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Is it really news to report that brokers are having a tough time?
I've written a few times about the problems that trading representatives are facing in today's market. A friend who left broking a few years ago emailed me recently with a suggestion that instead of looking at the plight of TRs I should maybe write something about the cost cutting that brokerages are undertaking. Here is his email -
"When I left stockbroking two years ago, I was told it was wrong in saying it would take a decade to build up the volume and number of savvy retail investors to create the next bull market.
Well, Maybank has recently sold off 3 of its floors back to Suntec City Development and leased back 2 floors, creating very cramped conditions for their staff.
They have also made non-performing remisers either convert to mobile brokers or resign.
CIMB also gave up one floor and moved their staff to occupy the remaining two floors, which like Maybank, means cramped working conditions.
Now there's plenty of talk that they are planning to sell off their Singapore broking business to a China house.
OCBC has also given up their third floor and crowded their remisers on only two floors. On top of that I hear that OCBC's incentive scheme might actually be a disincentive to force out the non performers.
I am quite sure that other brokerage houses have also made some adjustments to cutting cost. So was I wrong in saying it would take many years before we see a turnaround?
Maybe you should write something about the state of broking firms today, not just the plight of remisiers''.
Actually, it's difficult to separate the fortunes of TRs from their employers - when the market is good and volume high, everyone benefits. If conditions are weak, then incomes all round would be adversely affected. Cost-cutting is the inevitable, and in many ways, easiest option to address this.
Of course, the more cynical in TR ranks would point out that the top bosses of their firms are always the last to suffer pay cuts but that's true in most other companies/industries. It isn't fair but that's the reality of corporate life.
But yes, I agree that the industry is not thriving - the boss of a local house once told me that his Singapore business is simply a cost centre and that without regional deals, they'd be sunk - though to be honest, I'm reluctant to place too much focus on such negatives. From a journalistic viewpoint I guess it is news and so it should be reported for the sake of informing readers. But I'm not prepared to go beyond that and harp on it. One reason is that after repeated mention of the same thing I believe the news value declines - is there any point for instance, in running news reports which essentially say that times are bad and a particular industry is not doing well? It's a bit like hearing or reading about another suicide bombing in the Middle East. If there is one today, it could well be the 20th this year or the 50th in the past 12 months- does it then really have any news value?
So for the last time - yes, times are tough for TRs and their employers, with the former having to make do with reduced income and the latter having to undertake cost-cutting measures in order to survive. Enough said.