Listed broker Celestial Asia Securities Holdings plans to form an on-line broker alliance, which may present a threat to the stock exchange.
Under the proposed alliance, brokers could share on-line platforms to disseminate information to each other, such as details of share placements, according to a source.
'Brokers may also utilise the platform to route and match orders for their clients, thus by-passing the stock exchange,' he said.
Some brokers pointed out that, if the alliance performed such market-making functions, it could be regarded as a proprietary trading system, presenting a challenge to the stock trading franchises of the stock exchange.
'It may constitute a violation of the unified exchange ordinance,' a broker said.
According to the ordinance, the stock exchange will 'have the exclusive right to establish, operate and maintain a stock market in Hong Kong'.
However, a source from the Securities and Futures Committee said the issue was still a moot point.
