Doors open for HK stock brokers to enter the fund management fray
City’s stock trading watchdog relaxing its rules for stock brokers applying for licenses to conduct limited scale fund-management business
The Securities and Futures Commission, Hong Kong’s stock trading watchdog, is relaxing its rules for stock brokers applying for licenses to conduct limited scale fund-management business – a move which should help more brokers diversify.
The commission said that brokers who already have an SFC Type-1 securities trading license and five year’s experience of discretionary trading for clients – effectively that means they have complete freedom to make trades on behalf of clients – can apply for a Type-9 fund management license to conduct certain types of fund management, such as selling client fund products.
There will also be no need for individuals to pass formal exams in fund management, but companies will be required to offer staff training to gain the license.
The announcement is being seen as a personal success for lawmaker Christopher Cheung, a broker himself, who has spent two years fighting heir corner, so brokers can expand their services from pure stockbroking into some fund management.
“Brokers’ commission per transaction has fallen to below 0.1 per cent, while fund managers can ask for fees between 1 to 3 per cent up front, leaving a lot of brokers struggling in the current conditions,” Cheung said.