Download Trading activities after the abolition of the minimum brokerage

Press release
LCQ9: Trading activities after the abolition of the minimum brokerage
commission rule
Wednesday, 26 January, 2005
Following is a question by the Hon Jeffrey Lam and a written reply by the Secretary for
Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today
(January 26):
Question:
Will the Government inform this Council of the changes in the trading volume of
securities, stockbrokers' commission income, and trading activity of securities investors after
the abolition of the minimum brokerage commission rule on 1 April 2003, as compared to
those before the abolition, as well as the numbers of securities companies which have wound
up their businesses and of securities professionals who have become unemployed so far, due to
the abolition of the above rule?
Reply:
Madam President,
We have consulted the Securities and Futures Commission (SFC). Its reply is as
follows.
Average daily turnover increased from HK$6.1 billion in Q1 2003 (preceding the
abolition of minimum commission rate) to HK$ 12.3 billion in Q3 2004. The average daily
turnover reached HK$20 billion in November 2004. Statistics of average daily turnover since
the abolition are set out in the table below –
Before the
abolition
2003 Q1
Average daily turnover
(HK$ billion)
6.1
After the abolition
2003
Q2
8.1
2003
Q3
12.0
2003
Q4
15.3
2004
Q1
19.7
2004
Q2
13.8
2004
Q3
12.3
Gross securities commission income per broker increased from HK$4.5 million before
the abolition to HK$8.2 million in Q3 2004. The figure reached HK$12.4 million in Q1 2004.
Statistics of the gross securities commission income per broker are set out in the table below -
Before the
abolition
2003 Q1
Gross securities
commission income per
broker (HK$ million)
4.5
After the abolition
2003
Q2
5.3
2003
Q3
8.8
2003
Q4
10.3
2004
Q1
12.4
2004
Q2
8.8
2004
Q3
8.2
The number of transactions executed on the Stock Exchange of Hong Kong increased
from 8.78 million in Q1 2003 to 14.9 million in Q3 2004. Statistics of the number of
transactions since the abolition are set out in the table below Before
the
abolition
2003 Q1
Number of
transactions
(million)
8.78
After the abolition
2003
Q2
11.02
2003 Q3
18.05
2003
Q4
19.76
2004
Q1
23.15
2004
Q2
15.55
2004 Q3
14.9
The number of firms has decreased from 478 before the abolition to 446 in Q3 2004
while the number of licensed persons has increased to 9,120 in Q3 2004 compared with 8,586
before the abolition. Employment statistics of the SEHK participants from Q1 2003 to Q3
2004 are set out in the table below Before abolition of
minimum commission
2003 Q 1
Number of firms
No. of licensed
persons
478
8,586
After abolition of minimum commission
2003
Q2
467
8,484
2003
Q3
453
8,561
2003
Q4
449
8,664
2004
Q1
448
8,770
2004
Q2
447
8,954
2004
Q3
446
9,120
The above-mentioned changes may be attributable to a number of factors, including
market sentiment, capital flow, interest rate movements and external factors, such as the
economic conditions in the United States and the Mainland China.
The SFC is not aware of any cases of unemployment and shut-down of stockbroking
operations in relation to the abolition of minimum commission.