Hong Kong’s financial regulator should relax domain trade mandate if a city is to contest with opposition Singapore in unfamiliar sell trading, as a internationalisation of a yuan provides a good event for a city to stand a universe rankings, according to maestro traders.
Hong Kong overtook Tokyo to turn a world’s fourth-largest forex trade centre in Apr this year, though it still lags behind London, New York and Singapore.
Jasper Lo, arch executive of King International and a forex merchant of 30 years, pronounced a parsimonious domain trade is a pivotal reason Hong Kong is losing out to other financial centres. The Securities and Futures Commission now sets a smallest forex trade domain during 5 per cent, compared with 2 per cent in Singapore and a US, while London has no domain limit. The attention normal is about 0.5 per cent.
“This means investors can trade 20 times their initial deposition on forex trade in Hong Kong, 50 times in Singapore and New York, and 200 times in London,” Lo told a South China Morning Post. “This means investors can use most reduction income to trade a same volume of forex in London, New York and Singapore. This is because Hong Kong has mislaid out.”
The SFC says a domain is designed to strengthen leveraged forex brokers opposite sensitivity in a unfamiliar sell markets.
Wilson Chan, a former banking merchant who is now an associate executive of a MBA module during a City University of Hong Kong, said: “In Australia, a domain requirement is usually 1 per cent and many Hong Kong investors trade forex around a Australia market. If Hong Kong would revoke a domain level, it needs to cut it almost to get closer to Australia or it won’t be means to contest for business.”
However, Chan pronounced a regulator would need to cruise risk issues as a forex marketplace could be really volatile.
The normal daily unfamiliar sell turnover in Hong Kong stood during US$437 billion in Apr this year, next Singapore’s US$517 billion, New York during US$1.27 trillion and London during US$2.43 trillion, according to a investigate by a Bank for International Settlements, that carries out a consult of foreign-exchange trade in about 60 markets worldwide each 3 years.
Lo, who recently led a set adult of King International, that is requesting for a forex trade permit in Hong Kong, pronounced Hong Kong was a tip 3 forex marketplace in a 1980s, only behind London and New York.
“Back then, many British forex trade firms set adult here with many gifted traders, while a series of forex investors was no reduction than those in a batch market,” he said.
The Hong Kong forex marketplace declined after many British firms changed to Singapore in a early 1990s, fearing domestic doubt forward of a 1997 handover of Hong Kong to a Chinese.
Then in 1994, a SFC introduced new laws to umpire leveraged forex companies, including a domain trade limits. Previously there was no domain requirement in forex trade in Hong Kong and many brokerages would collect only 1 per cent.
This has prevented malpractice though also led to a decrease in a series of players in a marketplace from 52 in 1994 down to 42 today. The series of SFC-licensed forex traders stands during only 1,028, compared with 25,861 in bonds trading.
Lo said: “There are many mainlanders that would like to trade forex though a domain turn is too high in Hong Kong so they opt for trade in London instead. The internationalisation of yuan is a good possibility for Hong Kong to locate adult and it is time for a SFC to relax a rule. Singapore in 1994 also collected 5 per cent domain though now has reduced that to 2 per cent.”
Gary Cheung, vice-chairman of Hong Kong Securities Association and a maestro batch and banking broker, concluded that a SFC contingency cut a domain in sequence to reignite a forex marketplace in Hong Kong.
Cheung pronounced that before a SFC introduced a law in 1994 many stockbrokerage houses also ran a forex desk, with a domain turn concluded between a brokers and a investors.
“The SFC has not set domain levels on particular batch trade and lets a brokers negotiate with customers. It uses other measures to safeguard a financial confidence of a stockbrokers. This is because a batch marketplace is really active,” Cheung said.
“For a forex marketplace to turn active again, it is critical for a SFC to adopt a same proceed on forex trading, and let a banking brokers openly negotiate domain with customers.”
He pronounced a decrease of a forex marketplace has meant fewer people have been training forex trade and apropos brokers in a sector.
“If a forex marketplace becomes active again, it is healthy some-more people would take adult courses in forex trade and join a industry,” Cheung said.
An SFC orator said: “An adequate turn of smallest initial domain is to yield a pillow for leveraged forex brokers opposite a pointy volatilities of a forex markets, as new and past events have demonstrated. We acquire views from a attention and will keep in perspective of their suggestions.”
Andrew Fung, executive executive of Hong Kong lender Hang Seng Bank, pronounced overheads were another cause giving Singapore an corner over Hong Kong as a forex hub.
“For vital currencies such as a euro and Japanese yen, some-more US and European banks might have their marketplace and traders located in Singapore due to costs such as bureau rental. The South Asia rising marketplace currencies and batch markets such as India are investors’ favourites in a final dual year, and that helps Singapore too.”
Heng Koon-how, a comparison investment strategist during Credit Suisse in Singapore, pronounced Hong Kong is a apparent choice for investors who are penetrating to concentration on offshore yuan trading.
“Beyond that, Singapore has a graphic advantage over Hong Kong as a FX trade heart due to the some-more different and deeper FX trade pool,” Heng said. “Singapore has an active concentration on trade in South East Asian currencies and Australian and New Zealand currencies. Most Australian mining and commodity firms have Asian offices in Singapore.”