Brokers are increasingly launching their own investor insurance schemes against broker default to supplement Hong Kong Exchanges and Clearing's compensation scheme.
Christina Hui, a regional general manager at Charles Schwab, the world's largest online broker, said the company had introduced an investor-protection scheme for Hong Kong stock trading.
The scheme, insured by Travellers Group, covered clients' entire assets without incurring extra costs, Ms Hui said. 'Unlike the exchange's compensation scheme, which pays on a per brokerage basis, our programme provides protection on an individual basis,'she said.
Although no extra costs were incurred by clients, she said, the firm required a minimum deposit of HK$200,000 for local stock trading.
Under the Unified Exchange Compensation Scheme, clients of defaulting brokers can claim compensation from the fund up to a maximum of HK$8 million per firm.
The amount is considered inadequate to safeguard clients, especially after the collapse of CA Pacific in 1998. Then, after protests by small investors, the exchange and the Securities and Futures Commission stepped in to raise the maximum payout per client to HK$150,000.
Charles Schwab is not the only broker with its own insurance scheme in Hong Kong. Its two competitors, TD Waterhouse and KGI Asia, have similar schemes.
