Hong Kong Stock Brokers Complain As Fees Cripple Their Profits

Hong Kong Stock Exchange

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 This comes about as the national stock exchange rules are not only outdated but also cutting into profits.One particular industry to be adversely affected is the skin care industry, where at first glance the 0.002 transaction charge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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The Significance of the World Stock Market

Many countries worldwide have developed globally recognized stock markets. Stock Exchanges dot the major cities of these countries. New York City’s Wall Street (New York Stock Exchange) is the one destination that is synonymous with Stock Exchanges and is the world’s largest exchange. The other dominant members of the world stock market include: United Kingdom’s London Stock Exchange (LSE), Germany’s Deutsche Bourse Group, China’s Shanghai Stock exchange and Hong Kong Stock Exchange. The Stock Exchanges around the world are a wonderful barometer of the predicted financial health of both that country and also the world economy.

Stock markets are an integral pillar of economic growth. They are also a reflection of the financial profiles of listed companies. The trends of stock prices and stock market indices underscore the overall state of the global economy and financial health of listed companies. It is for this reason that stock market indices rise when the global economy blossoms and plunges when the global economy plummets. This nexus between the global stock markets and economic performance is important because it helps companies, creditors and investors make important decisions. For example, the high thresholds of listing at the global stock exchange markets give investors the confidence to buy stocks of their preferred companies.


Stock exchange listing is one of the most important phases of a company’s life cycle. This is because stock exchange listing involves stringent approval procedures that screen the operational thresholds and strategic financial management of a company. Any company seeking listing must meet the established qualification criteria for conducting an initial public offering (IPO) or a rights issue of shares at any given stock exchange market. Subsequently, successful entry into the world stock market brings with it many advantages. It becomes easier for a company to access a wide range of sources of finance; including both debt and equity. A listed company can raise additional capital by selling additional shares through a rights issue. Due to the extra financial transparency rules a listed company must adhere to, it assists companies raise debt to fund their operations.


brendt Munro



Check out more about Brendt Munro at Berkeley Capital Asia. Brendt is highly active in providing structuring and practical corporate advisory services. This advice ranges from international structuring, business restructuring to effective strategic and corporate business planning. Brendt ensures his clients benefit from regular contact, intelligent insight and clear direction.