Broking fees: Don't ignore the economics of doing business

I REFER to the editorial "Fees remain a problem even with smaller SGX lot sizes" (BT, Jan 13) and wonder once again why the press continues to ignore the economics of doing business. Isn't the recent shutdown of Standard Chartered's equities division that offered no minimum brokerage instructive enough that no company can continue to burn cash by the simple equation of costs exceeding revenues?

Look at it from another business viability angle, economies of scale, a fact totally ignored in two of the examples cited in your editorial. On Jan 12, 48.7 million Apple shares changed hands at a total value of US$5.4 billion. In contrast, total share value traded on the whole of Singapore Exchange (SGX) on the same day approximated a measly S$859 million.

As at Jan 9, Vanguard S&P 500 ETF had fund assets of US$27.8 billion on which a seemingly low expense ratio of 0.05 per cent works out to a tidy sum of US$13.9 million per year. Contrast this with the tiny S$35.5 million fund size of Nikko STI ETF. Even at 0.39 per cent expense ratio, its management annual fee approximates only S$139,000.