Financial lawmaker calls on SFC to relax rules restricting Hong Kong stockbrokers

A lawmaker has urged the financial regulator to make it easier for stockbrokers to open accounts online for mainland customers and to allow them to conduct asset management business, in a bid to help struggling industry players.

Christopher Cheung Wah-fung, legislator for the financial services sector, said the brokerage industry has faced the challenge of declining turnover as more players have joined the market.

“If Hong Kong brokers could open accounts for mainland customers via the internet, it would widen the customer pool for many local brokers,” Cheung said during a media lunch on Monday.

The number of stockbrokers trading in the Hong Kong stock market has risen to the highest level in 20 years, with 614 brokers now licensed to trade in the city’s bourse, compared with 604 in March, according to SFC data. In the 12 months to June, 119 new players were granted licences to begin operating in the city.

Newcomers have been attracted by an improvement in market outlook last year when the Shanghai-Hong Kong Stock Connect programme led to a record HK$200 billion of shares changing hands on average every day during the month of April 2015. The average daily transactions have declined 66 per cent from that peak and were down 42 per cent in the first nine months of this year to HK$67.8 billion.

Cheung said he has negotiated with the Securities and Futures Commission, which has agreed in principle to relax the rule which currently restricts Hong Kong brokers to only opening accounts for mainlanders face to face. The reformed regulation, which does not yet have a launch date, would allow accounts to be opened online as long as the customer possessed an electronic permit from police on the mainland. Meanwhile, the Hong Kong broker would require an e-certificate from Hong Kong Post Office.