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Enoch Yiu

Floor-based futures trading was given a ticker-tape send-off as 24 years of history came to an end at the Hong Kong Futures Exchange yesterday.

As the final session of open-outcry trading drew to a close, traders joined a mass countdown before tearing up hundreds of futures-order tickets and flinging them into the air.

In a bizarre scene, many then returned to yelling out buy and sell orders and making their familiar hand signals in a display of mock trading.

It wasn't a mass protest, nor a refusal to face reality. On an emotional afternoon for the 300 futures floor traders, many simply wanted to take photographs or videos of themselves in action.

From Monday, the trading pit and its bright-jacketed participants will be only a memory. Many traders will lose their jobs as futures trading bows to technological progress and moves entirely to a screen-based electronic system.

'Of course it was a sorry day,' said Wong Hung-kwan, who has been a floor trader for more than 10 years for local broker Shun Loong Holdings.

'I have been on the floor shouting out orders every day for more than 10 years.

'I passed most of my career on the floor. It was fun. It was exciting. How can I forget those good days?' Dominic Moynahan, director of KGI futures, voiced similar sentiments.

'It is a sad change. All open outcry markets will die like this eventually. But that is the power of technology.' Open outcry - in which traders shout out their buy and sell orders on a trading floor - has been used in the futures exchange since its launch in 1976.

The exchange has already introduced electronic trading for some products, but from Monday its flagship contracts - Hang Seng Index futures and options, which account for the vast bulk of turnover - will join them.

The trading floor will soon be turned into office space for the exchange's technology department, according to futures exchange chief executive Frederick Grede.

Tong Cheuk-hung, who has traded with Tanrich Futures for six years, said: 'Trading on the floor with hundreds of traders is of course much more interesting than sitting in front of a computer.

'Electronic trading has no atmosphere and no noise. I will miss the noisy days on the crowded trading floor.' Mr Grede believed many traders would be redeployed to offices to enter orders after the shift to the Hong Kong Automated Trading System (HKATS).

However, traders were more downbeat, believing lay-offs would be widespread. 'Our floor trading team now has six people,' said trader Samuel Chau Chung-yin of Singapore-based Phillip Commodities Hong Kong, who has been a floor trader for 10 years.

'Given the existing trading volume, I think it needs only three people to enter orders on to computers,' Mr Chau said.

Norman Tse, of locally based Asia Financial Futures, said mass lay-offs would be seen in foreign-based brokerages, with some shedding entire teams of floor traders.

However, in many cases generous compensation packages will sweeten the pill.

According to one trader from ING Futures, those laid off would receive at least one month's salary per working year.

Stanley Ho Wai-hung, head of electronic trading at the futures exchange, said there would be more job opportunities in the futures market after the introduction of HKATS.

This was because the electronic system would stimulate trade and make it easier for the exchange to launch new products.

'A number of new products, such as interest rate and regional index products, are expected to be added successively after the migration,' Mr Ho said.

However, not all traders were so confident about the new system. Many complained that HKATS had still been unstable in its latest tests.

Migration to HKATS was delayed from last year after the system failed a series of trials.



Ticker-tape storm for end of open outcry