OCBC Securities' managing director said they will not merge its securities business into its bank.

Weeks after DBS announced the merger of its securities business into the bank, local brokerage OCBC Securities came out to say that it will not be taking the same route. Neither is OSPL planning to push its 200-plus remisiers into private banking.

«My position is I will not go down that path,» said Dennis Hong, managing director of OCBC Securities Private Limited (OSPL), who was quoted in the «Business Times» (behind paywall).

New Era

Hong acknowledged that their retail brokers must offer more value-added services and access to foreign markets in order to thrive in the era of falling brokerage commissions. Examples of value-added services include share margin financing, share lending, or facilitating bulk share placements among parties.

«At the firm level, the era of declining brokerage commission is here. We see it in the market, our competitors, in fintech companies coming in offering no transactional charges for trades. My contention is that there are simply different revenue models.»

New Forms of Fees

In order to attract customers, brokers and fintech companies could waive transactional brokerage, but instead charge an annual asset-under-management fee, platform subscription fee, or custody fees. 

Alternatively, they may also prescribe minimum cash balances which in turn deliver float income for these brokers or platforms.

Staying Resilient

OSPL's total equities traded value increasing by a 4 per cent compound annual growth rate (CAGR) over the past three years, Hong shared. Its diversified business segments involving retail equities, institutional equities, and futures and leveraged foreign exchange (FX) helped buffer downward pressure for its equities business.

«This is supported by our re-orientation of focus to facilitate access to over 30 foreign markets and exchanges that allowed us to register a CAGR of 24 per cent in foreign retail traded value within the same period. Concurrently, our futures and leveraged FX business has steadily increased its contribution and now represents more than one-fifth of our top-line in 2018,» explained Hong.

For 2018, OSPL's traded value for overseas market that went through its retail channels increased by 24 per cent year-on-year. At the same time, its remisiers increased their SGX traded value by 45 per cent year-on-year.