The Government will back Hong Kong Exchanges & Clearing's move to explore ways to promote two types of investor services to increase protection for investors who trade through stock brokers, Secretary for Financial Services & the Treasury Frederick Ma says.

In his FSTB &You column today, Mr Ma said the two services are the Investor Participant Account service and the Stock Segregated Account service.

An Investor Participant Account is a direct-custody account in the Central Clearing & Settlement System for investors, providing them with the convenience of electronic book-entry settlement. An investor has full control of shares kept in his IP account and only the investor can authorise the transfer of shares out of his account.

As regards the Stock Segregated Account, after opening the account with a broker or custodian, whenever there is a stock movement in the account, the HKEx will give the investor concerned a daily movement statement showing movements of the stock during that day.

At the end of each month, the Securities Clearing Company will also give the investor concerned a monthly balance statement showing the balances of all stocks.

Clients' trust essential

Recognising small and medium stockbrokers are facing fierce competition, Mr Ma believed they have distinct advantages and attractions for investors. 

"Despite the regrettable conduct of individual firms, I believe the vast majority of securities firms are law-abiding, and reacting positively to competition.