scoop, Webb-site.com has learned of secret plans to merge the HKEx
and the Jockey
Club, capitalising on the obvious synergies of the casino-like stock
market and the broad gambling customer base of the Jockey Club. The move
has implications for the MPF as well as the battle against offshore
football betting. Read our
HKEx to Merge with Jockey Club
1st April 2001
Webb-site.com always aims to bring you tomorrow's news
today. In an exclusive, we have learned that just over a year after its listing
on its own exchange, Hong Kong
Exchanges and Clearing (HKEx) is to make its first deal, an all-share
merger of equals with the Hong
Kong Jockey Club. The new entity will be known as the HKJOx.
Sources cited the synergies for the deal as "compulsive and
compelling" - combining the public's compulsion for gambling on stocks with
the compelling guaranteed returns of the Jockey Club, which takes 5% of every
Inevitably, concerns are being raised that the Stock Exchange
will raise the transaction levy to the same 5% from its current level of 0.01%
in order to finance "continuing investment in technology". Senior HKEx
executives were seen inspecting the sumptuous
houses of the not-for-profit Jockey Club and were thought to be earmarking a property in Shek O for the future
HKJOx club house, where a one-time cyber-tycoon is reportedly selling his
half-finished mansion and going back to university.
Sources close to the Government have indicated its blessing for the
and that they will reclassify "stamp duty" on shares as "betting duty",
reflecting the realities of the situation. It has long been the case that Hong
Kong investors duck in and out of the market to avoid the risk of being exposed
to bad governance. Webb-site.com has learned that the Government, in the
interests of a longer-term market and stimulating interest in the compulsory
savings scheme, will rename the MPF the "Mandatory Punting Fund".
The new AMS/3 internet-ready trading system will be combined
with the Jockey Club's telebetting expertise, and it will be possible to
transfer funds directly from your brokerage account to your telebet account and
vice versa. Settlement times for stock transactions will progressively be
reduced from 2 days to 20 minutes, to coincide with the cash-settled racing market.
Each horse will be given a special 5-digit "bloodstock code" starting
with "99", and the Futures Exchange is widely expected to begin making
a market in bloodstock derivatives, with each contract being entitled to the
cumulative 3 month winnings for a $10 bet on the horse in each race it runs.
Short-selling of individual horses will be introduced, allowing punters to bet a
horse will "not win" rather than "win". The
short-triple-trio bet will pick the three horses which come in the last three
places in 3 specified races, and the traditional quinella (the first 2 horses in
either order) will be renamed the duola because
whoever named it the first time couldn't count.
Back to the Futures
On the corporate governance side, the merger marks a return to
the good old "private club" days of the Stock Exchange. "It is
only right that the traditions of the club be respected" said a senior
Jockey Club steward who had been re-elected unopposed for the last 10 years. Directors of
HKEx will be renamed "Stewards".
A new category of "voting members" will be created at
HKJOx, who will elect the Stewards of the HKJOx, and the Stewards will of course
select the voting members, providing "much-needed stability and continuity
The 600 brokers who owned the Stock Exchange until its flotation
last year will become voting members of HKJOx, in addition to the 200 voting members of the
Jockey Club. Indeed, it is rumoured that the total of 800 voting members under the
HKJOx will be the same as the 800-strong Selection Committee which will appoint the next Chief Executive of Hong Kong in
All other HKEx and Jockey Club shares will be converted to
non-voting zero-coupon subordinated perpetual loan notes, and holders will have
to sit at the back at Annual General Meetings and park at least 1 mile from the
grandstands at Shatin.
Injecting a new burst of realism into the listing process, a
number of veterinary surgeons will be appointed to the listing committee to help
in the "vetting process" of candidates for the ill-fated GEM. At the
same time, to rationalise the licensing system for intermediaries, horse
trainers will be given sponsors licenses in the hope that stocks from their
stable will perform better than many existing GEM stocks. The track record
period for new GEM stocks will be the same as for yearlings, and the horses will
be suspended when they start limping and delisted before going into
"liquidation" at the glue factory. Urgent amendments will be made to
the SFC Bill currently being considered by the Legislative council.
Analysts consulted by Webb-site.com viewed the pending
merger as a strong positive for the HKEx, and offshore bookmakers were
reportedly offering odds of 4-1 on the deal going ahead.
The deal also heralds the possibility of a new marketplace for
football betting, solving the Government's concerns about increasing offshore
betting. An order-driven market in the score of each match will be held on the
Stock Exchange trading system, and AMS/3 will be renamed "Automated Match
Scoring" system according to spokeswoman April Fu Liu-ah.
In a move towards 24-hour trading, a direct link
will be formed with the American NFL, so that US Football matches can be traded
here by anyone who understands the rules, or claims to. Traders expressed hopes
that US football betting would be even more popular than the Nasdaq-SEHK
programme for trading US stocks in Hong Kong.
© Webb-site.com, 2001