Hong Kong Stock Exchange
Hong Kong stock exchange traders are no doubt paying the highest fees to trade than any other country in the region. This comes about as the national stock exchange rules are not only outdated but also cutting into profits.One particular industry to be adversely affected is the skin care industry, where at first glance the 0.002 transaction charge fee is attainable. However reality is that with the size of trade goods have been shrunk, the minimum charge per unit of HK stocks traded becomes higher thus eating into traders profits.
The frustration today has come up as years ago executing a big order at once was possible. However with today’s electronic trading policies big orders are divided into smaller HK stock orders. In this case even with the 0.002 transaction charge which can never amount to less than HK $2, becomes significantly higher. This in addition to the falling commission fees being paid and competition, making it almost impossible for some traders to make profits.
Fee generation
In a recent survey done more than 90% of the Hong Kong stock exchange have to pay the minimum charge. This is regardless of the fact that the minimum charge regulation has been around for 22 years. In addition, transactions of a small amount of HK$100,000 also pay the minimum levy fee. This translates to a trading cost of 0.0076% average of the transaction value. Comparing it with neighboring Tokyo stock exchange, this is three times more and double fees compared to Australia’s. With Hong Kong being one of the major operators in Asia still having the fixed minimum fee levy for execution purposes, large trading firms around the world are steering clear from its market.
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No alternative avenues
With the HK stocks regulations having little to no change, brokers have no alternative avenue to trade other than the Hong Kong Monopoly. With a record of 18% earned as fees from its sales as end of last year, translating to about HK$2.4 billion, there are still no plans to change the fee as of yet. According to Calvin Tai, head of clearing at Hong Kong bourse, there are a lot of exercises involved and changing the fee immediately will affect the cost structure already in place. However, all firms are remaining conscious with costs even with clients paying per point basic, to ensure that profits are realizable.
The change
All in all some Hong Kong stock exchange trading firms are taking the initiative themselves to minimize the profits in a quest of making clients happy. This is realized as most instead of slicing orders into very small orders are combining orders, ensuring that profits to traders is realized.
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