Black brokers call for radical overhaul of sector – Absip
Decreasing black broker allocations and a disproportionately low black presence in the equity research sector warrant a radical overhaul of the industry.
This is according to the president of the Association of Black Securities and Investment Professionals (Absip), Sibongiseni Mbatha, speaking this week at the association’s annual stockbroker summit held in Cape Town. Mbatha said the number of black brokerage firms had declined over the past 10 years.
He said some of the challenges facing the black broking firms today included a lack of legislative support, as BBBEE legislation remained voluntary and only applicable to those “who wish to comply”.
“Black brokers lack the support of enabling legislation and regulations to drive transformation in the industry,” said Mbatha.
He said the financial services sector should commit to promoting a transformed, vibrant and globally competitive industry that reflected the demographics of South Africa and contributed to the establishment of an equitable society.
“In a wider economic context, more needs to be done to bring black people into the economic mainstream. While this remains a challenge in a country with high unemployment and low GDP growth, targeted initiatives can position us on this path,” he said.
Member of the Black Brokers’ Forum and CEO of Lefika Securities, Vusimuzi Mkhondo, said the first black-owned stockbroker was registered on the JSE in 1996.
“Since then we have seen numerous entities come and go in this space. More than six black firms have closed. Clearly a low survival rate,” said Mkhondo.
He said there were a total of 44 qualified male black stockbrokers, of these 20 were practising while 24 were not.
The majority in the industry consists of white male stockbrokers at 438; of these, 264 are practising while 174 are not.
He said black stockbrokers faced an uneven playing field where they were expected to compete against global players without the matching resources and support, resulting in low allocation.
In a contribution to the transformation panel discussion, head of equity derivatives at the JSE, Valdene Reddy, confirmed that there were transformation challenges in the sector and that the JSE was committed to transformation externally and internally.
“We have a transformation journey that’s publicly available while our ownership is a challenge,” said Reddy.
“Being a listed company, we make every effort in terms of transformation in staff complement,” she said.
General manager for listed equities at the Public Investment Corporation (PIC) Lebogang Molebatsi said while the level of transformation at the PIC was high, “there are powerful decisionmakers at the PIC who do not agree with us on transformation”.
“Key positions of decision makers at the PIC are being held by the minority. We need black people to hold these positions,” said Molebatsi.