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Issues that undermine M'sian retail intermediaries: remisiers
Publication Date : 10-12-2013
The Remisiers Association of Malaysia or Persama has raised concerns about the low brokerage fees, rising numbers in financially distressed counters and a possible abuse of the new personal data protection rules.
The association said in a statement that the three key issues could undermine the survival of Malaysia’s over 6,000 retail market intermediaries, including remisiers and paid dealers, who handle more than four million central depository system or CDS accounts in the retail sector.
“If the authorities do not resolve these issues soon, Persama feels that market liquidity will dwindle fast and the stock market/capital market could suffer as a result,” said the body that represents more than 900 remisiers in Malaysia.
A spokesperson from Bursa Malaysia said it would look into the concerns raised by Persama.
According to Persama, the current retail Internet trading with a disorderly brokerage rate has created an uneven playing field that favour high-frequency trading, thus making stock prices very volatile. This situation, the association said could discourage retail participation.
“Price volatility also impairs the listed company’s ability to maintain the price to reflect its fundamental value,” Persama claimed, adding that the undercutting-rate practice was “anti-competition”, benefiting only the big banks, while squeezing out remisiers/dealers.
An industry observer, however, said it was only natural that digital revolution would lower the cost of stock-market trading.
“Technology has made online trading more convenient, and certainly, investors, including the retail ones, would naturally go for the platform that offers the most competitive rates,” he explained.
On the trend of increasing number of Practice Note 17 (PN 17) companies and delistings, Persama claimed public confidence and the image of the capital market had been undermined, and thus further curtailing retail participation.
More than 350 listed companies have been classified PN17 firms in recent years, with more than 150 delisted.
“Retail investors who had earlier invested in ‘good’ companies feel short-changed when these companies suddenly turn into near worthless entities when they become PN17 firms.
“For companies with a good future, investors also feel angry when they were privatised at unfair and unreasonable prices,” Persama argued.
“We appeal to the authorities to come out with more conducive enforcement measures for the revival of such delisted companies and to address such unhealthy development in the capital market,” it said.
Meanwhile, Persama also stressed that the new Personal Data Notice practices under the current Bursa Rules, which became effective on Nov 15, 2013, were not consistent with Section 43 of the Malaysian Central Depository Act 1991 on “secrecy”.
“This might open the door to malpractices and abuses of the trading data,” it claimed.