Fight over customers slashes brokers'' fees

The fierce competition on the capital market has pushed an increasing number of brokerages to cut up to 20% of their trading fees for customers this year.

In the past two years, the market has seen a somewhat more consistent fee reduction trend, so that, from an average fee of some 2%, it has now dropped to one percent.

Brokers say the tone of fee cuts was set by the Stock Exchange, which last year cut down, by almost one third, the trading fees imposed to brokerages. This year, the bourse operated another cut in fees levied on brokerages, both for purchases and sales of stock on the main market (Regular), from 0.18% to 0.15%.

A certain fee reduction trend was noticed on the market both in the case of classical intermediation services assisted by brokers, and in the case of Internet trading.

Some brokers say this fee reduction policy was embraced with a view to boosting market shares, while others feel that the fee cuts were simply normal, in the wake of the significant stock exchange growth over the last two years, both at the level of prices and traded volumes.

At the same time, other brokers say they had to go with the market trend, even though, by slashing fees, they risk seeing their profit go down as well.

“This is a suicidal tendency of the market, which will lead to lower profits for higher market shares,” commented Petru Prunea, chairman of SSIF Broker, which ranked fourth on the Bucharest Stock Exchange in terms of volume of transactions with equity handled in the first nine months of the year.

“Since the beginning of the year, in the case of transactions handled by brokers, we have cut down trading fees by about 0.2 percentage points, from levels of 0.9%-1.5% early in the year,” Prunea added.

The management of Vanguard, the most active brokerage on the segment of online trading services, maintains that the fee cuts must be regarded as a reorientation of the company”s product marketing policy.

“Over the last two years, there have been trading fee cuts. I believe this is a natural result of the rearrangement of the market along new levels, both in terms of the number of investors, and regarding the volume of transactions,” says Mihaela Baciu, chairman of Vanguard, which ranks 10th in the top of the stock exchange brokers. catalin.ciocan@zf.ro