The dispute over the derivatives trading system of Cheung Kong (Holdings) escalated yesterday with Hong Kong Exchanges and Clearing's chief operating officer calling for brokerages not to trade on platforms which had yet to get regulatory approval. Property developer Cheung Kong (Holdings) has teamed up with five investment banks to offer an equity-linked notes (ELNs) trading platform to local brokers. It is reported to be preparing to launch its iMarkets system as early as November 15, although it is yet to receive Securities and Futures Commission approval. The launch of such a platform would put it in direct competition with HKEx's proposed service for trading new derivative products. A Cheung Kong spokesman yesterday would not confirm the launch day but said 'preparation work for the launch of iMarkets is being carried out'. HKEx chief operating officer Frederick Grede warned brokers against trading with unregulated platforms. 'If any trading platform is introduced without regulatory approval, such a platform would be illegal. If I was a brokerage executive, I wouldn't direct my clients to a system that doesn't have regulatory approval,' he said. Cheung Kong is reportedly working with brokerages to set up its iMarkets platform which will offer Internet trading of the ELNs - a high-risk, high-return derivative product which allows investors to bet on stock-price movements. Mr Grede said HKEx had planned to launch ELN trading 18 months ago but had had to wait for regulatory approval from the SFC on product design, disclosure requirements, fees and charges and marketing strategy. He claimed the SFC would be applying more relaxed standards to iMarkets if it were able to launch earlier than HKEx. 'There is a real danger of Hong Kong becoming an unregulated market. We have been working with the SFC for 1.5 years to proceed with trading ELNs and we are still waiting for approval,' he said. He said if iMarkets were to proceed earlier than HKEx it would show Hong Kong was changing its regulatory standards. It would not be a healthy sign, he said, for Hong Kong to see a wave of unregulated trading platforms. An SFC spokesman said it was discussing with iMarkets the model for its platform and would then decide which conditions to impose. The Cheung Kong spokesman said: 'All business operations carried out by the Cheung Kong Group are, and will be, perfectly legal, with all concerned regulatory approvals obtained.' Mr Grede said he believed there would be a trend for more electronic derivative- and stock-trading platforms to be launched. He said HKEx was not worried about competition from other platforms but urged the SFC to make sure they were regulated in the same manner as the HKEx. The SFC confirmed that because iMarkets was not a stock market it did not infringe on HKEx's monopoly as the only stock exchange in Hong Kong.