Reductions in online trading fees delayed

Bangkok Post (25 Oct 2007)

Internet trading fees will be maintained at 0.2% of transaction values until the end of 2009, the Stock Exchange of Thailand board announced yesterday.

Fees for online trades for cash balance and credit balance accounts would also be maintained at 0.15% until the end of 2009. Cash balance and credit balance accounts are used by only a small minority of online traders.

The decision delays previous plans to liberalise commission fees starting next year. Internet trading fees for normal accounts were scheduled to fall to 0.15% starting in January, and be set at 60% of normal commissions from 2010 and made fully negotiable in 2012.

Commissions for normal trades, now fixed at a minimum of 0.25%, are to decline from January 2010 and be made freely negotiable from 2012.

Suthichai Chitvanich, a SET executive vice-president, said the extension would help reduce risks for brokers and promote trading discipline among investors.

He noted that the number of online investors and the volume of online trade had risen rapidly over the past year, in part thanks to the lower commission fees compared with conventional trading.

The SET board also agreed to delay planned changes to compensation for marketing officers by another two years until the end of 2010.

Brokers can pay marketing executives up to 27.5% of their total commission revenues on a monthly basis. The system was due to change at the end of this year to a pay-for-performance structure that included withholding 25% of compensation to be paid on a six-month basis.

The SET also announced that foreign brokers designated as exclusive partners with local firms must pay trading commissions of at least 60% of minimum commission rates for trades.

The foreign broker must also charge a minimum commission of 0.25% to their clients, and also agree to transfer know-how, research and technology to the local partner. From 2010 to 2011, commissions over 20 million baht would be made negotiable between the foreign exclusive partner and the local brokerage.

The new policy changes on commission fees and marketing compensation must be approved by the Securities and Exchange Commission.

Meanwhile, the SET index closed yesterday at 866.03, up 5.94, in trade worth 17.93 billion baht. The index rose as high as 875.81 points in morning trade before easing on profit-taking. Energy stocks gained 0.82%, banks closed up 1.29% and property rose 0.92%.

Foreign investors were net sellers of 1.72 billion baht in stocks, with retail investors with a net buy position of 964.68 million and local institutions net buyers of 760.35 million.

Mongkol Puangtaetra, assistant research manager at Adkinson Securities, said the market moved largely with regional markets, which closed mostly lower on ongoing concerns about the sub-prime mortgage crisis in the US.