Most local and mainland retail investors will trade funds on an online platform if the Hong Kong Exchanges and Clearing sets up and operates one, according to a Hong Kong Investment Funds Association survey.
The poll showed that 81 percent of mainlanders would like to use such a scheme – where funds can be bought and sold like stocks – and 51 percent of Hongkongers would opt for it.
HKIFA surveyed 950 mainland and local retail investors in October. Some 70 percent of respondents were Hongkongers.
It said setting up such a trading platform will enable fund managers to offer diversified wealth-management services to investors, most of whom are currently investing only in stocks.
At the moment, about 70 to 80 percent of investments in funds are done through banks, which determine the service fees and commissions for their services.
HKIFA chief executive Sally Wong Chi-ming said introducing competition via a new channel for selling funds will help bring down service fees, benefiting retail investors.
She noted that though foreign experience suggests that having a new sales channel will not necessarily wean fund investors from banks, it’s the new investors who may be lured to try out funds.
Wong said HKIFA has been in talks in the past two years with HKEx and local brokerages for the establishment of a fund-trading platform. Many markets in the region – including Taiwan, Korea, Thailand and Australia – have set up such a platform.
She said talks with HKEx are focused on operations, with the bourse operator looking at prospects of setting up one.
HKEx needs to update its fund- trading system, which is more diversified than the one used in trading standardized equity products, said Wong.
HKIFA will also work with the Securities and Futures Commission, the local securities regulator, to formulate related regulations to help set up the platform.
The SFC has to clarify numerous issues, including the online fund transaction process, the boundary between recommendation and solicitation, and the circumstances that will trigger suitability testing, said Wong.
The SFC will soon issue a circular relating to suitability.