Traditional brokers say lower trading fees ‘not end game’ as competition heats up

On whether incumbents are slow to innovate, Phillip Securities said it was fully aware of the need to “move fast”.

“Of course, we would have liked to launch the app yesterday, but it takes time to build…and this time, we did it differently,” said Mr. Lim, noting that the brokerage has polled more than 100 users through the revamped app development process.

Comments collected from focus groups and weekly product demos gave her ideas for a “pipeline of new product features” to be rolled out later this year and beyond, such as regular trading of US stock options and thematic investing in ESG.

Maybank Securities said its offerings are tailored to investors “who are pursuing their financial and professional careers (and) need a broader depth of financial services.”

“If you are an 18-year-old or a college student looking to make your first investment, the capital you have may not be much…in fact, you should probably go where it is cheaper,” said the company’s head of retail. Thorhog. “This is why new entrants better serve the new investor right now.”

“However, go a little fast and you in a few years in your career, that could change. People are looking for diversification in their overall wealth and investment portfolio, and this is where we and some other players have some advantages.”

However, the brokerage, which was incorporated in Singapore in 1972, has indicated that while it will continue to exploit its strengths, it cannot ignore demographic changes and the requirements of new investors.

Going forward, it will “heavy” focus on revamping and simplifying its digital trading platforms, in particular its mobile app. Mr. Thorhaug said it is also looking to “modernize” the ways to set up its customers and fund the account in ways that cater to the younger generation.

Price war – good or bad?

The incumbents have also responded to the competition with some adjustment to the cost of trading for investors.

Philip Securities launched Cash Plus, a low-cost trading account in January 2020 to attract “price-conscious” investors. For example, those with this account can trade US stocks online at fixed rates starting at $1.88, compared to a cash management account that charges a 0.3 percent rate or $20 minimum.

“Of course, one important thing, at least in the long run, is that we need to make sure that our products are priced reasonably,” Lim said.

Another existing player, FSMOne.com, reduced its fixed commission fee for Singapore-listed stocks and exchange-traded funds (ETFs) from S$10 to S$8.80 in April of last year. FSMOne.com is the digital trading platform of iFast Corporation, which launched stock brokerage services here about six years ago.

Its general manager Jean-Paul Wong noted that traditional brokerages are likely to face “long-term pressure” amid competition. He added that while investors would benefit with lower fees, “it can’t be just about fees when it comes to proving value to customers.”

Wong also warned of a “high cost” to be incurred, along with an “issue of long-term sustainability” for those focused on offering competitive rates and attractive free offers.

“iFAST does not see lower fees as the end game or just a differential factor…if it was just about pricing, traditional stock brokers would be missing out on significant market share due to their rather exorbitant prices for stocks and ETFs,” he told CNA.

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