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spk06: Ladies and gentlemen, welcome to FUDU Holdings' third quarter of 2021 conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff and Head of IR at FUDU. Please go ahead, sir.
spk01: Thanks, Operator, and thank you for joining us today to discuss our third quarter 2021 earnings results. Joining me on the call today are Mr. Leif Le, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Xu, Senior Vice President. As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control. forward-looking statements involving hearing vests and uncertainties. We caution you that the number of important factors could cause actual results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its registration statement. So, with that, I will now turn the call over to Leif. Leif will make his comments in Chinese, and I will translate.
spk03: Thank you for participating in today's business meeting. In the third quarter, we have 16.6 million real estate clients. At the end, the number of real estate clients exceeded 1.16 million. Natural growth for seven consecutive quarters has been contributed by more than 50% of new real estate clients. Due to the low market sentiment,
spk01: Thank you all for joining us today. In the third quarter, we added 166,000 net new paying clients, bringing our total paying clients to about 1.2 million. This was the seventh consecutive quarter where over 50% of new paying clients were acquired organically. Our quarterly paying client retention rate slightly slipped to 97% due to dampened market sentiment.
spk03: We continue to promote and implement an international strategy. In Singapore, we continuously adjust the budget allocation between new rewards and brand and effective marketing to continuously improve customer efficiency. In the third quarter, all customers in Singapore will have a higher flow rate and continuous income.
spk01: We continue to execute on our overseas strategy. In Singapore, we iterated on client incentives and budget allocation between brand and performance marketing to optimize client acquisition efficiency. In the third quarter, we observed higher retention rate and consistent asset inflow across client cohorts. We continue to expand product offerings in Singapore by launching U.S. IPO subscriptions, structure warrants, and fund products.
spk03: As one of the top buyers in the Hong Kong market, our number of users in Hong Kong is one-third of the adult population in Hong Kong. We plan to further improve our penetration rate among young customers and expand to other customer groups whose penetration rate is not yet high. The Hong Kong market is already competitive. and there are new competitors coming in. But we are confident to continue to maintain and expand our leading position in Hong Kong. Because we believe that a successful brokerage company is inseparable from the trusted brand, the ultimate user experience, the consistent trading system, the strong capital security, and the close relationship with commercial banks. All of this requires time to develop. These are also our competitive advantages.
spk01: In Hong Kong, we remain the top of mind retail broker as the number of our Hong Kong users already constituted one third of the adult population in Hong Kong. We intend to further penetrate into the young and tech savvy population and expand into the demographics that are currently not well represented in our plan B. Despite the new players entering into the Hong Kong market, which has always been a very crowded space, we are confident to extend our leadership position because we believe the key success factors of a broker include a trustworthy brand, superior user experience, an end-to-end proprietary trading infrastructure, a strong capital base, and close relationships with commercial banks, which all take time to cultivate and are where our competitive strengths lie.
spk03: 4,240 billion Hong Kong dollars increased by 111% and decreased by 16%. The decrease is mainly due to the rapid recovery of some of China's new economic companies' stocks. However, the relative slowdown in the impact of the stock market fluctuation is due to the strong entry of customers. The average customer asset fell to 36.3 million Hong Kong dollars. The main reason is that the average customer asset of the new market is relatively low. House of quarter end.
spk01: Total client assets were HK$424 billion, representing a 111% year-over-year increase and 16% quarter-of-a-quarter decrease. The sequential decrease was largely due to the sharp pullback of some Chinese new economy stocks, though this mark-to-market impact was alleviated by robust net asset inflow. Average client asset balance dropped to HK$363,000, which was tracked by lower account balance in new markets. However, In spite of the challenging market backdrop, both total and average client assets in Singapore increased sequentially, up 52% and 11% respectively. For clients that we acquired two quarters prior, their average net asset and flow and account balance both tripled.
spk03: In this quarter, the trading volume is 1.4 trillion Hong Kong dollars. The same growth rate is 33%. The same growth rate is 3%. The trading volume of each share is 6.8 trillion Hong Kong dollars. Trading volume was HK$1.4 trillion, up 33% year-over-year and 3% quarter-over-quarter. HK$680 billion
spk01: or 50% of total trading volume came from U.S. stock trading, down 19% quarter-over-quarter due to lower trading turnover of U.S. tech stocks. Meanwhile, we continue to gain market share in Hong Kong futures and options trading.
