'It's going to be a sprint from here on out,' said Mark Duff, chief executive of Boom Securities, the first firm to spot the on-line trading trend in the United States and offer the service for Hong Kong stocks.

'I'm excited about the competition. If it were business as usual, it wouldn't be a business worth doing,' he said.

It is not business as usual now that giants such as Jardine Fleming, Charles Schwab and TD Waterhouse have announced plans to offer local stock trading soon. Local brokerages such as Celestial Asia (also known as CASH), Phillip Securities, Bank of East Asia Securities, Tai Fook, Mansion House and Sun Hung Kai have put on-line strategies into action.

Many of the smaller brokerages are expected to band together, either merging completely or creating joint ventures on-line, for fear of losing existing customers to brokerages that offer fast trading on the Net. Sales commissions are about the same on-line or off, though on-line trades can be done without having to reach a broker in person.

Retail investors, about 20,000 of whom already trade on-line, can expect these new Net trading services to offer everything from research reports and instant quotes to access to mainland and overseas stock markets, initial public offerings and non-equity financial instruments such as futures, options and bonds.

For Schwab and TD Waterhouse, both of which recently acquired the necessary seats on the Stock Exchange of Hong Kong to offer on-line trading on both the Hang Seng and the GEM boards next year, the strategy is one of 'clicks and mortar'.

Customers want to be able to trade on the Internet and have access to a broker for the more complicated trades and questions, they say.

Schwab has one branch office in Hong Kong where clients can stop in; TD Waterhouse has two. Schwab is looking to add retail locations and TD Waterhouse plans to add two more next year.

With on-line commissions of about 0.25 per cent, compared to 0.6 per cent in the US, and a potential customer base of a few million at most, why do so many firms want to come to Hong Kong? For TD Waterhouse, which has about 12 per cent of the five million on-line trading accounts in the US, the answer lies in profits it can earn from lending to traders buying on the margin, and the interest spread it would earn on the cash in customers' accounts.

'Commissions are a smaller part of the business,' said Karen Buck, managing director of TD Waterhouse in Hong Kong.

Indeed, overall volume on the Hong Kong stock exchange, at an average of less than US$1 billion per day, is small compared to the daily average of US$7 billion on North America's Nasdaq.

All the firms chasing on-line trading business are hoping that the US on-line trading phenomenon will duplicate itself in Asia.

Christina Hui, regional general manager for Schwab in Hong Kong, attributes the rapid increase in average daily market turnover in the US - about threefold for Nasdaq alone in the past four years - to both the advent of on-line trading and the installation of electronic trading systems.

In Hong Kong, the merger of the stock and futures exchanges and the installation of the AMS/3 back-end system will do more than increase the speed at which buy and sell orders are executed.

'It will also become a fair and transparent market, and that will actually help to increase the whole activities,' Ms Hui said.

Many brokers see Hong Kong as a gateway to other markets in the region, according to Mr Khoo. About 20 per cent of CASH's on-line clients come from outside Hong Kong and most of its on-line accounts are registered to new clients who do not come from its more traditional base.

Japan, Singapore, Taiwan and Korea are often mentioned as target markets, in addition to the mainland, where about 50,000 investors already have on-line trading accounts, according to Leenong Li, president and chief executive of Shenzhen Prosperity Systems.

Mr Li says that his company's on-line stock information and trading site, in Chinese and aimed at traders of Shenzhen and Shanghai stocks, gets about 300,000 page views per day.

Boom and CASH are busy staking out their position. Boom, which is technically not a broker but uses local brokers to execute its customers' trades, has received more funding which it will use to build up a market news team and beef up its customer loyalty programme, as well as to add markets beyond Nasdaq and Hong Kong.

CASH, a listed brokerage with about HK$500 million in cash, plans to spend at least HK$50 million on a marketing campaign.

'We expect competition from Tai Fook, Sun Hung Kai, all the big houses, but it comes down to a couple things: brand building [and] awareness,' Mr Khoo said.

Aside from market news and analysis offered by a number of on-line trading firms, Hong Kong's retail investors already have access to a plethora of pure financial information Web portals, none of which offer on-line trading.

The challenge for these sites, which are spending to build or buy content such as real-time share prices from the Stock Exchange of Hong Kong, will be how to recoup their costs from an audience that is not conditioned to pay for on-line information.

Financial information providers include specialised ones such as Finet Online, Quamnet, Quotepower and e-finance, as well as general portals like Sina and Cable & Wireless HKT's Netvigator. Another Hong Kong service will be launched next month by Canada-based Stockhouse, and more will follow.