Hong Kong Exchange cuts trading fees to boost market

HONG Kong's stock exchange (HKEX) will cut trading fees for its cash market starting next year in an effort to improve market efficiency and boost activity.

Overall, the moves by the Hong Kong Exchanges & Clearing will lower the effective rate on cash market trades to 0.565 basis points from 0.576 basis points, according to a statement on Tuesday (Nov 1). The bourse is removing a fixed trading tariff of US$0.50 on each transaction while raising its ad valorem fee on all trades to 0.00565 per cent from 0.005 per cent.

"HKEX has worked with regulators, business partners and market participants to agree to the new fee structure, providing greater simplicity and market efficiency," HKEX co-chief operating officer and head of markets Wilfred Yiu said.

The city has been under pressure to simplify its complicated fee structure and lower overall costs, even though it has no capital gains tax. HKEX chief executive officer Nicolas Aguzin has pledged to enhance market efficiency to lure more algorithmic trading to catch up with other markets.

The exchange, the government as well as securities and audit regulators all charge fees on the city's about HK$122 billion in average daily trading. Last year, it raised the stamp duty on stocks, the biggest part of trading costs, for the first time in 28 years amid slowing economic growth.

About 11 per cent of Hong Kong trading is derived from automated systems, far below global average of 65 per cent, according to a study by the Hong Kong Institute for Monetary and Financial Research released last year. BLOOMBERG

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