THE Shenzhen stock exchange is offering Hong Kong securities houses a direct trading link system which will enable foreign brokers to deal in B shares by computer from Hong Kong. The move should revive flagging foreign interest in B shares in Shenzhen, which has been plagued by mounting concerns over the mainland's runaway economy, depreciation of the yuan, and the economic austerity programme. The computer link will allow off-floor trading by overseas brokers in Hong Kong without the need to make long-distance calls to their trading representatives in Shenzhen for making orders. It should enhance market efficiency in share trading. Standard Chartered Securities became the first foreign securities house to use a pilot version of the computer link for direct dealing in B shares last Friday. The system is similar to the existing trading network which provides a link between cities in China for the trading of A shares. Eddie Chan, Standard Chartered Securities' business development manager, said technical problems with the computer system were largely solved. But he said the company would not use the system for regular trading for the time being until the software was further improved. ''It is value added to the special trading seats held by foreign securities houses,'' said Mr Chan. There are only 11 B share special seats in Shenzhen, which allow foreign brokers to have their own traders on the trading floor. Those who do not hold any special seats on the floor must still rely on their Chinese partners, the mainland brokerage houses, to make orders for them. Mr Chan said the computer link would prove advantageous to overseas brokerage houses, which now find it difficult to get up-to-date trading information, because it would also provide faster and more precise information and data on the market as it was connected with the exchange's trading system. Daniel Zeng, director of the Shenzhen exchange's International Business Division, said the program was still at a testing stage but added that the exchange would promote the computer link among foreign securities houses after perfecting the software. ''Some Hong Kong brokerage houses have already shown interest in the computer link,'' he said, adding that discussions were still continuing. Mr Zeng said the exchange had secured verbal endorsement from the Securities and Futures Commission, Hong Kong's securities watchdog, for the computer link between China and Hong Kong during its visit to the territory last week. The linkage would not infringe any local rules, he added. He said the computer system would reduce the demand for trading seats on the trading floor. The Shenzhen stock exchange has 600 trading seats in three trading halls, which are nearly filled. It is substantially smaller than the Shanghai securities exchange which has 2,600 trading seats in six trading halls.
