BRIDGe POISED TO ATTRACT YOUNG INVESTORS

Players laud combined efforts of Bank Negara, Securities Commission in digitalisation of local stockbroking industry

INDUSTRY players have lauded the combined efforts of Bank Negara Malaysia and Securities Commission (SC) in the digitalisation of the stockbroking industry.

MIDF Research senior banking analyst Imran Yassin Yusof said the Brokerage Industry Digitisation Group (BRIDGe) could potentially attract young investors, speed up turnaround time and save costs.

“We have seen stockbroking being offered online to retail investors already. However, the creation of BRIDGe will enhance this further and attract new investors, especially the younger generation, given their preference for technology,” said Imran in an email.

Last week, both SC and Bank Negara launched BRIDGe, a joint working group between the regulators and industry to accelerate digitisation of the stockbroking industry.

“In terms of operations, we believe that this will also potentially have faster turnaround time, which may also result in cost savings as some of the processes can be automated and also require less consumables,” he said.

During the unveiling of the Annual Report 2017, SC chairman Tan Sri Ranjit Ajit Singh said BRIDGe aimed to accelerate the digitisation of the brokerage industry to enhance operational efficiencies and service standards.

However, Imran cautioned that commoditisation of the services would potentially bring downward pressure on service fees, thus affecting revenue.

“This, however, could be mitigated by an increase in trading volume due to bigger customer base and trading activities as a result of seamless trading experience,” he said.

An analyst from CIMB Investment Bank who declined to be

In terms of operations, we believe that this will also potentially have faster turnaround time, which may also result in cost savings as some of the processes can be automated and also require less consumables. IMRAN YASSIN YUSOF

MIDF Research senior banking analyst

named agreed.

“T h e s t o c kbroking industry has had its fair share of digitisation initiatives over the years, with online trading today representing 80 per cent of total volume.

“Further efforts in this area would certainly lead to better propositions for customers and could also lead to greater participation in the stock market as new investors find such offerings more attractive,” he said.

Imran noted that digitalisation of stockbroking could lead to regional trading, but challenges persisted.

“Theoretically, digitisation would mean that a physical presence is not needed for services to be offered to investors.

“However, we also have to be cognisant that each market will have different rules and regulation and the country it operates in may not have the same level in terms of digital readiness,” he said.

Both analysts agreed that digital stockbroking was still vulnerable to the cybersecurity risks that were the inherent in all online services.

“As the industry drives towards more digitisation, it will draw more attention from cyber criminals.

“The industry needs to take equal, if not more, efforts on cybersecurity protection on the whole platform, end-to-end from the information technology infrastructure and application to the human security readiness,” said a CIMB analyst.