Retail Bank in Hong Kong Launches Online US Equities Trading

Customers who click into the i-banking section of CITIC Ka Wah Bank see a cheery greeting:

“At CITIC Ka Wah Bank, we bring you optimal financial solutions to help you get the most out of life… both now and in the future. Simply log on to i-banking and experience the ease and convenience of online financial management.”

Reflecting Hong Kong’s powerful international outlook, the bank offers diversified portfolios for global wealth management. Now it is also offering zero-commission online US stock trading for its CITICfirst customers.

The bank has long offered its customers the ability to buy and sell Hong Kong stocks; however, the first rule of investment is that diversification reduces risk while expanding the horizon for growth.

For CITIC Ka Wah Bank, that presented an opportunity to expand its wealth management services. Since the US has the largest stock market in the world, it made sense to offer customers a chance to buy US stocks and diversify their portfolios to improve performance and reduce risk.

To link customers directly to the US markets, the bank is using Marketware’s WebBroker+, which is built on the Microsoft .NET Framework.

Online brokerage firms in Hong Kong, including Charles Schwab and E*Trade, have the infrastructure to provide online stock trading from Hong Kong to the US, but for a retail bank, offering similar services in Hong Kong is difficult, said Jose Pierre, CEO of Marketware.

CITIC Ka Wah Bank is aiming its foreign investment services at the bank’s sophisticated retail customers who have already shown they are comfortable with technology through their use of its i-banking services.

The bank is looking at US equities as both an immediate attraction for its more demanding customers and a long-term strategy to grow business in mainland China, said Phoebe Wong, senior vice president and head of the bank’s Wealth Management and Strategic Planning Department.

“Our mission is to be the preferred and trusted wealth management partner for affluent customers in Hong Kong and Mainland China,” Wong explained. “We believe the US stock market is the key investment option that we have to offer to this wealth management segment. The launch of our new online US stock trading service is part of our ongoing efforts to cater to the sophisticated needs of these savvy customers.”

To meet the sophisticated needs of the target segment, the bank needed to provide a powerful yet intuitive platform to compete.

“Being able to offer our customers US equities makes us much more competitive, especially against the global retail banks like Citigroup and HSBC. With the support of ADP and Marketware, CITIC Ka Wah Bank is now offering to customers a superior US trading proposition featuring a seamless, online straight-through processing experience, breadth of order features, multi-lingual user interface and very reasonable brokerage pricing,” said Wong.

The Marketware platform provides CITIC Ka Wah Bank’s clients with research from Thomson Financial including company news, earning consensus from leading analysts, target price, charting and sophisticated technical analysis plus real-time market data.

“Our infrastructure provides our clients with linkages that even some of the global retail banks are not offering in Hong Kong,” Wong added. “The user-friendly online trading platform has been equipped with full trading functions which include market order, limit order, stop limit order and good till order. Customers can place their orders with straight-through processing anytime, anywhere and with online and email confirmation and statement for easy reference.”

Offering US investment also strengthens the bank’s relationships with its existing customers.

“Our affluent customers normally hold five products with our bank and over 70 percent have investment relationships with us,” explained Wong. “US stock trading is a new investment choice for the customers and it helps enrich equity selection and diversify market specific risk. Clients might also increase business in foreign exchange transactions as they need to convert local currency to US dollars for settlement purposes.”

CITIC Ka Wah Bank is looking beyond Hong Kong for significant future growth.

“Our target market is much more than just Hong Kong,” she said. “We plan to expand this to China as well when opportunity arises and regulatory requirement allows.”

Wong divides potential investors into two distinct groups – the mature and sophisticated professionals or business owners who are Internet savvy, and the young, up and coming investors who want to do all their transactions online. Both groups are accustomed to automated channels.

Using the Internet channel is the most effective way to offer trading in US equities at a reasonable price for investors in Hong Kong, since it is 12 hours ahead of New York. Trading real-time has to be done at night, Hong Kong time. Having an effective platform with less manpower resources significantly improves the cost dynamics. This would be translated into an even more attractive price for investors.

“Online US trading is a niche product among banks in this part of the world,” Wong added. “We position this as a new financial option that opens up new investment opportunities for investors. CITIC Ka Wah Bank enables investors to grasp these opportunities with confidence, convenience and peace of mind. Our tag line ‘Strike when it’s right’ reflects the value we put behind developing this product.”

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