BUZZ-HKEx: broker scramble to adjust for volume surge continues

** Debate rages on where daily volumes for the Hong Kong exchange will stabilize and is forcing analysts to return to the drawing board and revisit all assumptions

** "Once or twice in a decade, volumes hit a parabolic curve. This unhinges the definition of normal volumes, which is the stage we are at for HKEx (HKSE: 0388-OL.HK - news) ," says Harsh Wardhan Modi at JPMorgan (LSE: JPIU.L - news)

** Recent volumes on the HKEx, which have topped $30 bln daily, have blown away estimates is most analyst models. Chart: http://link.reuters.com/zer54w

** JPM the latest this week to lift forecasts for average daily volumes, the key driver of earnings for HKEx, and joins at least 7 other brokers including Goldman Sachs (NYSE: GS-PB - news) , Morgan Stanley (Xetra: 885836 - news) and Credit Suisse (NYSE: CS - news) who have adjusted their models to catch up with the runaway stock price

** HKEx, the world's second-worst performing listed exchange by late March on 1-year returns, has now easily vaulted rivals as the latest surge has seen the stock double vs year-ago levels Chart: http://link.reuters.com/xer54w

** As trading activity on the HKEx shoots up sharply, JPM says the exchange's trading engine -- which is capable of handling peak volumes of 30,000 trades per second -- should hold up

** Challenges likely will come from clearing and settlement, which still require human intervention (RM (LSE: RM.L - news) : vikram.subhedar.thomsonreuters.com@reuters.net)