China Approves Online Trading
04/12/00
BEIJING, April 12 (Reuters) - China has finished drafting rules that will
legalize online stock trading, but only licensed securities brokerages will
be allowed to engage in the lucrative business, Xinhua news agency said on
Wednesday.
``The regulations will ban non securities companies such as Internet portals
from engaging in any kind of online brokerage,'' Xinhua said.
In addition, licensed securities dealers will have to apply for special
permission before rolling out online trade services, it said.
The new rules are likely to stoke a boom in stock transactions over the
Internet in China, where an estimated 15,000-100,000 shareholders already
trade shares online through trial services.
They would also provide a near-term boost to Internet companies supplying
technology for online trades, such as Shenzhen Prosperity Systems Co Ltd, in
which Motorola Corp (MOT.N) and Intel Corp (INTC.O) have invested, and Hong
Kong-based GoTrade.com Inc, an analyst said.
But those companies could be left with a bitter aftertaste since they will
be barred from brokering services themselves.
``I think there are different interpretations,'' said a former executive at
a securities trade technology firm. ``The bottom line is it's still not
clear whether portal-types of services will ever thrive.''
Allen Yan, vice president for strategy and marketing at GoTrade.com said:
``I don't think it will hurt us.''
``We provide the back-end systems, not trading services,'' Yan said. ``The
rules will clarify and promote the market -- this is a real help.''
China has 40 million stock investors, and the number of people using the
Internet has exploded to 10 million from just two million last year,
according to official statistics.
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