spk03: At this stage, Fudu Big Wealth and more well-known asset management companies have established a cooperative relationship, including Shlod and Kelei. Since then, Our total number of partners has increased to 56. By the end of the third quarter, the total assets of financial management customers reached 17.7 billion Hong Kong dollars, which increased by 132%. About 10% of real estate customers hold financial management products. In order to further meet the needs of high-end customers, we have introduced more other funds. At the same time, we have also cooperated with many well-known asset management companies to hold online special consultations.
spk01: MoneyPlus established new partnerships with prominent asset managers, including Schroders and Carlyle, bringing our total asset management partners to 56. By the end of the third quarter, client assets and wealth management reached HK$17.7 billion of 132% year-over-year. About 10% of our paying clients held wealth management positions. We further leaned into products and services for high-net-worth clients by onboarding more alternative funds and working with renowned asset managers to offer curated online workshops.
spk03: At the end of the year, we have 215 IPO distributors and investor-related customers, as well as 325 ESOP customers. In comparison, we have increased by 165% and 158% respectively. In the third quarter, Xichai, Jianai, and Sunna, etc., have begun to use our ESOP services. In addition, more than 700 companies have created business names on our platform, including more than 150 listed companies worth more than 110 Hong Kong dollars. In the third quarter, Biadi, JD Health, Popomat, and Anta, and many other new economic companies, began to use our business name to communicate with individual investors and release the latest business news.
spk01: As of quarter end, we have 215 IPO and IR clients, as well as 325 ESOP Solutions clients, up 165% and 158% year-over-year. Companies include Haiti and Simple Love Yogurt adopted our ESOP service in the third quarter. Over 700 companies have opened enterprise accounts with us, including over 150 listed companies with market capitalization north of HK$10 billion. In the third quarter, BYD Auto, JD Health, PopMart, and Anta started to use our enterprise account to communicate with retail investors and post business updates. 接下來,有請我們的首席財務官阿瑟介紹我們的財務表現。 Next, I'd like to invite our CFO Arthur to discuss our financial performance.
spk02: Thanks, Lee and Daniel. Please allow me to walk you through our financial performance in the third quarter. All the numbers are in Hong Kong dollar, unless otherwise noted. Our total revenue was $1.7 billion, 83% year-over-year and 10% Q-over-Q. Brokerage commission and handling charge income was $933 million, an increase of 66% year-over-year and 17% Q-on-Q. The increase was driven by the 33% yield via growth in total trading volume and a higher blended commission rate of 6.9 basis points. Since most of our clients adopt the commission per share pricing model for U.S. stock trading, a decrease in the average share price of the stock they trade results in a higher blended commission rate. Higher contribution from derivatives trading also supports our commission rate expansion. Interest incomes was $632 million, an increase of 129% year-over-year and 4% Q-on-Q. The year-over-year and the Q-over-Q increase was both driven by higher margin financing and the security lending income, partially offset by lower IPO financing interest income. Other incomes were $166 million, up 56% year-over-year, and down 2% Q-on-Q. The year-over-year increase was primarily due to increase in enterprises' public relationship service charge income and the currency exchange service income. A Q-over-Q decrease was mainly due to the decrease in IPO subscription fees and earned writing fee income in the inactive IPO market. Our total costs were $267 million, an increase of 47% from $182 million in the third quarter of 2020. Brokerage commission and handling charge expenses was $125 million, an increase of 24% year-over-year, and a decrease of 14% queue-on-queue. The expenses didn't grow in line with the brokerage commission and the handling charge income due to our upgraded service package with our U.S. clearinghouse and the lower IPO subscription fees. Interest expenses were $74 million, up 57% year-over-year and down 7% year-over-year. The year-over-year increase was due to higher margin financing interest expenses and higher expenses associated with our security borrowing and the lending business. though partially offset by lower IPO financing interest. Interest expenses didn't increase in line with interest income, as we increasingly shifted our funding mix towards lower-cost funding sources. Processing and servicing costs were $67 million, percent year-over-year and 25 percent queue-on-queue. The increase was primarily due to increase in system usage fees and the crowd service fees to process a higher number of concurrent trades. As a result, our total gross profit was $1.64 billion, an increase of 92 percent from $764 million in the third quarter of 2020. Gross margin was 85% as compared to 81% in the third quarter of 2020. Our total operating expenses were $764 million, up 177% year-over-year and 18% Q-over-Q. We continue to invest in international markets, and we estimate over 30% of our operating costs were devoted to overseas markets. IMD expenses was $224 million, a 50% year-over-year and a 29% QMQ. We continue to add head accounts to support the new product offering, U.S. clearing capabilities, and the product customization for international markets. Approximately 40% of our IMD personnel were dedicated to our Moomoo product nowadays. Selling and marketing expenses were $403 million, up 263% year-over-year and 7% Q&Q. The rising spending was driven by higher branding and marketing expenses in Singapore and in the U.S. in particular. In the third quarter, approximately 40% of our selling and marketing expenses were spent on overseas client acquisition. G&A expenses were $137 million, an increase of 122% year-over-year and 42% Q&Q. The increase was primarily due to increasing headcount for G&A personnel. As a result, our non-GAAP adjusted net income increased by 58% year-over-year and 17% Q&Q, to 646 million, the non-GAAP net margin for the quarter was 37%. That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead. Thank you.
