketing and investor education. The working group would also study budgets and funding needs of the second board, estimated at up to $200 million. The exchange may ask for financial assistance from the Government to develop the second board.