Many prefer brokers to online trading
They stick to traditional way despite higher commissions
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They stick to traditional way despite higher commissions
By Jonathan Kwok
21 April 2012
Online share trading may be gaining in popularity here but many retail investors still prefer to trade via their brokers despite the higher commissions they have to pay.
That is a key finding from new research showing that about 310,000 investors here traded shares through a remisier last year - about 10 per cent more than the 280,000 who traded online.
The research was done by Australia- based research house Investment Trends.
‘While some remisier clients are migrating towards trading online, the size of the remisier market is still larger than the online broking market in Singapore,’ the firm said in a statement yesterday.
No reason was cited for the fact that many traders here are sticking with the traditional way of trading shares despite the higher cost of doing so.
Most brokerages charge a minimum fee of $40 for dealer-assisted trades, while trades done online typically incur a minimum fee of only $25. Above these minimum sums, the charges for remisier-assisted trades are also higher, as a percentage of the total contract size.
Observers say that the continued popularity of remisier trading could be explained by the fact that some investors still prefer speaking to a remisier, especially one providing sound advice.
Seasoned traders who have built up relationships with their brokers are also unlikely to change their habits in a jiffy.
‘You are not always in front of a PC, ready to trade,’ said a retail broker who has been in the business for 18 years and who declined to be named.
‘Even if you have a computer or some mobile device, you still have to go to the website, find the stock and enter the price. It’s a longer process.’
The broker added: ‘It is a lot easier just to press eight numbers and give an instruction through the phone.’
Mr Albert Fong, president of The Society of Remisiers (Singapore), said: ‘Investors out of the marketplace need to be in touch with us.
‘Remisiers can provide them with a better understanding and guide them along. We are here full-time. Investors who trade through the Internet also call us and get our opinion.’
Another reason for the preference for remisiers could be that traders call them in order to secure higher credit limits as a result of establishing a rapport over the phone.
Singapore’s contra trading system means that investors typically buy stocks without putting cash upfront, and pay up only a few days later. The remisiers have to bear the credit risk in the meantime.
Still, there is no denying that online trading - which now extends to smartphones and tablets - has gained in popularity over the years, and is likely to displace remisier-assisted trading slowly.
Brokers say that younger, tech-savvy investors prefer online trading.
‘More of my clients, who are in their late 20s to early 40s, trade online,’ said Mr Desmond Leong, who has been a remisier for eight years.
‘My clients are a bit younger and more Net-savvy. Our role has changed a bit. Clients will call us if they have issues or for troubleshooting, and less for the execution of trades.’
Investment Trends said that overall satisfaction with online brokers had improved since 2010, with 64 per cent of online share traders saying their main broker was ‘good’ or ‘very good’.
‘It is worth noting that (trading via smartphones) has become significantly more important in driving overall client satisfaction,’ said Investment Trends.
‘One-third of share traders currently use a smartphone or tablet for trading.’
Investment Trends senior analyst Uwe Helmes said 28 per cent of online share traders chose their main online broker due to the smartphone application.
‘Our mobile trading applications are experiencing robust take-up rates.’
Investment Trends also ranked the market share of the various broking houses. Phillip Securities is dominant in online broking, with a third of online share traders saying it is their main broker.
There is no clear leader in the remisier market. The top five brokers in the remisier space all have primary market shares between 10 per cent and 18 per cent.
Market sentiment also affects trading volumes, said Investment Trends. Volatility in the second half of last year discouraged clients from entering the market.
The study included a survey of almost 13,000 traders. Many Singapore brokers helped out with the study, as did some partners that work with active investors, such as online portal ShareInvestor.
Online Broking
Online Share Trading