MBKET urges constraints on online trading
Price war threatens brokerages, boss says
Maybank Kim Eng Securities (Thailand) or MBKET, the country’s biggest stock broker by market share, has asked regulators to restrict online trading service to institutional investors, saying only they have the knowledge to make investment decisions.
Competition in the securities brokerage i ndustry has intensified, in particular through price-cutting by purely online brokers, said MBKET chief executive Montree Soenpaisarm.
He said the current situation looked like 15 years ago, when most brokers went into the red by offering commission-free service after the liberalisation of the industry.
Mr Montree’s comments came in response to at least two online brokers charging lower-than-average commission fees.
ASL Securities Co charges a trading commission fee of 0.08%, well below the average of 0.15% levied by traditional brokerage houses, as well as a negotiable rate for high-net-worth investors.
SBI Thai Online Securities, another purely online stock broker, is offering promotional trading fees ranging from 0.015% to 0.02% of transaction value for three months after starting up the business in October.
The low commission fees are jolting the industry as online trading grows at a rapid clip. This type of service, available since 2009, represents 35% of total market value and 60% of retail trading value.
Mr Montree said t he Association of Securities Companies (Asco) met officials from the Securities and Exchange Commission (SEC) to discuss traditional brokers’ concerns that the price war could pose a threat to long-term market development.
“The pricing strategy can attract investors, but it will also harm other players that produce quality research papers that are crucial for investment decisionmaking,” he said.
“Some players copy other brokers’ research, and that is unfair, as the latter have costs in making research. Everyone should have a level playing field.”
According to year-to-date SET data, MBKET has a market share of 8.65%, followed by CIMB Securities (Thailand) (CIMBS) at 6.11% and Finansia Syrus Securities (FSS) at 5.66%.
MBKET’s market share is down slightly from last year’s 8.87%, while those of CIMBS and FSS have risen marginally from 6.02% and 5.61%.
MBKET handles client assets valued at 300 billion baht. It provides the full array of securities services, including research, and covers about 100 companies listed on the Stock Exchange of Thailand and the Market for Alternative Investment.
SEC assistant secretary-general Paralee Sukonthaman said limiting online trading service to institutional investors was unnecessary and Asco should take care of cutting commission fees among its members.
The securities watchdog will let all brokers do business freely as long as they meet the requirement of offering quality research to cover at least 30 stocks, she said.
In another development, MBKET managing director Sukit Udomsirikul expects the SET index to reach 1,5001,600 points next year, driven by fund inflows to emerging markets offering cheap stocks compared with those of developed markets.
SET executive vice-president Pakorn Peetathawatchai said the exchange would aggressively attract foreign investors by conducting roadshows.