Ab­sip sees need for trans­for­ma­tion in do­mes­tic stock­broking in­dus­try

The Star Early Edition - - BUSINESS - Joseph Booy­sen

BLACK par­tic­i­pa­tion in South Africa’s stock­broking in­dus­try was less than 2per­cent and much more needed to be done to bring about trans­for­ma­tion in the in­dus­try, the As­so­ci­a­tion of Black Se­cu­ri­ties and In­vest­ment Pro­fes­sion­als (Ab­sip) pres­i­dent Si­bongiseni Mbatha said yes­ter­day.

Black stock­broking firms made up 1.5per­cent of the in­dus­try in 2015 and this had only in­creased to 1.8per­cent this year, Mbatha told an Ab­sip stock­broking sum­mit in Cape Town. The stock­broking in­dus­try re­mained largely un­trans­formed af­ter more than 20 years since the coun­try be­came a democ­racy.

De­spite the emer­gence of black stock­broking firms and a grow­ing num­ber of qual­i­fied peo­ple, the face of the in­dus­try re­mained largely white and male, he said.

A re­port ti­tled Trans­for­ma­tion in the Stock­broking In­dus­try: A White Pa­per Primer showed that black bro­kers’ mar­ket ac­tiv­ity was sur­pris­ingly low as a per­cent­age of do­mes­tic cap­i­tal mar­kets ac­tiv­ity, and that over the past five years mar­ket trad­ing ac­tiv­ity and per­for­mance had in­creased, while black bro­ker al­lo­ca­tion de­creased, Mbatha said.

The re­port also showed that the pres­ence of black in­di­vid­u­als in the re­search sec­tor re­mained dis­pro­por­tion­ately low, the num­ber of prac­tis­ing black stock­bro­kers re­mained very lim­ited and the num­ber of black bro­ker­age firms had de­clined in the past 10 years.

Mbatha said some of the chal­lenges still fac­ing black broking firms in­cluded a lack of leg­isla­tive sup­port be­cause broad-based black eco­nomic em­pow­er­ment leg­is­la­tion re­mained vol­un­tary. Black bro­kers lacked the sup­port of en­abling leg­is­la­tion and reg­u­la­tions to drive trans­for­ma­tion in the in­dus­try.

He said the play­ing field was un­even: black bro­kers were com­pared with banks as well as global play­ers and were re­quired to com­pete on an equal foot­ing, de­spite not hav­ing had the op­por­tu­nity to build match­ing re­sources and sup­port sys­tems.

Sup­port was in­fre­quent and the in­sti­tu­tion’s sup­port for black bro­kers over the years had been in­ter­mit­tent, short­term and in­con­sis­tent, mak­ing it dif­fi­cult for these com­pa­nies to plan with any pre­dictabil­ity, he said.

Joan­mariae Fubbs, the chair­per­son of the Port­fo­lio Com­mit­tee on Trade and In­dus­try, said in a key­note ad­dress at the sum­mit that it was im­por­tant for every­one in the stock­broking in­dus­try to recog­nise their role in trans­form­ing the sec­tor.

Fubbs said con­sumer ed­u­ca­tion about buy­ing shares was in­suf­fi­cient. She said an­other is­sue South Africa needed to guard against was mo­nop­oly cap­i­tal. “There is no good mo­nop­oly cap­i­tal, black or white. The re­al­ity is that now it is white mo­nop­oly cap­i­tal. We are op­posed to mo­nop­oly cap­i­tal, it is not healthy.”

She said Ab­sip could play a crit­i­cal role around the is­sue of trans­for­ma­tion.

“Yes there is change, but the pace of change is at a snail’s pace, es­pe­cially in the fi­nan­cial sec­tor,” she said.

Ajay Lalu, the manag­ing di­rec­tor of Black­lite Con­sult­ing, said the gov­ern­ment had to step in to en­force trans­for­ma­tion in the stock­broking in­dus­try and fi­nan­cial ser­vices sec­tor as a whole.

“The prob­lem is when you put your pen­sion fund with a fund like Mo­men­tum, they want the best price for trad­ing in eq­uity. “Black bro­kers do not have the global net­work or trad­ing plat­forms and vol­umes that com­pa­nies like Deutsche Bank have that al­low them to of­fer lower prices per trade.

“We should be say­ing that 30per­cent of all trades of the JSE should go to black stock­broking com­pa­nies as a start.

“It is an in­dict­ment that 23 years into our democ­racy, only 2 per­cent of all trades on the JSE are done by black stock­bro­kers. The gov­ern­ment needs to reg­u­late the ex­ist­ing stock­broking firms and pro­mote lo­cal 100per­cent black-owned and black women-owned firms,” he said. The JSE in May last year launched an ini­tia­tive whereby emerg­ing black-owned stock­broking firms were set to re­ceive a boost with the JSE’s lat­est ini­tia­tive, en­ter­prise de­vel­op­ment.

The pro­gramme in­volved the JSE pay­ing cash dis­burse­ments equal to 33per­cent of the quar­terly eq­uity trad­ing and mem­ber­ship fees of a black bro­ker­age to pro­vide fi­nan­cial as­sis­tance and sup­port to the sus­tain­able growth of the busi­ness. The JSE was not able to com­ment at the time of go­ing to press. – Ad­di­tional re­port­ing by Di­neo Faku

PHOTO: SUP­PLIED

Ab­sip pres­i­dent Si­bongiseni Mbatha says the play­ing field was un­even as black bro­kers were com­pared with banks as well as global play­ers and were re­quired to com­pete on equal foot­ing.

PHOTO: LEON NI­CHOLAS

The JSE launched an ini­tia­tive last year whereby emerg­ing black-owned stock broking firms were set to re­ceive a boost.

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