spk06: Thank you. As a reminder, to ask a question, you will need to press star and the number 1 on your telephone. To withdraw your question, please press the pounder hash key. Please stand by while we compile the Q&A roster. Once again, we have questions. Please press star and the number one on your telephones. Our first question is from the line of Bella Zhang of PH Capital. Please go ahead.
spk07: Hi, management. Thanks for taking my question. I have two. There are too many about the regulation impacts, actually. The first one is, you know, the new jobs from cyberspace administration of China requires cybersecurity assessment for listing in Hong Kong. Well, especially for tech companies with data over one million users. So my question is, do you actually see any negative impact on your IPO pipeline because of the new regulation from CAC? And should we expect the IPO space in fourth quarter and next year will be slowed down a lot? The second one is in terms of your customer acquisition. There are some concerns about the legality of offshore trading by online brokers. Just wondering if management can shed some light on the impacts under government regulation. Well, especially for customer acquisition in mainland China, you know, people may feel hesitant to open new accounts due to the regulatory concerns. Well, additionally, will that affect your customer acquisition strategy? Let me translate myself. Thank you, Manager Chen. Taiwan Taiwan Taiwan uh um um Thank you.
spk02: I will take the second question first. I will leave the first question to my colleague's lead. In terms of the China regulations, I think we are not in the best position to prejudge what the regulator will do.
spk00: I think so far, you know, the impact to our client acquisitions
spk02: in the Great China areas is manageable. I can share a little bit more colors, which I think may be helpful for analysts and also the investors to gauge how the negative impacts on the recent headline use, because of that, what's the implications to our client acquisitions across the board. Definitely, we see certain asset outflows among clients in the Great China areas amid the concerns over media reports. Overall speaking, we think the impact is still very short-term and manageable. From the mid-October to mid-November, the net asset outflows account for less than 2% of our total client assets. And the situation started back normal from last week. In my humble thoughts, I think the worst is already behind us. Of course, the market volatility, alongside with seasonality effect in Q4, together with this headline news, definitely enhance the attrition rate for existing paying clients and also create some challenges for new client acquisition across the board in the near term. But we think that overall speaking, the situation is still within our control. Thank you.
spk03: The second question I would like to answer is that, currently, the business situation of FUTU is the same as usual. The business that FUTU is engaged in is not something new. It has existed for many years before FUTU appeared. And FUTU's entire business scale is actually not that high in the industry. Another thing is that FUTU's business model, service method, and Hong Kong and all other foreign and Chinese and Hong Kong and Chinese and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong Kong and Hong The investment in technology and innovation will be greater, and the customer experience will be more important. We have always actively embraced supervision and maintained high standards and strict requirements for business compliance. At the same time, we have always maintained an actively open communication attitude, and welcome supervision institutions to give us and the industry more guidance. In the future, if there is new supervision guidance, we will also follow it at the first time.
