Trading in futures set to go on-line
Futures trading in Hong Kong could soon be a matter of point, click and a two-second wait for confirmation.
Interactive Brokers, a subsidiary of United States group Timber Hill, is waiting for finalisation of a licence to start offering Hong Kong investors the opportunity to make futures trades without calling a broker.
'It would take two seconds . . . and that's confirmation as well,' the Hong Kong arm of Interactive Brokers' managing director, David Friedland, said.
'Right now, an investor wanting to buy an option or a future, you have to phone a broker,' he said. 'With this, you just dial in. All you have to do is open an account on-line.' The Interactive Brokers service will send trades directly to the floor for the Hang Seng 100 futures and options, which are fully automated.
The same will follow for Hang Seng Index futures and options trading when that becomes fully automated, a change-over which is expected in a few months.
The on-line futures trading concept is not for the faint-hearted.
'We're targeting a sophisticated investor in the terms that we don't want to give them advice,' Mr Friedland said. 'It's about speed, cost and ease.' For some traders, however, the speed offered by a direct on-line service such as Interactive Brokers does not have much appeal.
'It wouldn't make that much difference,' one futures trader said. 'As soon as I phone, it's only a few seconds later.' More than 30 firms in the US offer on-line futures trading and the growth has brokerages working to improve their Web sites.
This growth is partly a result of smaller contracts designed to lure the retail investor, such as the E-mini - introduced by the Chicago Mercantile Exchange in 1997 as a smaller version of the S&P-500 contract.
The E-mini trades on Globex2, the mercantile exchange's 24-hour electronic network.
Interactive Brokers' parent Timber Hill offers on-line trades in the E-mini for US$9.90 a contract.
'I think it will be huge,' Mr Friedland said of the Hong Kong service.
He said the service was not just aimed at individual traders. An important line of business would be the company's service to brokers, who can use the firm's technology with their on-line services.
Internet trading in the equities market in Hong Kong is also embracing more sophisticated services.
On-line broking operation Boom Securities yesterday launched a service for trading US equities, making it the first Hong Kong firm to offer retail investors cyber-trading in Hong Kong and US-listed securities.
Boom, an independent on-line stock trader, uses brokers to finalise trades. With the new service, users can place orders for stocks listed on the New York Stock Exchange and Nasdaq Stock Market.
'We are opening up the market to the wider retail investor population of Hong Kong and broadening their investment options,' Boom managing director Mark Duff said.
Also making its mark in cyberspace is Hong Kong group Fortitude Services, which supplies on-line trading software to brokers.
Its aim is to introduce an inter-broker network through which brokers could offer world-wide deals.
This network would make it 'easier and cheaper' to do this, founder and director Jean-Yves Sireau said.
Fortitude supplied the trading systems for retail broker Mansion Securities' Internet trading system.
