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SECURITIES TRADING
NUNTAWUN POLKUAMDEE
Securities brokers have been gradually diversifying their revenues away from brokerage fees to prepare for industry liberalisation in 2012. Kampanat Lohacharoenwanich, the chairman of the Association of Securities Companies, said proprietary trading was becoming an important revenue source for many brokers.
Two-thirds of industry revenues still come from brokerage fees, although this has fallen from 70% in 2007 and over 80% in 2006.
Mr Kampanat said the investor base had also changed in recent years, with retail trades now equalling that of foreign investors at around 40% each, with the remaining 20% comprised of local institutional investors.
In contrast, retail investors used to dominate trading on the Stock Exchange of Thailand at 65-70% of total turnover, with the share of foreign investors just 20-25% and local institutions only 5-10%.
Mr Kampanat said local institutions included transactions made by other brokers for their proprietary trading accounts, which on any given day could account for 6-7% of market turnover compared with 2-3% at the beginning of the year.
The push to diversify revenues comes as the Securities and Exchange Commission announced that commission fees, now set at 0.25%, would be made freely negotiable by 2012. Brokerage licences would also be made open to new applicants in four years.
''In other exchanges, brokers typically have less than 50% of their revenues coming from commission fees. Other businesses, such as investment banks, asset management, proprietary trading and financial advisory services comprise the rest,'' Mr Kampanat said.
''I think that most players in the industry will be able to revise their strategies and expand into other areas before 2012.''
The SEC has encouraged brokers to expand their business activities into derivatives trading on the Thailand Futures Exchange, fund sales, advisory activities and private fund management.
Mr Kampanat, the chief executive of Trinity Securities, said the house earned 50% of its revenues from brokerage fees, 10% from proprietary trading and the rest from futures market trading and investment banking activities.
Trinity Watthana, the listed holding company of Trinity Securities, reported first quarter profits of 14.68 million baht on revenues of 140 million. The group posted profits of 64.32 million baht on revenues of 492.58 million last year.
Mr Kampanat said Trinity was reviewing its existing 14-branch network to see where cost savings could be made.
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