spk01: We are a business as usual here at Futu, and our business model is nothing new. So before our inception, this business has been there for years, and our business size is small relative to the whole industry. So our business model and how we serve our clients are identical to a lot of the other international Hong Kong and China brokers and banks in Hong Kong that help Chinese-based access overseas trading. And we are operating under the same set of laws and regulations. You have to ask, what are the differences? In comparison to our peers, we invest more heavily into technology and innovation, and we attach more importance to user experience. And we have always been embracing the regulations and have a very high set of standards for operational compliance. And we are actively and transparently communicating with the regulators. And we anticipate and welcome more guidance from the regulators to both us and the industry as a whole. And if there are new regulatory guidances coming out, I think we'll abide by these regulations as soon as possible and as a listed company. will timely update any new information available to us. Yeah, and also to your question about whether the IPO pipeline could be influenced, we feel like the IPO pipeline is more dependent on the overall market environment than on the cybersecurity kind of investigations. So I think how the IPO pipeline will turn out in Hong Kong in the next couple of quarters will be largely dependent on the overall direction of the markets. And also I just want to point out that historically we achieve like high single digit of our revenue through IPO related businesses, including IPO subscription fees and the IPO margin financing income. So we don't think it's a material impact on our business and we have a lot more levers to pull to further our growth. And as we mentioned in our opening remark, we think there is still a huge under penetrated population in Hong Kong that we could tap into. and a lot of the international markets that we have entered, including the Singapore and the U.S., offer significant runway for growth. Thank you.
spk06: Thank you. Our next question is from the line of Catherine Liu of Morgan Stanley. Please go ahead.
spk00: Thank you for the opportunity to ask this question. I'm Morgan Stanley's Liu Xinhe, Catherine. I have two questions I'd like to ask. First, I'd like to ask the management I will translate for myself. Thank you very much for giving me this opportunity to ask questions. So just two questions from me. First, just wondering, can the management help us to analyze how to view the overseas market growth opportunity or the room for growth for Futu? And then the second question is, can the company give us some guidance in terms of the fourth quarter, quarter-to-date operational data trend, such as the velocity, client assets, et cetera? Thank you.
spk02: Okay, sure. Catherine, let me just supplement the answer I mentioned before for your second question. Stu, I will leave the first question to Lee. I think in terms of the client activities, we see investor sentiment is warming up in the fourth quarter. Of course, in the fourth quarter, we face some long holidays, such as national holiday and also Christmas. if we do take out the holiday effect in Q4, we expect the overall trading volume may be similar to Q3 based on the current run rate. In terms of client assets, as I mentioned before, we definitely got some, you know, negative asset outflows because of the headline used recently. But the situation started back to normal since last week. And in particular, we see very encouraging signals in our overseas markets, such as Singapore. In our opening remarks, Liv mentioned that, you know, our average client assets in Singapore already jumped 11% Q-on-Q basis. I do think, you know, on top of that, we will continue to see on a core whole and also on an absolute basis in Singapore market, we will still see another at least 15% increase Q-on-Q on top of the growth, what we achieved in Q3. And also, in terms of our wealth management products, so far our assets on wealth management segment has demonstrated a strong resilience, and we do expect a more product offering to be launched in Q4, which may further drive our AUM continue to go up. Thank you.
spk03: Thank you, Catherine. Let me answer your first question. Then until the third quarter, the number of users in Hong Kong is a total of 222,000, which is 32% of the population over the age of 18 in Hong Kong, which means that the number of registered users in Hong Kong is one-third of the adult population in Hong Kong. The customer penetration rate among the young people in Hong Kong aged 20 to 29 has reached one-fifth. Then in the Hong Kong market, Singapore. Singapore's adult population is about 4.9 million. If 30% of them have a credit card or an economic account, we can estimate that there are about 1.5 million investors. From the current inflation rate, there is a lot of room for improvement. In the future, in our international strategy, On the one hand, we hope to focus on other Southeast Asian countries. Similarly to Singapore, the technical capabilities and user experience of other Southeast Asian countries are relatively thick. Currently, there are 33 million Chinese in Southeast Asia. It is estimated that there are about 22 million Chinese users on the Internet. Looking at the IP address of the current FUTU users, the brand of FUTU has gained a certain recognition in many Southeast Asian countries. On the other hand, we believe that the American market still has room for further growth. We believe that Moomoo balances friendly user experience and in-depth product functions, which can well fill the gap between the market space between American current Internet brokers and traditional brokers. In the third quarter, As of Q3, we had about 2.2 million users in Hong Kong.
