The discussion regarding the abolish of the minimum stock brokerage commission framework was held at the Financial Affairs Panel of the Legislative Council. [CB(1)733/02-03(03)] January 16, 2003
Release Date: 2003-01-14
Ref.: SC20030114/1020
January 14, 2003
Proposal by the Hong Kong Securities and Futures Industry Staff Union to Enhance the Business Climate of the Local Securities Sector
Introduction: Over the past year, our union has diligently investigated the causes of the securities industry's current challenges. We have identified that management by external parties and excessive oversight have hindered growth more than they have facilitated it, contributing significantly to the industry's decline. If the government earnestly desires the prosperity of this sector, these issues must be addressed. Following extensive consultations, we present nine strategic recommendations:
1. Adjust Stamp Duty and Commission System: Consider reducing stamp duty while gradually phasing out the minimum commission system. The industry should determine a minimum transaction fee based on operational costs to prevent destructive competition, thereby reducing transaction costs.
2. Enhance Short-Selling Framework: Improve the current short-selling system to resolve the limitation where only a few major firms and specific stocks are eligible for shorting. This adjustment can help level the playing field between institutional and retail investors.
3. Implement Central Clearing System: Develop a centralized clearing system and promote a paperless approach. Retail investors should have access to a central clearing account without incurring additional costs, thereby boosting their market confidence.
4. Introduce Legal Market-Making System: Drawing insights from other markets, establish a legal market-making framework to address transaction scarcity in non-blue-chip stocks. This can standardize market-making activities, curtail illegal practices, and enhance regulatory oversight.
5. Encourage Mainland Investment: Actively promote investment from mainland China by establishing Hong Kong Stock Exchange offices in key mainland cities, rather than passively awaiting capital inflows.
6. Redefine Derivatives Strategy: Refine the strategy for developing derivatives to ensure that such complex products are introduced only after investors are well-acquainted with them, as they have historically been destabilizing in the Hong Kong market.
7. Expand Advisory Mechanism: Broaden the scope of the securities industry advisory mechanism to include representatives from both the Financial Services Bureau and small investors.
8. Elevate Company Standards: Enhance the quality of listed companies to increase investor confidence and solidify Hong Kong's status as a financial hub.
9. Independent Regulation for Bank Securities: Ensure that banks manage their securities operations in separate venues and are subject to the same regulatory framework to promote fair competition.
Sincerely,
Wong Kwok On David
Chairman
Hong Kong Securities and Futures Industry Staff Union
January 14, 2003
Proposal by the Hong Kong Securities and Futures Industry Staff Union to Enhance the Business Climate of the Local Securities Sector
Introduction: Over the past year, our union has diligently investigated the causes of the securities industry's current challenges. We have identified that management by external parties and excessive oversight have hindered growth more than they have facilitated it, contributing significantly to the industry's decline. If the government earnestly desires the prosperity of this sector, these issues must be addressed. Following extensive consultations, we present nine strategic recommendations:
1. Adjust Stamp Duty and Commission System: Consider reducing stamp duty while gradually phasing out the minimum commission system. The industry should determine a minimum transaction fee based on operational costs to prevent destructive competition, thereby reducing transaction costs.
2. Enhance Short-Selling Framework: Improve the current short-selling system to resolve the limitation where only a few major firms and specific stocks are eligible for shorting. This adjustment can help level the playing field between institutional and retail investors.
3. Implement Central Clearing System: Develop a centralized clearing system and promote a paperless approach. Retail investors should have access to a central clearing account without incurring additional costs, thereby boosting their market confidence.
4. Introduce Legal Market-Making System: Drawing insights from other markets, establish a legal market-making framework to address transaction scarcity in non-blue-chip stocks. This can standardize market-making activities, curtail illegal practices, and enhance regulatory oversight.
5. Encourage Mainland Investment: Actively promote investment from mainland China by establishing Hong Kong Stock Exchange offices in key mainland cities, rather than passively awaiting capital inflows.
6. Redefine Derivatives Strategy: Refine the strategy for developing derivatives to ensure that such complex products are introduced only after investors are well-acquainted with them, as they have historically been destabilizing in the Hong Kong market.
7. Expand Advisory Mechanism: Broaden the scope of the securities industry advisory mechanism to include representatives from both the Financial Services Bureau and small investors.
8. Elevate Company Standards: Enhance the quality of listed companies to increase investor confidence and solidify Hong Kong's status as a financial hub.
9. Independent Regulation for Bank Securities: Ensure that banks manage their securities operations in separate venues and are subject to the same regulatory framework to promote fair competition.
Sincerely,
Wong Kwok On David
Chairman
Hong Kong Securities and Futures Industry Staff Union