WHAT ABOUT ONLINE SHARE TRADING & INVESTMENT FOR ORDINARY CITIZENS OF PNG?

by JEAN ROCKINGHAM
The Port Moresby Stock Exchange (POMSoX) has excelled since its official inception in April of 1999. With its fundamental aim to provide a medium for mobilizing and raising national and international capital for the long-term benefit of the citizens in Papuan New Guinea, POMSoX has transcended efficaciously. POMSoX trading protocols and procedures are a mirror image of the Australia Stock Exchange (ASX) (the ASX licensed its Business and Listing Rules to POMSoX). With Papua New Guinea experiencing a resource boom especially in the mineral, oil and gas industries, international groups and companies have shown immense interest in doing business in Papua New Guinea. Those approved have listed themselves with POMSoX giving opportunity to ordinary citizens to buy and sell shares.
Has general trading of shares benefited ordinary (individual) Papua New Guineans? The answer lies subdivide between those that have some knowledge and have traded, those who are aware but cannot trade due to limitations (accessing trading facilities, stern procedures, less user friendly etc.) and those that have absolutely no idea such trading opportunities exist.
With regards to the current trading platform mechanisms in Papua New Guinea to buy and sell shares, it is an absolute disgrace and far from being user friendly. Apparently, it’s monopolized and operated on stringent protocols that do not favor the general populace. To add to the mounting frustrations, individuals cannot trade openly and freely as the requirements to establish a trading platform (or account) are subduing within rigorously stipulated guidelines when compared to other trading platforms around the globe.
So what is the current shares trading platform setup in Papua New Guinea? It is so intimidating to bring to light that Papua New Guinea has only two (2) legally recognized Stock Brokerage Firms (licenced). Kina Securities Limited (KSL) and the Bank of South Pacific Capital Limited (BSP Capital Ltd). By definition(Wikipedia), Stockbrokers are regulated professionals, usually associated with a brokerage firm who buy and sell stocks and other securities for both retail and institutional clients, through a stock exchange or over the counter, in return for a fee or commission.
Correct me if I am wrong but I fail to understand this, only two (2) Stock Brokerage Firms in Papua New Guinea?! Why only KSL and BSP CL? What about the other major financial institutions like the ANZ Bank, Westpac, PNG National Development Bank, the Asian Development Bank and other deposit-taking institutions which include the twenty one (21) savings and loan societies? There are also some very small microfinance groups that are not presently covered by the prudential regulatory laws in place which one would think can comfortably establish Brokerage Services.
Undoubtedly, it is evident that the Brokerage Services are monopolized and as such, the brokerage service fees are exorbitant. These fees are an absolute overkill. The sliding scale brokerage fee structure on each investment consideration either buying or selling attracts the following fees in these set brackets;
• K2,000 - K10,000 ……………….K325
• K10,001 – K20,000 …………….2.50% + K75
• K20,001 – K50,000……………..2.00% + K75
• K50,000 – K100,000 …………..1.50% + K75
• K100,001 + ……………………..1.00% + K75
Based on the above fee structure, one would think ordinary Papua New Guineans would generally be forced to trade within the first bracket, i.e. K2,000 – K10,000.(but not limited to) at a brokerage fee of K325. This brokerage fee is substantially inflated and a clear example of daylight robbery. K325 for what? The trading platforms these days are all computerized and if any, the stockbrokers are just sitting in front of their computers waiting to execute sell & buy orders from their clients.
A comparison between brokerage fees at the ASX and the POMSoX depicts stunning variances that are undeniably thought provoking. At most, a general trading via any of the countless and legally recognized brokerage firms in Australia, for e.g. The Commonwealth Bank of Australia is AUD$19.99 which equates approximately to K40. Majority of the local traders might not pay attention to such massive variances in trading fees when compared externally but such is distinctive for any system that is monopolized. So, the K325 fee for a single trade is unquestionably senseless and downright extortion. The powers to be that approve for Brokerage Firms to trade in POMSoX have an immediate task in front of them to sanction other financial institutions (ANZ Bank, Westpac Bank, PNG DB etc.) as brokerage competitors to give local traders flexibility. KSL and BSP CL have capitalized the brokerage services for so long. As various Brokerage Firms are introduced, obviously, the associated trading fees will reduce proportionally favoring traders.
Recently, an enquiry to setup a personal trading platform with BSP CL has turned out to be a very tedious, time consuming and an ineffective exercise. Even worse, the ‘stockbrokers’ knowledge on the subject matter was surprisingly limited. Being an existing BSP customer, one would generally think that the ‘checks’ conducted to confirm your identification would be a tick and flick process provided you present some ID upon request but again, the recent enquiry as prolonged into months now. Interestingly enough, www.bsp.com.pg hosts the portal, www.bsp-capital.com/home for the general public to open trading accounts. Toggle on the “Open an Account” button and you end up downloading pdfs outlining prerequisites, requirements and personal data fill-out questionnaires. I would assume KSL has a similar setup.
It is so frustrating that dossiers after dossiers need to be filled and signed prior to any progress actually commences. Why all these paper work?
This is the New Millennium, the Age of New Technologies. This is the age where just about anything, everything is at our finger tips via the INTERNET. Every possible bank on this planet earth is accessible via the internet. Gone a days of limited internet access. Every Papua New Guinean with access to a mobile phone has access to the internet regardless of their whereabouts in the country.
Requirement for traders to be in a 1-on-1, face-to-face meeting with their stockbrokers to discuss buying and selling orders has undergone radical changes in the last two decades. Influenced by a phase change in traditional marketing and business to a more sophisticated but yet so easy to use, the INTERNET has changed the world over. Brokerage Firms (globally) with Online Trading facilities have given individuals, groups and business organisations the freedom to execute orders (buy or sell) whenever they want. Papua New Guinea Brokerage Firms (KSL, BSP CL and fingers crossed, with the new ones coming on board) take heed of what’s happening around the world and make our lives a little easier.
Online trading is definitely the way forward for Papua New Guineans. Each account holder in any bank should have the easy option of setting up trading accounts/ platforms and have easy access online whenever they want to trade.
Amidst all the current political debacle and publicized skepticism with regards to the country’s economic status quo, Papua New Guinea is destined for prosperity. The general populace needs to partake in such prosperity. Every institution that by name allows the public to partake in any form of activity (for a fee) must make every facility user friendly, conducive and up to date.

Comments

  1. WillFebruary 23, 2019 at 7:12 PM

    hi Jean,
    I fully agree with your article. the fees mentioned for a single trade and process involved deters any interest to trade with theses brokers. I would like to ask a question. is there a possibility of using an online broker platform to trade in other foreign markets (ASX to be exact)?

    ReplyDelete
  2. WillFebruary 23, 2019 at 7:12 PM

    hi Jean,
    I fully agree with your article. the fees mentioned for a single trade and process involved deters any interest to trade with theses brokers. I would like to ask a question. is there a possibility of using an online broker platform to trade in other foreign markets (ASX to be exact)?

    ReplyDelete
  3. UnknownSeptember 27, 2019 at 3:37 PM

    I'm a online forex,stocks,commodities and indices trader. I have couple of brokers overseas trading my account in us dollar. I trade using my own market analysis on charts over my phone and laptop.so if this is cheap then we should be developing brokerage companies to such level with the demand of technology

    ReplyDelete

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