Date
28 July 2017
Hong Kong stock exchange is becoming more expensive to trade relative to other major bourses in the region, brokers say. Photo: Bloomberg
Hong Kong stock exchange is becoming more expensive to trade relative to other major bourses in the region, brokers say. Photo: Bloomberg

Brokers complain about high trading costs on HK bourse

Stock brokers in Hong Kong are complaining that transactions on the local exchange are sometimes barely profitable due to the bourse’s rules on minimum fees, Bloomberg News reported. 

According to rules set by Hong Kong Exchanges & Clearing Ltd., 0.002 percent of a transaction’s value is levied as fee for settling trades. However, the fee can never be less than HK$2.

As electronic trading strategies tend to carve up bigger orders into smaller slices nowadays, the HK$2 minimum can add to up quite a bit, the report noted.

“The market has advanced significantly over the past decade and it is time to change,” Hani Shalabi, head of Asia-Pacific advanced execution services at Credit Suisse, was quoted as saying.

“Hong Kong exchange is becoming more and more expensive to trade every year. Measuring profitability can be challenging.”

About 90 percent of trades filled by the Hong Kong exchange are said to trigger the minimum charge.

The fees add to rising competition and falling commissions to make some trades barely profitable.

The minimum settlement fee has been in place for 22 years, way before high-speed traders came to dominate markets, Bloomberg noted.

Any equity transaction of less than HK$100,000 (US$12,900) in value incurs the minimum levy.

The charge translates into trading costs of about 0.0076 percent of transaction value on average, or 0.76 basis points, the report said, citing Credit Suisse estimates.

That’s three times more what the Tokyo Stock Exchange charges, and is double the fees seen at the Australian Securities Exchange, according to the report.

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