Singapore Broker Exodus Seen Quickening: Southeast Asia

[godjira1]

I have to say it was very poetically worded though, and probably true as well.

But i guess all forums have their rules.

[CityFarmer]

In case buddies here wondering what is happening to minimax?

The user, minimax, had made a request to remove his account. With respect on his choice, I granted the request.

Thank for his contribution so far. May be our forum is not suitable or matching to his preference.

Regards
Moderator

[Bibi]

Any forumers here who are ex-remisers/broker/dealer like to comment? Is it true you left because the commission sucks? Or the risk/reward ratio is not worthwhile?

[cfa]

Believe many left the industry because of lack of business , lower comm rates , higher risk.
Those were the days when remisiers could be choosy and hanged up their phone if they felt your orders were too small or troublesome to execute .

[cyclone]

I have to say it was very poetically worded though, and probably true as well.

But i guess all forums have their rules.

Forumers are advised to be restrained. Do not use such vulgar words : sh**, tur*, an*l, etc. Thanks.

[Wildreamz]

Lower volume is bad for everyone, but in this case, it is a worthwhile sacrifice.

http://www.automatedtrader.net/news/at/1...ies-market

It is proposed that securities intermediaries impose minimum collateral on their customers for trading in both SGX-listed and foreign listed securities, based on the customers' open positions and credit risk management practices. SGX also intends to shorten the settlement cycle from T+3 to T+2 days by 2016.

Measures like these help to discourage "mom and pop" retail investors from engaging in highly leveraged contra and naked short which are essentially gambling in my opinion and put both brokerage house and themselves at serious credit risk. Overall, it is definitely better for the society as a whole.

"Professional speculators" such as traders, funds and institutional investors can and will still engage in speculative trade using derivatives such as CFD. Hence, I do not think trading volume will be impacted as as much as some people think.

Instead of encouraging speculation, we should try to increase trading volume by making SGX listed stocks more accessible to more potential investors (eg opening sgx stocks to more countries) and making the lot size smaller.

[d.o.g.]

Instead of encouraging speculation, we should try to increase trading volume by making SGX listed stocks more accessible to more potential investors (eg opening sgx stocks to more countries) and making the lot size smaller.

Currently SGX stocks can only be traded by SGX-ST members, who must have a physical presence in Singapore. This is a legacy of the days when SGX traded by open outcry and "trading seats" were owned by the brokers. Today with electronic trading there are no physical seats per se. There was a proposal some time ago to allow offshore brokers to trade SGX stocks, but AFAIK it went nowhere, obviously due to resistance by the local brokers.

The local brokers did make a fair point that offshore brokers would not be subject to MAS regulations, which would give them an unfair competitive advantage. As it stands today, offshore investors can use offshore brokers to trade SGX stocks, as long as these offshore brokers route the order through an onshore broker.

The shrinking of the lot size was recently proposed, it will move to 100 shares/lot (like NYSE and KLSE), and eventually to 1 share/lot (like ASX). Frankly I think the smaller lot size is long overdue. Ever since shares went scripless there has been no reason to keep the 1,000 shares/lot system. But SGX executives had other ambitions (like buying ASX), so such common sense changes were not implemented.

The remisier's job as it stands today is probably going to fade away. In the old days people could get tips (whether useful or not) from their remisier. Today such tips would likely be considered "financial advice" which is regulated separately and requires a different license.

Some stockbroking houses may choose to also become financial advisors and get their remisiers dual-licensed as advisors' representatives. Such dual-class remisiers could then legally promote whatever stock is hot to their clients, on the basis of it being "financial advice" (leaving aside the quality of such advice).

Other stockbrokers may simply let their remisiers fade away, leaving only the institutional sales force for institutional clients, with retail clients left to trade online on their own.

We may even see a Singapore version of Interactive Brokers or E*Trade, where everything is done online and commissions are very low, in exchange for virtually no human support.

[sgd]

maybe their numbers greatly reduced but I don't think brokers will go away there are still traditional types like me that prefer to just pick up the phone and do a trade. The brokerage fee they earn from me is not very much. I also know internet trading is cheaper but everybody needs to make a living, don't do things to deprive others from making their living you help others today one day somebody else return the favor remember karma.

[CY09]

Hi SGD,

Its also about the demographic shift in investors and their preference. There are indeed "old-fashioned" (I may say) people who still prefer using the phone. However, the older generation will gradually die out (literally). They are being replaced by younger/ more tech advanced investors. This group will prefer internet/mobile trading over calling your broker.

Secondly, consumers these days are price sensitive. In fact, talking around I have noticed many of my peers prefer SCB, Lim&Tan, DBS (cash-Vickers), Citibank. This is because many of us don't use (understand) the concept of contra*. This are generally the cheaper brokerages (lim & Tan has a 5% rebate as well as quite interesting sign on promotions).

Thus with lesser reliance on the human (brokers) and competition among each other to offer lower fees, the rational way for many brokerages is simply to cut out brokers. (note: Labour cost is a lot in Singapore!)

*Please note my "peer" sample is a little biased as all are not traders.

Advertising: Lim & Tan promotion is $40 NTUC voucher and $48 rebates if you do 3 trades within 3 months. However, please don't buy just for the sake of clocking the promotion. As value investors, I will strongly recommend researching for undervalued stocks first, decide on a few, then open a Lim& Tan account. This way you will have adequately researched companies and then be able to enjoy the Lim&Tan benefits.

[orangetea]

Ever thought this will become the new normal in the information age?

The new normal will see retailers trade online.

Brokers will only serve institutions