Charles Li Xiaojia will not officially become the chief executive of Hong Kong Exchanges and Clearing until next month. But into his third month as Paul Chow Man-yiu's shadow, he is already making waves. Critics call him an 'extravagant misfit' while supporters characterise him as an 'intelligent reformer'. I am not going to cast my vote here. Instead, I'll show you what I have gathered from insiders. The 'trivial' but juicy bits first. Li, a former JP Morgan head of China, asked the board to give him a full-time driver and a golf club membership in Beijing. No commercial entity would bat an eyelid over these. We are talking about Beijing, where these are daily necessities in the corridors of power. At the exchange, though, it's a different story. For almost a decade, the arrangement has been to hire a part-time driver and nice car only when the chief executive or chairman is in Beijing; and the current chief executive, Chow, does not play golf. This type of cost control and a flat expense curve for nine consecutive years are what the management is most proud of. After all, the exchange leadership seldom goes to Beijing and yet the deals continue to come. Beyond these perks, Li asked the whole board to have a two-day retreat for brainstorming. He wants them to answer three big questions. How big and real is China as a market? How real is the emerging competition? And, depending on the answers, how should the exchange prepare for the future? If they decide to become more proactive in terms of talent and infrastructure, what will that mean for the budget? What will it do to the 10 to 15 per cent cost ratio, the 75 per cent return on equity and 90 per cent dividend payout? Li is asking for input from everybody before the exchange puts out the 2010-12 strategic plan in March. Board members are shocked or excited, depending on who you ask. For the past six years, they have been on the receiving end of three-year strategic plans prepared by the management. It was not a demanding job, given the 'operational focus' of the plans with a limited big-picture strategy and limited risk. The management worked on the plan in spring, the board discussed it at two or three meetings and it was out before Christmas. Now, Li wants ownership from every board member. The shock is not just coming from the board. Li has been meeting almost every second-tier official one on one. At the end of the chat, he asks for a list - the three things that he or she wants Li to do and the three don'ts. Wow ... the exchange has largely been a top-down corporate, given Chow's unrivalled knowledge and experience in Hong Kong's financial markets. The top management makes the call and you are safe. Now, Li wants people to speak their minds. The shock is among government officials as well. They barely knew Li before his appointment. Now he is calling up top officials without going through the 'proper channels' - that is, bypassing many in between. Mind you, less than a decade ago, the then chairman of the Securities and Futures Commission received a letter from his counterpart in the exchange stating that any dialogue between the two bodies should be chairman to chairman, not chief executive to chairman! Now you can see why Li is dubbed both 'misfit' and 'reformer'. He is not just playing the role of a top marketing man in Beijing as most have expected, but also a chief executive pushing for a 'cultural revolution' - something many market practitioners consider long overdue. It will be tough, very tough. The top reason is the exchange's own success. A call for change can easily win support from stakeholders - the board, employees and shareholders - in a bad company. Everybody is ready to make some sacrifice because the alternative is losing everything. Yet the exchange could not be in better shape. Its profit and share price are only slightly below record highs. Its financials remain unrivalled. It has the highest operating margin, return on equity and dividend payout ratio among major exchanges. It has made itself the world's largest derivatives market and record holder of initial public offerings. This 'super abnormal' profitability is unlikely to change in the next few years, given the mainland's buoyant economy and liberalisation pace. It will be tough to convince the board the old way will no longer work in the new environment. Remember the saying: 'If it ain't broke, don't fix it!' It will be tough to push bureaucratic-minded employees to embrace the aggressive and perhaps more results-oriented reward system of a commercial entity. It will be tough to sell shareholders on the expansionary mode, which may mean higher costs and lower dividend payouts even if there is a bright future in the long run. Failing to secure the trust and support of any of these stakeholders and his grand blueprint will be nothing but an empty statement. Yet, given who he is, Li has a double challenge. To the Hong Kong financial scene, he is a stranger. More importantly, he is an alien, both as an investment banker and a mainlander. The good thing is his hands are not tied by historical baggage. The bad thing is he does not command the same trust and respect that Chow does. He also must fight various 'mainlander' stereotypes and the fact that many power players lost out to him in the early part of the job hunt. The flurry of criticism and rumours way before he has taken on the job shows how steep a mountain he has to climb. Li is no stranger to uphill battles. The former oilfield worker made himself the most senior Chinese at one of the world's largest banks. Yet for a new exchange to emerge requires the courage of many others. Let's hope Hong Kong has not run out of that.