spk01: accounting for about 32% of the population over age 18 in this region, meaning that about one out of every three Hong Kong adults is our user now. And our penetration rate among Hong Kong population between the age of 20 and 29 is about 20%, meaning that one out of every five in this group uses our product. So in the Hong Kong market, we maintain a high penetration rate among the young and tech-savvy population. while focusing on acquiring the under-penetrated groups such as the middle-aged people and the female groups, etc. And in Singapore, the adult population is about 4.9 million, and assuming that about 30% of them have a brokerage account, there are approximately 1.5 million retail investors representing great potential for further penetration. And also, as part of our future international strategy, We will take Singapore as our Southeast Asian headquarter to spend into other countries in this region. And similar to Singapore, other Southeast Asian countries lack in terms of their brokerage service capabilities and user experience. And we see that there are approximately 33 million Chinese population in SEA and 22 million of whom are Internet users. And based on the IP address of Futu's existing users, we think that Futu has built a high brand recognition in many Southeast Asian countries already. And last but not least, I think we see potential for further growth in the U.S. market as well. We believe that Moomoo strikes a delicate balance between user-friendly mobile design and advanced product features and can thus very well fill the market gap between the incumbents in the market and a lot of these online brokers. And our net new clients in the U.S. increased meaningfully in Q3 on a sequential basis, benefiting from our initiatives in broadening client acquisition channels. And going forward, we'll adjust our client acquisition strategy based on the market dynamics to reach our targeted client groups. Thank you. Thank you.
spk06: Our next question is from the line of Zoe Zong of Jefferies. Please go ahead.
spk05: Thank you for accepting my question. I also have two questions I would like to ask. The first is, how many of our Q3 new 166K real estate clients are from Hong Kong, Singapore, China, and the U.S. market? And how much is the total number of real estate clients of 1.17 million? Thank you, management, for taking my questions. I have two questions. First, we noticed that the company newly added 166,000 paying clients in Q3. Could you please provide some color about the user mix, like how much came from Hong Kong, Singapore, mainland, and the U.S.? ? And could you please also share the mix for the 1.2 million total pay income? And my second question is regarding customer acquisition cost. So the implied customer acquisition cost was around 2,400 Hong Kong dollars in Q3. So how should we expect the CAC next year? Thank you.
spk02: Sure, so I will take both questions. I think, number one, the breakdown for the new client acquired in Q3, in general, Great China area accounts for roughly 60% of the new paying clients acquired for the quarter. The remaining 40% Singapore roughly accounts for 28%, and the remaining 11% belongs to the US. And also, for your second question in terms of the, you know, market spending, I think what we focus internally is more, you know, the R pool versus, you know, CAC ratio. Definitely you see, you know, the CAC numbers in the third quarters increase from a Q and Q basis. Mainly, I think it's due to the, you know, because the market conditions, which let our attrition rates temporary go higher. Therefore, you know, on average basis, you can see the CAC number slightly go up from a Q and Q basis. It is very difficult for us to give you quantitative guidance for the CAC number, which have heavily been impacted by the market conditions, as you can imagine. But I think, you know, in our conviction, user engagement is always the most important thing we care, because, you know, the transition cost for the paving users to other competitors or to other channels take, you know, very high, you know, time thresholds. Therefore, we still will more focus on the growth. Definitely we will, on a close basis, monitor our unit economics to make it more justifiable. For instance, if we look at our Singapore numbers, I think back to second quarter this year, if we use the CAT number and also our pool number at that time, our payback period for our Singapore paying clients is around 2.5 years. But now, you can see after one quarter, our average client asset cohort already increased by 11%, and we do expect there will be another 15% jump in the fourth quarter. So, you know, on a more, you know, forward-looking perspective, the unit economics will become more and more make sense after we further, you know, gain the trust and the confidence from the existing users who will, you know, inject more fundings into their accounts and also at the same time we will provide more product offerings to enhance our take rate. Thank you.
spk05: Very helpful. Thank you.
spk06: Thank you. The next question is from the line of Charles Zhou of Credit Suisse. Please go ahead.
