stock broker commission

Paying about $6.60 comm for a S$3,300 purchase of X shares thru StanChart today. instead of minimum $25 at other brokers. U all should consider StanChart!

SGX – The truth is out
It is reported, finally, in the ST that all is not well in the stock market. For a particular month, many remisiers were earning less than $1000 in commission. This is nothing better than the cleaners in the foodcourt. And in a normal month, many are raking less than $2000. What are the implications? 

It is not simply a dying profession for the remisiers. The broking houses need the commission to pay its staff or they too will have to close shop. The green eye monster has done its job well to kill this industry that once was a roaring business and supporting many other businesses in one way or another. The drastic changes in turning a stock market into a casino drove the final nail into the coffin.

The volume of trading appears to be high but simply fictitious in a way, generated by computers for brokerages or trading houses, house trades that bear no commission. The real participation of traders, retail and institutions too is dwindling and drying up. 

The state of health of the market is best seen by good stocks being delisted as their real values are higher than the stock values in the market. It thus does not make sense for good companies to waste their time and paying fees to be listed. And with so many penny stocks, 1c or less than 1c stocks in the main board, it simply says something is embarrassingly wrong.

Surely the people responsible for ensuring a healthy and viable stock market know what is going wrong and how to put it right. They are not paid in the millions for nothing. Once the stock market is crippled, with remisiers and supporting staff quitting the industry, with brokerages shrinking and folding up, the damage is very difficult to repair. There will be a loss of confidence and a fleeing of funds. The offices in the financial district could go empty and rentals will slide as well.

The job loss in the industry is insignificant to the demise of a stock market and the finance industry. Make no mistake about it. The numbers don’t lie. The market and the associated businesses are going kaput while millions are being paid and there is still no light at the end of the tunnel.

mysingaporenews.blogspot.sg/2012/12/sgx-...My+Singapore+News%29

Enlightening piece on short-selling by d.o.g at www.valuebuddies.com/thread-736-page-22.html

When person A buys from person B, there is an exchange of shares for cash. If you sell shares you do not have, you still have to deliver the shares somehow by the settlement date, typically T+2. If you do not deliver, the exchange will buy from someone else and use those shares to deliver to the buyer. It then imposes a fine on you for creating a failed trade.

If you want to avoid the penalty you need to obtain title to the shares BEFORE you sell them. Typically this means borrowing (taking possession of) the shares from someone who does own them. You have to pay them interest until you return the shares.

How do you borrow the shares? You have to either go through the stockbroker's Share Borrowing & Lending (SBL) program, or use a prime broker.

For SBL, the typical borrowing cost is 10% per year. Usually the SBL stocks come from CDP's lending pool. CDP charges 6%, the brokers add their own fees making it 10%.

Prime brokers like Goldman Sachs may charge as little as 1% per year, but the last time I talked to a prime broker, the starting amount before they will even consider opening an account is US$250k per year in fees. So unless your portfolio is at least US$50m, it's not likely you can get a prime broker.

A more involved question is how you can short S-chips. The short answer is that you can't. The long answer is that it cannot be done because you need to locate a pool of shares to borrow at a reasonable cost.

The CDP lending pool is very limited because it is an opt-in system, and most retail investors don't participate. Even if you do find shares to borrow, the cost is prohibitive at 10% per year. Only a fool or a rank amateur would borrow stock at a cost of 10% per year.

For institutional investors, the prime brokers draw on their own pool, which essentially consists of other institutional investors' holdings. Given the S-chip debacle of the last several years, there are almost no institutional investors today who hold S-chips. Ergo, there is also no pool of stock there to short either.

I hope this enlightens those who were hoping to short S-chips and make tons of money. This was actually possible in 2005-2007 when some S-chips were still popular among institutional investors e.g. Ferrochina, China Milk, Sino Environment, China Hongxing etc. You could borrow these shares and short-sell them, making good money when they collapsed later. But after the collapse all the funds got cold feet and sold out, so the short-sellers couldn't find any more scrip. I doubt if there is much short-selling now in the S-chips.

For Poems users.

board lots at 100. You can now buy eg:100 shares of SIA which will cost around $1,150.
If the commission is <$10,min comms :$10
If the commission is >$10, comms 0.28% applies.

Can anyone confirm that StanChart's no-minimum commission equities trading platform will continue to be available? It's not affected by the recent decision to shut down equities division?

"The spokesperson added the decision to close its institutional cash equities, equity research and Equities Capital Market (ECM) business with immediate effect does not impact its "core strategic aim of supporting the international trade, wealth and fixed income, currencies and commodities (FICC) needs" of corporate and affluent retail clients."

www.channelnewsasia.com/news/business/si...artered/1576182.html

Looks like the StanChart trading platform is operating as per normal. See article in BT today.