Hong Kong's minimum equity-trading commission rule is preventing on-line brokerages from competing on price, according to the Asian chief of the world's largest on-line broker, Charles Schwab.
As many retail brokers in Hong Kong already charged the lowest fee allowed - a 0.25 per cent commission on each transaction - Internet brokers were unable to undercut them, Schwab (Hong Kong) regional general manager Christina Hui said yesterday.
'It's a bar that we can't go below the 0.25 per cent minimum,' Ms Hui said. 'It's different for our US service, where we can offer fees of 40 per cent lower than phone-brokerage services.' Indeed, trading on Internet can cost a premium in Hong Kong.
Celestial Asia Securities Holdings, the only member of the stock exchange which offers Internet broking, charges a monthly account management fee for those trading less than $200,000 a month, on top of a 0.25 per cent commission.
On-line broker Boom Securities said it offered the minimum 0.25 per cent commission as a fee and required a slim account minimum.
Managing director Mark Duff said he was focusing on 'savvier' investors as a way to compete with retail brokers offering the same commission - while also providing research services and a connection to the broker 'market talk' network.