New players heat up competition in online stock broking

THE competition in the online stock broking business in Malaysia has gone up a notch as foreign broker Nasdaq-listed Futu Holdings Ltd has been gaining traction following the launch of its investment plattorm called Moomoo in May last year.

The Hong-kong based broker obtained the approval-in-principle for the Capital Markets Services Licence (CMSL) from the Securities Commission, allowing its Malaysian subsidiary to operate in the country.

Webull Corp, owned by Chinese group Fumi Technology, was reportedly given a licence to only do dealing and will need to work with a local brokerage for settlements.

“The new foreign players are giving the existing brokers a run for their money. But the impact is mostly on non-bank backed or standalone brokers,” says a market observer.

He adds that the impact will be felt by brokers such as Rakuten Trade and Malacca Securities as the Moomoo platform is able to garner market share as it enables investors to trade international markets such as the US stock exchange, at very low fees.

“Futu can offer very negligible fees as it has deep pockets to gain users as it is very much a volume game for them,” the observer adds.

Futu’s strategic investors reportedly include Tencent Holdings, Matrix Partners and Sequoia Capital.

According to Futu’s website, the company’s services include trading, clearing and settlement wealth management, margin financing and securities lending as well as corporate dealings.

Moomoo’s platform enables users to invest in stocks, exchange-traded funds, and American depositary receipts, among other assets.

It also allows clients to trade shares of companies in the United States, Hong Kong, and China under a single account.

In addition to Malaysia, Moomoo is available in the United States, Singapore, and Australia.

The company has onboarded over 20 million users globally since it was founded in 2018 in Palo Alto (part of Silicon Valley), California.

Moomoo and Webull are not the first foreign brokers to set up shop here. In fact, there are already two foreign online stockbrokers operating for some time.

IFAST Capital Sdn Bhd which is part of Singapore’s IFAST Corp Ltd, set up FSMONE Malaysia, an online investment platform in 2008.

In 2017, Japan’s Rakuten Securities, Inc partnered with Kenanga Investment Bank Bhd to operate an online investment platform.

Despite the competition, Malacca Securities Sdn Bhd is unperturbed as it did not see the impact on its business.

“We’re pleased to report that there has been no decline in trading activity among our existing clients who might be considering the Moomoo platform.

“We maintain a high level of confidence in the growth potential of the global market trading landscape for Malaysians, viewing it as being in its early adopter stage,” its managing director Lim Chia Wei tells Starbizweek.

“Traders in Malaysia have the flexibility to choose one or more brokers based on their individual preferences and needs.

“While Moomoo may offer a different set of features and experiences, we take pride in being a trusted local broker with a legacy spanning over 60 years,” she adds.

Lim says Malacca Securities, being a hybrid broker, can seamlessly blend the expertise and guidance of its seasoned professionals with cutting-edge technology, providing its customers with a guided, comprehensive, real-time, and intuitive trading experience.

Low fees

That said, investors, especially the retail investors are drawn to platforms that offer the lowest fee with access to other major stock exchanges.

As such, these factors may tip in Moomoo’s favour.

But Lim points out that there has been a noteworthy decrease in stockbroking fees, propelled by the widespread adoption of trading apps that facilitate easy market access.

“For Malacca Securities, the surge in uptake, particularly witnessed during the pandemic, saw an impressive growth of over 285% in new account openings for M+online over a span of two years.

“With the launch of M+global last year in May 2023, it marks a significant milestone in our efforts to enhance customer experience.

“This platform now empowers our customers with seamless access to trade across major markets such as the United States and Hong Kong.

“The expansion into these high market capitalisation markets underscores our dedication to providing a more comprehensive and convenient trading experience.

“As to date, we are serving over 300,000 loyal customer base that are currently using both our M+ trading platforms; M+online and M+global,” she adds.

Dealing with competition

When asked on how it copes with heightened competition, Lim says healthy competition as a way to push itself to do better.

“We believe in a fair playing field where everyone, both local and external players, can thrive together.

“It’s not just business for us; it’s about creating an environment that helps the whole industry grow.

“With the introduction of M+global in 2023, we now provide our customers with real-time market data access for the United States and Hong Kong market, a bilingual app catering to the diverse Malaysian market, and desktop trading platforms tailored for professionals.

“Additionally, we offer exclusive opportunities for traders to invest in Hong Kong initial public offerings,” she explains.