Partnership on way as broker stands by for bigger opportunities in China, Japan Tai Fook Securities Group, one of the largest local brokerages, plans to set up a joint-venture company to enter the mainland futures market. Group managing director Peter Wong Shiu-hoi said the company was in the process of choosing a partner and expected to start trading in mainland commodities futures later this year. Under the second phase of the Closer Economic Partnership Arrangement announced last year, Hong Kong brokerages can hold up to 49 per cent of a mainland futures joint venture. At present, the mainland's futures markets only trade in commodities contracts on the price of rice, wheat, soyabean, copper and crude oil. However, as part of financial market reforms, the authorities have indicated that some regulations would be relaxed to allow short selling of stocks and the introduction of index futures products, although no time frame has been given for the changes. 'Tai Fook has been involved in US and Japanese commodities futures for a long time. Setting up the new joint venture will allow us to import our futures trading skill and management into China,' Mr Wong said. 'We are waiting for China to introduce index futures as that would provide a lot of business opportunities. The A-share investors as well as qualified foreign institutional investors could use the index futures to hedge their investment risks,' he added. Mr Wong also said Tai Fook would open two more branches in Hong Kong, adding to the nine in operation, as well as another two in China where it already has offices in Beijing, Shanghai, Shenzhen and Guangzhou. 'As for the next step, we would like to open an office in the western part of China, such as Chengdu,' he said. The brokerage has 67,000 customers, of which 10 per cent are mainlanders who have local bank accounts to aid settlement while they trade through the internet. 'Internet trading has helped us to expand our business in China and other overseas markets. Within the next three years, I would like to see 40 per cent of our trading being done through the internet, up from 20 per cent now,' Mr Wong said. To encourage this, Tai Fook is launching 3G online trading services next month to give clients easier access to stock information and the ability to trade via their mobile phone. '3G can be used in many countries, including Japan. It might be useful for us to expand into the Japanese market as we have found that Japanese clients are very interested in trading H shares in Hong Kong,' Mr Wong said. Regarding investment banking, he said the brokerage would be sponsoring five to six initial public offers this year, each one raising between $500 million and $1 billion.