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
• 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.
hi Jean,
ReplyDeleteI 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)?
hi Jean,
ReplyDeleteI 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)?
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
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