Brokers want delay in commission float

One year needed to adjust to fee structure

NUNTAWUN POLKUAMDEE

Local brokers and the Stock Exchange of Thailand yesterday agreed to call for regulators to delay full liberalisation of online trading commissions. The SET and local brokers yesterday agreed to a one-year transition plan before online commission rates are floated.

Kampanart Lohachareonvanich, the chairman of the Association of Securities Companies, said he did not believe the delays would impede the growth of Internet trading.

''This will help to limit the risks for both brokers and investors,'' he said.

The Securities and Exchange Commission last year announced that starting this month, minimum commissions for online trades would be set at 0.15%, compared with 0.2% previously.

But the SET board last week agreed that it would adopt a one-year transition period before liberalising online trading commissions.

Investors trading through cash balance or credit balance accounts can qualify immediately for the minimum 0.15% fee. Cash balance accounts require cash to be placed in advance to cover any trade, while credit balance accounts allow investors to trade up to set credit lines established by their broker. But online trades through other types of accounts would remain subject to the 0.2% minimum fee over a one-year transition period.

Brokers have argued for a delay in the full implementation of the lower rates to help minimise trading risks and the impact on commission revenues. Online trade currently accounts for around 10% of the total transactions on the market, but is expected to jump sharply due to the lower trading costs under the new rate schedule. Normal commissions are currently set at a minimum of 0.25%, but are scheduled to begin to decline starting in 2010 and will be fully negotiable starting in 2012.

The SET will submit the revised rules for review by the SEC next week. According to the SET, only 3% of investors trade through cash balance accounts and another 3% through credit balance.

Prasitsin Visawanan, an assistant managing director at Sicco Securities, said the compromise should help address ongoing problems regarding the transition to online trade and issues regarding compensation of marketing officers.

Meanwhile, SET president Patareeya Benjapolchai expressed confidence that the market should improve this year over 2006.

''Corporate profits are on track to pick up from last year, thanks to lower oil prices and interest rates and a pickup in public and private investment,'' she said.

Foreign investors have recorded net inflows of 10 billion baht since the beginning of the year, Mrs Patareeya added, and the amount was expected to continue to grow after the central bank indicated it would further relax its 30% reserve rule on foreign investment.

The SET index has fallen by 6.2% since Jan 1, adding to the 4.75% loss posted in 2006.

According to the SET, nine-month profits in 2006 rose less than 1% from the same period the previous year, despite robust revenue growth of 21%. Most brokers estimate earnings growth this year to be below 5%, but project modest gains in stock values due to favourable valuations compared to other regional markets.

Bangkok Post
Wednesday January 31, 2007