Daniel Yuan: And, Chiyao, I will take your second question on our monetization strategy in Japan. And, yes, as you mentioned, we have seen a couple of leading brokers in Japan gone to zero commission for Japanese stock trading and we have reasons to believe that other brokers in Japan will probably follow suit. And so, well, no one is going to make money from Japanese equities trading, but U.S. stock trading is still quite profitable. [SP and Rakuten] and for example, charge USD0.45 for U.S. stock trading. We tend to price more aggressively than these incumbents, but we still expect to make very decent margin on U.S. stock trading. And as of the end of last year, we have seen that there are 2.3 million U.S. stock investors in Japan.
That’s relatively low compared to Japanese stock investors, but that has been growing pretty fast. As of the end of 2019, there were about 1 million U.S. stock investors. So, over the past four years, it has more than doubled. And besides U.S. stock trading commission, we also intend to monetize over margin financing and foreign exchange fees. We observed that Japanese investors really like to trade on margin. We have seen that, for the industry, average number, like around 50% of their trades are placed with margin. So, that’s going to be a key revenue driver. And then for FX charges, we understand that in order to compensate for zero commission for Japanese stock trading, all of the brokers in Japan charge pretty hefty fees for FX. So, as the trading volume of the U.S. stock trading on our platform grows, we also expect FX revenue to make a meaningful contribution.
Thank you.
Chiyao Huang: Thank you very much.
Operator: Thank you. Next question comes from the line of Cindy Wang with China Renaissance. Please go ahead.
Cindy Wang: [Foreign Language] Thank you for taking my question. So, I have two questions. First one is related to Japan market. Can you share the color of Japan’s meeting plans progress? What’s the conversion rate from registered users to paying clients? And have you seen new paying clients increasing month-over-month? Second question is for the — if the Futu subsidiary is applying for Digital Assets Trading Platform in Hong Kong, what is the progress looks like? And what is your preparation work for Digital Assets Trading Platform? Would you be able to launch trading functions immediately once your license is approved? Thank you.
Arthur Chen: Thank you, Cindy. I will answer your second question first, and my colleague Daniel will answer your question regarding to Japan. [Foreign Language] We echo the Web3 policies advocated by the Hong Kong Government, who want to build up Hong Kong as a Web3 global centers. In the past several quarters, we carefully studied the policies and the regulations issued by the Hong Kong SFC. TensorTrade, a wholly subsidiary within Futu Group submitted VATP license applications to Hong Kong SFC last month. And we expect the whole application process may take at least six to nine months when — if we have the luck to get approval in principles. And we have not formed a very concrete business plans afterwards. And we will continue to modify this content in the next couple of quarters and, hopefully, we can give some new updates in next Q2 or Q3. Thank you.
Daniel Yuan: [Foreign Language] And I’m going to translate for myself. So, right now, in Japan, the user to client conversion rate as well as the client to paying client conversion rate are both lower than what we have observed in other international markets, and we think there are two main reasons behind it. Number one is that, our account opening golden process still has a number of friction points. And, so far, the mid to back office in the Japan brokerage industry are still characterized by a lot of outsourced systems that have really unsatisfactory user experience. And in order to start account opening soon, we leveraged some of these outsourced systems which really have a negative impact on our users experience and thus impacted the conversion rate from account opening to asset deposit.
And in next couple of quarters, we plan to invest into our account opening process and gradually replace these outsourced systems with our proprietary system. And the second reason behind this low conversion rate so far is the lack of key trading products. And, as mentioned earlier, we now only offer U.S. cash equities trading to Japan users. And in the first quarter of next year, we plan to launch Japanese stock trading as well as LISA account. Although we are really confident that Futu’s U.S. stock trading capabilities lead our Japanese peers by a very wide margin, in Japan the Japanese stock investing is still very, very popular, and we understand based on our user survey that lack of, you know, Japanese equity trading is a key reason that prevents them from opening accounts with us.
Thank you.
Operator: Mr. Wang, are you — Ms. Wang, are you done with your question?
Cindy Wang: Yes. Thank you.
Daniel Yuan: Yes, I’m done. Thank you.
Operator: [Operator Instructions] Next question comes from the line of Peter Zhang with JPMorgan. Please go ahead.
Peter Zhang: [Foreign Language] Okay. Let me do the translation. My first question is a follow up question regarding the Japan product line. I wish to understand, going forward, will the clients in — Futu’s clients in Hong Kong or Singapore market being allowed to trade Japan stock? Is this product in your product pipeline? My second question is regarding the blended commission fee rate. We noticed that the blended commission fee rate declined sequentially in third quarter. We wish to understand what’s the reason behind and what will be the trend going forward? Thank you.
