HONG KONG • In a Hong Kong transformed by China's crackdown on everything from political dissent to the media to the judiciary, picking a new top boss for the stock exchange is proving to be difficult.

Mr Charles Li announced his intention to quit as head of Hong Kong Exchanges and Clearing (HKEX) more than a year before his contract ended amid strained relations with chairman Laura Cha, according to people familiar with the matter.

Ms Cha was put off by his free-wheeling style, which led him to sometimes not inform the board of important issues at an early stage, said the sources, who asked not to be identified.

More than seven months later, with Mr Li formally stepping down today, a committee has yet to settle on a permanent replacement. It is split between prioritising a candidate who can operate with confidence in China and one with a strong international background, the sources said.

Ms Cha, who is well connected in China and close to Hong Kong Chief Executive Carrie Lam, sees the bourse's role as serving Beijing's interests and avoiding competition with the mainland's exchanges, one of the sources said.

Mr Li had seemed to thread the needle, credited with both internationalising the exchange as well as building a bridge to China's markets. Still, the former JPMorgan Chase & Co banker was eventually seen as too outspoken and his aggressive - and failed - £29.6 billion (S$53 billion) bid for the London Stock Exchange (LSE) dented his standing.

He was forced to apologise last year after saying civil unrest in Hong Kong had exposed faults underlying the "one country, two systems" framework of the territory's return to Chinese rule. He said he had been misinterpreted.

In an interview with Bloomberg this month, Mr Li said the chief executive officer's job is all about "steering conflict" both in Hong Kong and on the mainland, but also one that entails taking risks.

His successor at the city's flagship financial institution will need to contend with an increasingly assertive Beijing while upholding the confidence of global investors at a time when Hong Kong's status as an international hub is in doubt.

The next boss will also need to consider whether to match Mr Li's style as de facto spokesman for the financial industry or take a more subdued approach, leaving the city's most important sector without a cheerleader-in-chief.

Candidates being considered include Mr Liu Che-Ning, co-head of Asia-Pacific banking at HSBC Holdings, as well as the HKEX's interim CEO and chief operating officer Calvin Tai.

Mr Mark Machin, CEO of Canada Pension Plan Investment Board, and Mr Philip Zhai, a former JPMorgan Chase & Co banker, have also been discussed, as has Mr Wilfred Yiu, a former Goldman Sachs Group banker who joined the exchange as head of markets last year, the sources said.

Mr Liu, Mr Machin, Mr Zhai and Mr Yiu all declined to comment, while Mr Tai was not immediately available. Mr Machin and Mr Zhai remain committed to their current jobs, according to the people.

An HKEX spokesman said in an e-mail reply that the selection process is being conducted by the board with "clear communication and transparency" and further announcements will be made when the process concludes. It declined to comment on any "gossip or speculation".

Dubbed "Mr China" for linking the bourse closer to the mainland and helping open doors for foreign investors, Mr Li is a tough act to follow. The exchange's revenue has doubled during his tenure and its stock has surged ahead of the broader market.

Mr Li is publicly credited for the landmark deal connecting trading between Hong Kong and the exchanges of Shanghai and Shenzhen. He likes to tell the story of how he sketched out the link on a napkin during lunch with the head of the Shanghai Stock Exchange.

The Stock Connect enabled investors to buy and sell onshore Chinese stocks and bonds using Hong Kong's infrastructure, which helped global index providers to include Chinese securities in their gauges, driving hundreds of billions of dollars into the market.

Ms Cha, a former vice-chairman of the China Securities Regulatory Commission, thinks that Mr Li has been given too much credit for the agreement, which now accounts for 10 per cent of the bourse's revenue, said the sources.

She has asserted more control, putting in place checks and balances for senior management, according to one of them.

Mr Li's resignation has shaken up the senior ranks at HKEX, with several executives exiting. Recent departures include head of market development Li Gang and some in his team, which was responsible for developing new products, said the sources. General counsel Ferheen Mahomed and head of human resources Eva Chau have also left.

Mr Li's major setback was the failed attempt to take over the LSE last year, following its acquisition of the London Metal Exchange in 2012. That debacle dented appetite for making the bourse more of a global institution, which was one of the four targets he set for his tenure, a source said.

That has tied the HKEX more closely to China, with its success in drawing listings of major Chinese companies this year becoming one of the few bright spots for a city roiled by the coronavirus pandemic and a crackdown following the imposition by Beijing of a new national security law. Hong Kong is suffering through a deep recession.

Average stock trading volumes rose 51 per cent in the first nine months of the year, while total raised equity funds, in both initial public offerings and secondary listings, more than doubled. Daily trading through the bourse's link to Chinese exchanges hit records in the year until September.

Tightening links further with the mainland is now the "irreversible" path for the bourse, Mr Li said in the interview this month.

The next steps could be to allow Chinese investors to buy bonds on the bourse, as well as opening up to derivatives and the primary stock market, he said.

Even so, the push towards the mainland is not entirely welcome in China, in part because it wants to promote its bourses. Expanding the link to include several benchmark stocks has proved difficult.

For now, Ms Cha views Mr Tai, the interim CEO, as a safe pair of hands due to his familiarity with the operations and infrastructure, according to the sources. But the 58-year-old could be approaching retirement age.

Mr Li offered some thoughts on what it takes as he heads out the door. One needs to be "strategically absolutely confident, but technically be humble", he said.

There is a kind of "different operating logic" in China, he said. "In terms of people relations... certain things can be done easier if the relationship is stronger."

BLOOMBERG