spk04: Hello. I am Zhou Cheng, the interpreter of Rui Xin. Actually, the previous two questions have been answered by the management team. Can you clarify what you mentioned about the 2% outflow? I didn't hear it clearly. The second thing you mentioned is that our opening process to risk management and banning investigation is the same as banks. I want to confirm this. Including business banks and private banks, when we open a account, our process and wind control are the same. I just asked two questions. I have two more questions. I will change two questions. The first one is about competition. The second one is about our stock repurchase. We have also noticed that some competitors have recently adopted some of the strategies of Lingming Jun. So I know that our company has not adopted it. I don't know if we have any other methods. For example, through this kind of discount or other methods, we also adopt some strategies similar to the zero-wage system. Then for this rate, I don't know what the management level will look like in the future. Including the two markets of Hong Kong and Singapore. Then how do we achieve this kind of VOM modification of the customer? Then the second is that we announced the return on the stock. I don't know how much we have done now. Then what is the price? Can you share it? OK, I will translate by myself. The first question, I just want to clarify, you know, the 2% you just mentioned about outflow. So what do you mean by that? You know, you just mentioned greater China. Well, which period? Can you maybe just give us a little more color on that? Second question, you also mentioned that, you know, the onboarding process, the due diligence, and also the risk management is same as banks. So do you mean that, you know, same as commercial bank or private bank for a security brokerage account? I also have, you know, two more questions here. The first one is we understand FUTU has not adopted a zero commission policy like many competitors do. So we have seen some promotion that offer zero commission trading either by using a promotion codec, account opening or redeeming coupons and afterwards. So how do we think about a series going forward in Hong Kong and Singapore as well as the monetization of the client AUM? The last one is also about the, you know, the share buyback. So can you maybe give us just a little bit more color about your share buyback so far, say, at what price and also, like, how many shares have you already, you know, buyback? Thank you.
spk02: Sure, Charles. You asked four questions. Let me just take number one and the number four first. Still, I will leave the second question and also the third question to leave. I think in terms of the client asset outflows, as I mentioned before, I just want to share some latest colors in terms of the implications from the recent headline news. It is very difficult to attribute our clients' asset outflows, whether because of the recent headline use or because of other reasons. But just to give you some very simple statistics, if we look back the past one month, we do have some net asset outflow. I think the amount is roughly in the range of 1% to 2% of our total asset balance at the end of the third quarter. So just to give you some sense in terms of the number. And also for the share buyback, I think definitely we will, you know, this is, you know, 13-month share buyback programs. And also, according to the SEC regulations, actually, we cannot conduct any share buyback during the result, you know, the black-out period. Therefore, so far, we have not conducted, you know, any share buyback yet. Thank you. .
spk01: Sure. As we mentioned earlier, we abide by the same set of regulations and laws in terms of our account opening procedures, KYC and AML, etc. So we believe that what we do is in line with what other brokers and banks in Hong Kong that currently do. We don't think there are differences.
spk03: Yes, let me talk about competitiveness. First of all, we believe that the competitive environment of Hong Kong's market has not changed significantly. No matter the price range, all kinds of methods have been used for many years. As I said before, a successful brokerage company is inseparable from a trustworthy brand, extreme user experience, flexible trading system, strong capital security, and a close relationship with commercial banks. These are all things that require time to develop and develop. After so many years, we have formed our own unique competitive advantage. We also pay attention to the fact that the main transaction cost of Hong Kong stock is not the so-called commission rate, but the hard tax. So here, Thank you.
spk01: We don't think the competitive environment has changed much in the Hong Kong market. And in fact, this price wall between our competitors has been happening for a number of years. And as I mentioned in our opening remarks, we believe that the key success factors of a broker include a trustworthy brand, superior user experience, this end-to-end proprietary trading infrastructure, a very strong capital base, and close relationships with commercial banks. And these really all take time to develop. And Futu has developed strong competitive strength in these areas. And also, we understand that the majority of the trading cost for Hong Kong stocks is coming from stamp duty, which is currently 3 bids. We currently charge a 3 bids commission, which is relatively low in comparison to the stamp duty cost. So we don't feel like the price wall has affected much, and we don't have plans to change our pricing. And if pricing is the only labor our competitors can pull when they enter into the market, if they don't see financial or operational results in the short term, they may feel a lot of pressure.
spk06: Thank you. We have now reached the end of our question and answer session. And I'd like to hand the conference back to Mr. Yuan for closing remarks. Please continue.
spk01: That concludes our call today. And now that I have the FUTU management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you and goodbye.
spk06: Thank you. That concludes our conference for today and thank you for participating. You may now all disconnect.
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