Hong Kong – FX liquidity gateway to the East? A very definite yes if you get it right

All eyes have looked east for several years, and even large, well established companies with experienced business development teams are still languishing in legacy markets, attempting to get into China with very little success, whilst some smaller, lesser known firms have garnered substantial business there.

China’s business community are likely as glib as the government about the inability of so many Western firms to gain traction in such a land of opportunity, technological prowess and business ethic, because the entry barriers serve China well as a place that everyone needs, and whose industrial power cannot be diluted.

Only a handful of firms have succeeded in China, however some large firms have established in Hong Kong, which is open for foreign investment and one of the most fiscally stable nations on earth.

FinanceFeeds notes that Hong Kong is technologically behind Singapore, which is surprising but has been verified by many industry professionals who have experience in both regions, and is also an interbank center rather than a home for retail FX companies, thus not ideal in terms of structure.

Saxo Bank, Leverate and Sucden Financial all established operations in Hong Kong from which to access China, all three of whom had good success. How did this occur, when others were limited to remotely attracting clients to their main offices via less than reliable Chinese partners?

FinanceFeeds today spoke to Raymond Mok, Head of FX and Bullion at Sucden Financial (HK) Limited which is the Hong Kong subsidiary of Long established London-based liquidity provider Sucden Financial, who explained

“Sucden Financial HK’s success at meeting client needs in terms of liquidity provision for Asian FX and precious metals prices has focused on our ensuring that we both listen carefully to client requirements at the on-boarding phase, customizing and tailoring the service and price feed accordingly.”

“Whilst also ensuring that at all times a high level of transparency is maintained and our operation purely as a provider of liquidity and not a principal market maker means we always work together with the client. The industry is developing rapidly and each customer’s requirements differ. Recognising that in the service provision is crucial” stated Mr. Mok.

Clearly, local presence is also a major factor, as well as patience and responsible business methodologies, further matters with which Sucden Financial concurred.

It is indeed a myth that the astute and successful Chinese introducing brokers want everything based on price. FinanceFeeds knows of several large Chinese portfolio managers which look for other aspects including length of time in establishment, and reputation.

China is, indeed, becoming a nation of discerning investors, and discerning partners for FX companies. The difference is that in China, these number into their thousands, hence the investment in getting the approach right is more than worth it long term.

Hong Kong can be a fantastic meeting point for influential partners globally and is a great meeting point. It is entirely feasible, for example, to spend a day in the Peninsula Hotel and invite top firms to see you, one after another, with great ease. Watching that in action is watching the FX industry’s efficiency at its very best.

Photo of Hong Kong Harbor courtesy of Andrew Saks-McLeod