The Hong Kong Futures Exchange will consider cutting trading costs further to increase competitiveness, despite having won a 'battle' with its Singapore rival, chairman Geoffrey Yeh Meou-tsen said yesterday. Mr Yeh said the exchange needed to prepare for competition from overseas counterparts and over-the-counter markets. 'Our real threat is not from Singapore but from the over-the-counter market, where people trade with each other directly outside the exchange,' he said. 'It would be possible for the futures exchange to further cut trading costs to attract international investors to the Hong Kong futures market.' The threat from the Singapore International Monetary Exchange (Simex) has receded, with trade in its Hong Kong index futures product dwindling to zero on some recent days. The launch of the Simex product in November forced the futures exchange to cut its margin interest retention rate for all futures contracts by about 30 per cent from January 1, and to waive all fees in December. Mr Yeh said the futures exchange had won the battle, since Simex Hong Kong Index futures had failed to generate much interest among investors. In November, the Simex product averaged 413 contracts a day. Last month the figure dropped to 166, and for the month to January 25, an average of 54 contracts changed hands each day. On some days in January, there was no trading at all. Mr Yeh said the futures exchange was in the final stages of discussion with the Government on how to implement a controversial proposal for the exchange to require disclosure of large open interest positions. The proposal is one of six made to the HKFE from a 30-point package announced by the Government in September aimed at making it more difficult and more expensive for speculators to 'manipulate' Hong Kong's markets. One proposal is to drop the threshold for an extra 50 per cent margin from 10,000 to 5,000 contracts. Mr Yeh said there were technical problems with the idea and it would require further study.