HKEX considers extending CEO Aguzin’s contract for one year

HONG Kong Exchanges & Clearing (HKEX) is considering extending chief executive officer Nicolas Aguzin’s contract until May 2025 after a tenure marked by challenges for the bourse, according to sources familiar with the matter.

The board is seeking to avoid changing chairman and CEO in the same year, the sources said, asking not to be named discussing private information. Aguzin’s current three-year contract ends in May, one month after chairman Laura Cha’s appointment expires in April. A usual HKEX CEO contract term runs for three years.

HKEX still needs to seek approval from the government and the Securities and Futures Commission (SFC) on the CEO appointment. The final decision is still subject to last-minute changes.

HKEX and the Hong Kong government declined to comment. The SFC did not immediately respond to a request for comment.

Aguzin, a former JPMorgan Chase executive, has been dogged by challenges since he took the job. Up until a rebound late last year, he presided over six consecutive quarterly declines in profit as global economic concerns, Covid restrictions, and a crackdown on private enterprise in China triggered drops in trading volumes and initial public offerings (IPOs). At the same time, investors are flocking to markets such as India and Japan.

Both the main revenue drivers of HKEX – cash trading and initial public offerings – dried up in 2023. The government had to step in and cut stamp duty in a bid to revive stock market activities, costing the city HK$14 billion (S$2.4 billion) annually.

To add to the difficulties, HKEX’s wholly owned London Metal Exchange faced litigation after it cancelled US$3.9 billion nickel trades in February last year amid market turmoil. It won the case in November in an important step to regain market confidence.

Before Monday, HKEX’s shares had slumped 45 per cent since Aguzin took over, slightly under-performing the broader index.

Still, HKEX quarterly profit has picked up. The city’s latest renewed pursuit of an IPO by oil giant Saudi Aramco together with other Middle East efforts to raise business, if successful, could also strengthen Aguzin’s position.

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He has also had a personal victory to secure a change to allow the market to keep trading under severe weather, running against a decades-long local practice and push-backs from smaller brokers and banks.

Some of Aguzin’s closest allies whom he brought in have already departed the firm, while potential internal challengers were promoted.

Aguzin was paid HK$24 million last year, including HK$10 million in salary, a performance cash incentive of HK$12.4 million as well as HK$1.6 million retirement and other benefits, according to its 2022 annual report. He also received HK$62.6 million in awarded shares. Excluding share awards, his 2022 package was up 2 per cent compared to the previous year.