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Enoch Yiu

Former high-flying businessman and political operator Barry Cheung Chun-yuen has seen his star plummet after the collapse of his baby, Hong Kong Mercantile Exchange, last year.
Many of Cheung's former employees, brokers and creditors described him as "hardworking, someone driven with a mission."
"He is a smart guy and had a dream to set up an exchange. But he underestimated the difficulties and did not have enough money to support his vision," former legislator Chim Pui-chung said. "This was bad as the collapse of the HKMEx led Cheung and others to suffer losses."
Cheung declined to comment for this article.

	He is a smart guy and had a dream … But he underestimated the difficulties

	CHIM PUI-CHUNG, FORMER LEGISLATOR
The former executive councillor and oil executive is facing several lawsuits. They include a personal bankruptcy hearing on May 21, filed by Leung Chee-hon, a director and shareholder of Sunley Holdings, after Cheung failed to repay a HK$40 million debt.
He also has to attend a District Court oral examination on his personal finances on May 27 in relation to a suit from former HKMEx co-president William Barkshire seeking HK$3.2 million in unpaid salary and remuneration.
Chim said he had offered an HK$8 million loan to Cheung in December 2010 for setting up HKMEx and he got his money back a year later. Other creditors were not so lucky.
The High Court last week ordered the winding up of HKMEx after it failed to repay four creditors, including its former landlord and employees for unpaid rent and salary. The amount involved is almost HK$100 million.
Cheung owns 56 per cent of HKMEx, which featured electronic trading in gold and silver with a platform whose establishment cost hit HK$500 million.
The court order came almost a year after Cheung surrendered HKMEx's trading licence to the Securities and Futures Commission after it failed to meet cash requirements.
The collapse of HKMEx does not only hurt Cheung's business life but also his public persona.
A month after the collapse, he quit the Executive Council and all other public duties after police began an investigation into false documents linked to the HKMEx.
Cheung had been active in public life. While working for global consultancy McKinsey, he was seconded to serve in the government's Central Policy Unit in 1993 and 1994. This established his government network.
He was a former chairman of the Urban Renewal Authority and an avid supporter of Leung Chun-ying during the chief executive election. When Leung won the city's top post in 2012, Cheung was appointed to his cabinet.
In business, Cheung was an executive director and deputy chairman of oil trader Titan Petrochemicals, where he got the idea of a commodity exchange.
Cheung put his dream into action in 2008 after he resigned from Titan and founded HKMEx. Financial Secretary John Tsang Chun-wah gave his blessing to the project, leading analysts to believe the government had officially endorsed the exchange.
However, the blessing did not mean it was all smooth going. HKMEx failed to launch oil futures as it initially planned because China placed restrictions on the exchange trading oil for mainland companies.
The global financial crisis in late 2008 also hurt his plans, prompting a shift to trade gold and silver.
A former employee said although Cheung had good connections with the government, it did not automatically translate into financial support or policy changes that benefited HKMEx.
"Some lawmakers said the SFC has been too lenient on the HKMEx, but we think it has been very harsh. The regulator required the HKMEx to undertake system tests repeatedly for almost a year before giving it a licence," he said. "The government only paid lip service in encouraging commodity trading. It did not really offer any policy or financial support to new players such as HKMEx."
HKMEx was powerless when rival Hong Kong Exchanges and Clearing, which had enjoyed monopoly status in stock trading, barrelled into the commodities arena by buying the London Metal Exchange in 2012.
HKMEx also failed to compete with the Chinese Gold & Silver Exchange Society, which had traded gold in the city for more than a century.
On its last day, HKMEx had only 181 contracts to settle. Even on a normal day, its daily transaction volume was about US$19.5 million. That was a fraction of the daily turnover of US$7.7 billion to US$10.3 billion at the 103-year-old Chinese Gold & Silver Exchange.
Ben Kwong Man-bun, a director and head of research at KGI Asia, one of the 37 members of HKMEx, said a lack of liquidity discouraged investors.
"We joined HKMEx to support the new market. However, it had little turnover and our clients had no interest to trade on it," Kwong said.
Cheung recruited about 100 staff, half of them with technology background, to establish and maintain HKMEx's electronic trading platforms.
Another former employee, who is among 70 claiming unpaid wages, still gave credit to his former boss.
"Cheung was a hardworking man," he said. "He was always the first to be in the office and he cared about staff training. He wanted to recruit talent and let the staff learn about the trading platform and products. It is a shame he did not have enough financial support."


Barry Cheung: the man behind the failed HKMEx

Illustration: Lau Ka-kuen

Business

Money

Markets & Investing

Barry Cheung was a rising star in the private and public sectors, but all that changed when his dream commodity project HKMEx collapsed


Former high-flying businessman and political operator Barry Cheung Chun-yuen has seen his star plummet after the collapse of his baby, Hong Kong Mercantile Exchange, last year.


Barry Cheung: the man behind the failed HKMEx

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Barry Cheung was a rising star in the private and public sectors, but all that changed when his dream commodity project HKMEx collapsed

Barry Cheung was a rising star in the private and public sectors, but all that changed when his dream commodity project HKMEx collapsed