FTSE Index data: Just display it!
Stockbrokers have resisted displaying live FTSE ST Indices on their screens because of the charges that they are charged for the data. They argue they don't want to pay extra, even though they won't be charged for the first year (they secured the first-year-free concession after earlier protests). But FTSE says it costs money to compile the indices on a daily basis. Our view is that the whole debate is rather childish and the losers, once again, are retail investors.
Stockbrokers have gone through a rough ride in recent years. First the deregulation of commissions brought prices down to S$25 per online trade, S$40 per broker-assisted trade over the phone, or alternatively 0.275% or 0.28% for large trades. Previously, they got paid much more. We saw a significant round of consolidation in 1999 and 2000, which brought about, among others, the combination of Vickers Ballas and DBS to form DBS Vickers, KayHian and UOB to form UOB KayHian, and so on. For brokers who've already seen their commissions drop, any additional cost is borne by them, and not passed on to clients. They absorb extra costs because of the competition in the market, and because retail investors are generally unwilling to pay.
The irony is, the brokers are behaving just the same. Even as they complain that they have no pricing power, that retail investors generally are cheapskates who complain about "high" brokerage commissions and demand that "everything also must be free", they are asking FTSE and the SGX to do the same.
It would be much better for everyone - including retail investors - to comprehend the value of data and information. Without these, no one would be doing any trades. Data and information are not luxury add-ons. They are crucial to the whole trading process. It's like refusing to fuel up your car to spite the oil companies and high oil prices. But your car won't go anywhere!
My understanding is ShareInvestor.com has a separate data charge for its subscribers, much like airlines have a fuel surcharge separate to the price of airline tickets. Perhaps the brokers should consider this? After all, currently they look like the bad boys in this dispute. If they provided the service but passed on the cost - in a year from now, when the charges kick in - they pass the responsibility of the costs to the SGX. By then, retail investors will be so used to seeing the indices, they won't be able to do without them and this whole issue becomes mute.
Mark Laudi - who favours the FTSE ST All Share Index as the new benchmark
To comment on this blog, go to the Investor Central blog
ArchivesStockbrokers have gone through a rough ride in recent years. First the deregulation of commissions brought prices down to S$25 per online trade, S$40 per broker-assisted trade over the phone, or alternatively 0.275% or 0.28% for large trades. Previously, they got paid much more. We saw a significant round of consolidation in 1999 and 2000, which brought about, among others, the combination of Vickers Ballas and DBS to form DBS Vickers, KayHian and UOB to form UOB KayHian, and so on. For brokers who've already seen their commissions drop, any additional cost is borne by them, and not passed on to clients. They absorb extra costs because of the competition in the market, and because retail investors are generally unwilling to pay.
The irony is, the brokers are behaving just the same. Even as they complain that they have no pricing power, that retail investors generally are cheapskates who complain about "high" brokerage commissions and demand that "everything also must be free", they are asking FTSE and the SGX to do the same.
It would be much better for everyone - including retail investors - to comprehend the value of data and information. Without these, no one would be doing any trades. Data and information are not luxury add-ons. They are crucial to the whole trading process. It's like refusing to fuel up your car to spite the oil companies and high oil prices. But your car won't go anywhere!
My understanding is ShareInvestor.com has a separate data charge for its subscribers, much like airlines have a fuel surcharge separate to the price of airline tickets. Perhaps the brokers should consider this? After all, currently they look like the bad boys in this dispute. If they provided the service but passed on the cost - in a year from now, when the charges kick in - they pass the responsibility of the costs to the SGX. By then, retail investors will be so used to seeing the indices, they won't be able to do without them and this whole issue becomes mute.
Mark Laudi - who favours the FTSE ST All Share Index as the new benchmark
To comment on this blog, go to the Investor Central blog
Labels: DBS Vickers, FTSE ST, retail investors, SGX, ShareInvestor.com, Singapore Exchange, UOB KayHian
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