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Hong Kong Exchange Bets Chinese Traders Are Just as Good as High-Frequency Ones

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Hong Kong’s stock exchange is counting on hundreds of millions of mainland Chinese investors, traders and speculators to provide the liquidity that high-frequency traders supply in most other major markets.

While HFT firms are the dominant market makers in U.S. stocks, currencies and other assets, a trading tax mostly keeps them out of Hong Kong equities. Hong Kong Exchanges & Clearing Ltd. has another source of volume: investors from the Shanghai Stock Exchange who can now buy and sell in Hong Kong. Another link is planned with China’s bourse in Shenzhen this year.