SFC refuses to delay new margin financing rule stock brokers say threatens their livelihoods as they struggle to survive amid protests
- ‘We are very disappointed that the SFC did not care about the livelihood of the brokers,’ said Tom Chan, chairman of the Institute of Securities Dealers
- Brokers now plan to lobby the government to step in to halt the new rule which they say will hurt the market further as it reels from 16 weeks of protests
Hong Kong’s stock brokers have failed to convince regulators to delay a new cap on margin financing they say will lead to closures and a further fall in stock market turnover.
Industry bodies representing the city’s brokerages say they will now take their opposition to the government after the Securities and Futures Commission on Monday rejected their request.
The new rule, which will apply from October 4, will cap the amount of money a brokerage house can lend to its clients to trade stocks at five times its capital. There is currently no restriction on the practice known as margin lending, regarded as a crucial source of income for brokers.
The new regulation has come as a huge blow to many of Hong Kong’s smaller brokerages, which are already struggling to keep their doors open with their revenues down almost a third amid the city’s ongoing political crisis.
“We are very disappointed that the SFC did not accept our demand to delay the new rule for a year. The commission only agreed to adopt a ‘light touch’ in enforcement, which does not help,” said lawmaker Christopher Cheung Wah-fung, who is also a broker.