Agricultural Bank of China this month finally fulfilled the great expectations heaped upon it to become the world's largest-ever IPO, with a dual listing in Shanghai and Hong Kong raising a whopping $22.1billion. Hot on its heels is the long-awaited flotation of American International Group's Asian arm, AIA, which is being touted as potentially the largest-ever Hong Kong listing.

But while the encomiums continue, driven by Hong Kong's luck and geography as the de facto center for international China listings, not everyone is happy. Although the Agricultural Bank flotation and other major deals continue to propel the Hong Kong exchange higher up the global top 10 by market cap, many market-watchers feel that the exchange's comfortable position as a primary market has done little to invigorate its lackluster secondary market – the platform on which, after all, the exchange's juicy primary business must ultimately be traded.

Indeed, despite offering some of the most exciting and sought-after stocks in the world, Hong Kong actually suffered a 16.4 percent dip in net profits, according to its latest financial statement, due in large part to a slump in daily trading volumes.

Although the HKEx was not alone in seeing trading volumes fall during the second quarter, global volatility is not the only problem.

Speak to Hong Kong-based brokers and it is clear that they are frustrated with what they perceive to be a general lack of reform in the HKEx's secondary market structure. According to one broker, liquidity – the catch-all term to describe the volume and availability of tradeable stocks – has changed little if at all in Hong Kong during the past decade. It remains to be seen if Charles Li Xiaojia, the chief executive since January, will have any impact. About half of the exchange directors and the chairman are government appointees, making it questionable how much dedication there is to reform.

Given the surge in the exchange's capitalization this is not only a cause for concern in and of itself but it also shows the exchange to be badly lagging its Asian peers.

Indeed, look beyond Hong Kong and Asia's exchanges are abuzz with activity. Not only are many in the process of upgrading their technology systems but in many instances they are also taking steps towards broader structural market reforms, all of which will serve to improve the speed, efficiency and reliability of their secondary markets.

And in some particularly progressive examples, these reforms are even going so far as to allow new entrants to compete head-to-head with the incumbent exchange, in a trend that mimics transformative developments seen in both the US and Europe.

Take Tokyo for example. Earlier this year the beleaguered Tokyo Stock Exchange, which in recent years has been plagued by a catalogue of embarrassing and costly technology glitches, unveiled its new trading system, Arrowhead – amid much fanfare. Widely regarded by foreign brokers to be the most structurally progressive market in Asia, Tokyo's regulatory regime has for some time allowed a greater range of alternative off-exchange trading mechanisms.

But July 29 marked a new milestone for Tokyo, becoming the first Asian market to confront head-to-head competition from international trading operator Chi-X Global – a leading alternative trading platform that has proved highly successful in both Canada and Europe where it has succeeded in stealing some 25 percent of secondary market share from the London Stock Exchange.

Elsewhere in Asia, other markets are catching up with Tokyo.

The Australian Stock Exchange (ASX), which last year submitted to a regulatory overhaul that deprived the exchange of both its supervisory status and de facto monopoly, is undertaking an overhaul in its secondary markets. In June, the exchange unveiled plans to slash trading fees, upgrade its trading platform, and launch two new mechanisms for trading stocks in a smart move designed to defend its monopoly against future competition from Chi-X, which is also poised to give the ASX a run for its money.

Meanwhile, in Southeast Asia, Singapore has been making headlines. Not only has the exchange entered into a much-feted joint venture with Chi-X Global to develop an alternative trading venue dubbed Chi-East, but in June the exchange announced that it has entered into a licensing agreement with global exchange operator NasdaqOMX to purchase what both parties claim will be the fastest stock exchange trading system in the world.

And it is not just Asia's bigger markets that are striving to cultivate their secondary market.

Even the recalcitrant board of the Philippine Stock Exchange has been forced to accept a technology upgrade provided by global exchange operator NYSE Euronext, while the Stock Exchange of Thailand is undergoing a regulatory overhaul that will open the market up to competition.

All such developments, insomuch as they serve to improve the speed, efficiency, and reliability of the secondary market, ultimately make the market a more attractive location for both local and foreign brokers and investors to trade.

In Hong Kong, however, such developments are notable by their absence – and what changes are being made are long overdue. The announcement in its latest financial statement, for example, that the exchange, which presently opens later than the majority of its regional peers, is considering extending its trading hours is more of an embarrassing admission than a cause for celebration, particularly since the idea was originally proposed in 2001.

What's more, the exchange is doing a good job of sounding borderline retrograde in its public statements. When Ron Arculli, Chairman at HKEx, stood up at the Foreign Correspondents Club in December last year to give a now notorious speech in which he claimed alternative off-exchange 'dark' trading – a type of equity market in which quotes are not displayed publicly – carry systemic risk, he sounded distinctly out of step with broader market opinion.

His position is understandable. For Arculli and exchange operators globally, dark liquidity – which protects investors against information leakage that may move the market against the trade – represents unwelcome competition, and in Asia it is growing. This week, for example, Deutsche Bank unveiled plans to establish its own dark pool in Hong Kong, due to popular demand.

But there is a simple reason investors are embracing dark liquidity in Hong Kong: it is more effective and efficient than trading on the exchange.

The HKEx needs to recognize this as other regional exchanges have and capitalise upon it. HKEx is unlikely to remain unchallenged as the de facto venue for international China-related offerings for too long, and when that challenge comes it will need a dynamic and efficient secondary market with which to defend itself.