The Trouble With Spreads

摘要

Executives at the Hong Kong stock market love to talk about how they're making the exchange more competitive. Their latest move: scrapping the minimum brokerage rate of 0.25%. As of April 1, clients will be able to negotiate lower brokerage rates with their brokers. Don't pop the champagne just yet. Compared with the ridiculously high bid-offer spreads for trading stocks, argues Hong Kong investor advocate David Webb, the, lower rates don't mean much. (A bid-offer spread is the difference between the price at which buyers offer to buy a stock, and the price of a sellers' offer.)