Hong Kong Exchanges and Clearing yesterday went ahead with its controversial proposal to narrow the trading spreads on more than 1,000 stocks from July this year despite strong opposition from retail investors and small brokers. The board yesterday decided to narrow the spreads - the difference between the bid and ask price for stocks trading at prices between 25 cents and $20 - in a bid to cut trading costs and increase turnover. Brokers, however, are not happy with the decision, saying a narrower spread favours institutional investors because the shares are easier to hedge. 'I am really disappointed about the HKEx decision. The exchange has put the interests of large institutional investors before the benefit of brokers and investors,' said Choi Chen Po-sum, vice-chairman of Hong Kong Institute of Securities Dealers, adding that retail investors doing day trades would find it harder to turn a profit. The exchange in July last year began the first phase of its plan, cutting all bid and ask price spreads from 25 cents to five cents for stocks trading between $30 and $100 and from 50 cents to 10 cents for those exceeding $100. The exchange in a statement last night said that phase one of its plan to narrow spreads had had a positive result and had improved market efficiency. 'There did not appear to be any adverse impact on market liquidity and turnover during the review period. Also, no adverse system operations were observed in respect of the loading on trading systems,' the exchange said. The exchange said the top 53 brokers were conducting 75 per cent of the orders of stocks between 25 cents and $20. In phase two of its programme, spreads between $20 and $30 will have no change but be kept at five cents. Stocks trading between $10 and $20 would have their spreads reduced from five cents to two cents. Stocks trading between $5 and $10 would have their spreads cut from five cents to one cent. Those trading from $2 to $5 would have their spreads cut from 2.5 cents to 0.5 cent. Stocks trading between $1 and $2 would have their spreads cut from one cent to 0.2 cent and stocks from 25 cents to $1 would have their spreads cut from 0.5 cent to 0.1 cent. The HKEx board yesterday appointed non-executive director David Webb to the listing committee effective immediately, replacing chief executive Paul Chow Man-yiu. The exchange recently changed the rules to make all three members of the committee non-executive directors.