No need to shed any tears for the end of HK’s iconic trading hall
The 30-odd traders left active on the floor are from a bygone age – but it’s
understood HKEX is planning to find a much smaller venue in Central for them, where hopefully they can still keep their rent at an affordable level
The stock exchange’s decision to shutter its iconic trading hall shows technological evolution has managed to end a chapter in the 126-year history of the city’s stock market trading.
Now the question is, ‘what happens to our traders?’
Hong Kong Exchanges and Clearing (HKEX) on Monday informed brokers that its current 32-year-old trading hall will be no longer, from October, as it is seriously under used.
Most stockbrokers said they felt sad about the news, while some of the older hands probably reflecting back on the halcyon days of frenetic verbal and manual trading.
The trading hall as a venue is in the collective memories of anyone associated with the stock market, after the combination of the four former stock exchanges into Stock Exchange of Hong Kong in 1986.
When Hongkong Land Holdings built the Exchange Square complex in the early 1980s, the government commissioned it to build the trading hall for the combined exchange, called the Stock Exchange of Hong Kong. The stock exchange later merged with the futures exchange, in 2000 to form the HKEX.
At the time, the grand 45,000 square foot trading floor was in the shape of a parallelogram, to cater for the almost 1,000 traders of the four former stock exchanges, with brokers of the four former exchanges sitting next to each other on one side.
Back then internet trading was but a dream, with business done by telephone, or brokers just yelling at each other on the floor, to get deals done.
The hall was crammed with running traders, but the noise and atmosphere were certainly electric.
All involved were witness to some of the most-important financial industry milestones of their time: the 1987 market crash, when the Hang Seng Index’s value fell 33 per cent in a single day; the listing of the first mainland company Tsingtao Brewery, in July 1993; the government’s intervention at the peak of Asian financial crisis in 1998; and most recently the launches of the Stock Connect trading links between Hong Kong and Shanghai and Shenzhen.
The trading hall was quite simply the beating heart of the local stock market, since its launch in 1891.
But even the most nostalgic brokers, who may have shed an inward tear on Monday morning after hearing about its imminent demise, would admit the move was inevitable with most of them no longer going there at all.
Let’s be quite clear, the hall’s closure does not mean any brokers will lose their jobs.
There are currently 500 active stock brokers in Hong Kong, up from about 430 two years earlier.
But the increase in number has failed to force any more into the trading hall to do business – quite the opposite, in fact, as this new generation trade electronically, while their clients bark buy or sell orders through smartphones or via computer screens.
Nowadays, less than 30 brokers are actually trading “on the floor” – where previously 1000s in their distinctive red jackets jostled for pole position – and they represent less than 0.2 per cent of all trades.
HKEX had actually wanted to close the trading hall a decade ago, when there were around 300 still renting desks there. But those last 10 years have certainly cut it down to size, and importance.
This time around, there will be no strong opposition.
The old timers who used to trade, adrenalin-driven, in the trading hall have retired and sold their businesses to the next generation, which is used to electronic dealings with clients and associates.
The concept of needing paper back-ups for trades no longer exists with brokers confident their computers will automatically save and confirm any trade made, without having to go anywhere near a seat in the largely empty trading arena on the first floor of Exchange Square.
Those 30-odd traders left active on the floor are from a bygone age. They could well have been worried on Monday morning about its end, as most are very small operators who rather like the cheap rent of HK$7,000 a month for a booth, while a small office in Central might cost more than double that.
But they needn’t fret too much, as it is understood HKEX is planning to find a much smaller venue in Central for them, where hopefully they can still keep that rent at about the same level.
There are only questions left unanswered: how to best use the hall after all the traders have gone; and in fact, can we still call it an “exchange” as such, when there are actually no traders left dealing on the premises?