HONG KONG - Less than a year since Charles Schwab reshaped the United States discount broker industry with zero-fee trading, a Hong Kong firm is following suit in a move set to deepen the pain for the city's many hard-pressed trading houses.
The move could have a knock-on effect across the sector, putting pressure on rivals who are already suffering under thin margins. By cutting fees to zero, the broker is forgoing HK$150 million to HK$200 million in fees for every 100,000 clients, according to Ms Zhu."Other brokers will have to follow in order to maintain existing client base or to acquire new clients."
Louis Mak, chief executive officer of low-fee broker I-Access Group Ltd, said passing on retail client trades is considered controversial by many in the industry in Hong Kong. The city only has one stock exchange as well, making it hard for brokers to reap compensation as their US counterparts can from multiple bourses.
"They would question how the company could stay afloat with such high rents and fixed costs in Hong Kong," said Bright Smart Securities chief executive Edmond Hui. Charging a commission of 0.0668 per cent on trades, Hui is also not budging on the level for his 338,000 clients across the city.
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