Stockbrokers expect shares in the combined stock and futures exchange to more than triple following its listing next year. Many brokers said they expected the shares to rise to about $12 from their issue price of $3.88, implying a market capitalisation for the merged exchange of about $12 billion. The optimistic projections indicate the Government's hard-won merger compromise may prove highly lucrative for stock and futures brokers. A threefold rise in the share price of the new exchange would bring a windfall of $12 million to the holder of each stock exchange seat and $20 million to each futures broker. Expectations of a sharp rise also means brokers are unlikely to vote next month against the reform plan, especially with the Government warning it will use coercive measures to push it through in the event of a negative result. Under the Government's plan, the stock exchange, futures exchange and the three clearing houses will be demutualised and merged into a new entity to be listed by September next year. The new exchange - Hong Kong Exchanges and Clearing (HKEC) - will issue about 1.06 billion shares at $3.88 each in exchange for brokers' seats. Stockbroker seat-holders will each receive 805,000 HKEC shares worth $3.1 million, while futures broker will each get 1.39 million shares worth $5.4 million. Concord Securities owner Peter Chan Po-fun, a former Kowloon Stock Exchange chairman, is one of the brokers who expects the HKEC shares to triple in price. 'The Australian Stock Exchange's [ASX] share price has risen three times since its listing last year,' he said. 'Hong Kong's market is bigger than the Australian one. I don't believe the share price of the local market will be lower than its Australian counterpart.' The ASX share price closed at A$11.30 on Friday, 2.75 times up from its issue price of $4.10 last October. Under the reform plan, brokers can choose a cash-and-share option, receiving one-third of their entitlement in cash and the rest in shares. Many brokers, including Mr Chan, said they would choose the all-share option, underlining their high expectation of HKEC's expected post-listing performance. However, Hong Kong Stockbrokers Association chairman Dannis Lee Jor-hung said brokers should not be too optimistic at such an early stage. 'The ASX is different from the HKEC in many ways,' he said. 'I think we need to know more about the future business plan of the new exchange to predict its share price level.' For example, it was necessary to know if the new exchange would be allowed to collect transaction levies as one of its sources of income. The dividend policy of the HKEC would also affect investors' interest in the shares of the new entity, Mr Lee said. Former Stockbrokers Association chairman Chu Chung-tin said he preferred the cash-and-shares option as it was hard to predict whether the new exchange could make a profit. But one stockbroker said since the exchange would have monopoly status, its profitability was assured. It is widely expected in the market that the new exchange will command a price-earnings ratio of about 12 times. Stock exchange director Henry Law Man-wai said the HKEC did not have a P/E ratio because it had yet to start operations. He said the new exchange's financial adviser would have to make a profit forecast in order to determine the prospective P/E of the HKEC when it was listed next year.