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 | Sunday, April 23, 2000, updated at 11:07(GMT+8) | ||||||||||||
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Web Fever Grips China's Security FirmsWith the explosive growth of Internet users in China, securities companies have recognized the potential of on-line stock trading. Some of the companies, including Guotong Securities Co, Ping'an Securities Co and Guotai & Jun'an Securities have already opened on-line trading services. Others companies are reportedly making preparations to open on-line trading services.According to China Daily, commercial websites are also vying for a piece of the cake. Yestock.com is one of the early birds. It has opened an on-line trading platform that can connect investors to the counters of 12 domestic securities companies. "The development of on-line stock trading will greatly lower the operational costs of securities companies,'' said Li Sen with the Huaxia Securities Co. It also provides convenience for investors who can trade at any corner of the world through the Internet and overcome regional restrictions, he said. Sources estimate that 15,000-100,000 shareholders are already trading shares on-line through trial services. Observers said on-line trading will almost inevitably replace at least part of the current over-the-counter trading because Internet technologies are improving and using the Internet lowers transaction costs. They believe the percentage of on-line stock trades within China's total trading volume will increase from the current 1 per cent. However, there are thresholds to cross. The China Securities Regulation Committee announced recently that only licensed securities brokerages will be allowed to engage in the lucrative business. In addition, licensed securities dealers will have to apply for special permission before offering on-line trading services. Besides policy restrictions, on-line trading must also overcome some technological and security problems. Because they are limited in technological resources, most securities companies have had to seek help from financial website operators who could provide technical assistance and create platforms to connect the traders to the securities companies. Concerns over Internet security also prevail. Though the securities companies and websites are building defences to improve Web security and to protect the rights of investors, they also claim not to be responsible for financial losses brought by systematic problems resulting from on-line trading.
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