Traditional brokers say lower trading fees ‘are not the end of the game’ as competition intensifies

As to whether incumbents have been slow to innovate, Phillip Securities said he was keenly aware of the need “to act quickly”.

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

Feedback gathered from focus groups and weekly product demos gave him ideas for “a pipeline of new product features” to be rolled out later this year and beyond, such as systematic trading of US equity options. and ESG thematic investing.

Maybank Securities said that from the start its offerings have been tailored to investors who “are more advanced in their financial and professional careers (and) need a greater depth of financial services.”

“If you’re an 18-year-old or a university student looking to make your first investment, the capital you have may not be large…The reality is that you’re likely to go where you want to go. is the cheapest,” said its retail manager. company Alexandre Thorhauge. “That’s why, at the moment, new entrants cater better to the new investor.”

“However, step forward a bit and you’re a few years into your professional career, that could change. People are looking for diversification in their overall wealth and portfolio, and that’s where we and other players have a little edge. “, he added.

That said, the brokerage, which was founded in Singapore in 1972, noted that while it will continue to play to its strengths, it cannot ignore changing demographics and the demands of new investors.

Going forward, it will focus on revamping and simplifying its digital trading platforms, especially its mobile app. It’s also looking to “modernize” its customer onboarding and account funding methods to meet the needs of a younger generation, Thorhauge said.

PRICE WAR – GOOD OR BAD?

Incumbents have also reacted to competition by adjusting transaction costs for investors.

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

“Of course, an important thing, at least in the long run, is that we have to make sure our products are affordable,” Lim said.

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

Its managing director, Jean Paul Wong, noted that traditional brokerages are likely to face “longer-term pressures” in a competitive environment. But while investors will benefit from lower fees, “it can’t be solely due to fees when it comes to demonstrating value for customers,” he added.

Mr Wong also warned of a “high cost” to bear, alongside “a matter of longer-term sustainability” for those focused on offering great prices and attractive freebies.

“iFAST does not see low fees as the end game or the only differentiator… If it is just price, traditional stockbrokers would lose substantial market share given their fairly low fees. outrageous for stocks and ETFs,” he told CNA.

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