7/07/2014

Remisiers – The disappearing trade


The term remisier is quite unique to Singapore. It refers to a profession or tradesmen who execute buy and sell orders for stocks in the stock market. They used to offer more in the past, with some giving professional advice and opinions, information on stock rumours, speculations and sometimes ‘insider news’ to their clients. The remisiers also took on an intermediary role of extending credit limits for their clients to trade and becoming the first line of defence for the brokerages when a client absconded.

There was a healthy relationship between the clients and the remisiers then. This was in the past before the remisiers were, in a way, relegated to order takers or keyboard operators, not allowed to provide professional advice or recommend stocks to clients. Even providing opinions to clients on the stock market can by a scary thing if a wrong opinion led to complaints to the exchange. This is despite the fact that many remisiers have tertiary education, some in finance, and also certified to practise after passing the required tests stipulated by the Exchange. Remisiers are also required to attend refresher courses annually to keep them abreast with the developments in the industry.

The lowest point was the suggestion to rename remisiers as trade or sales representatives to accord them a level of incompetence or competency appropriate to order takers or keyboard operators. Recent developments led to the remisiers being required to be certified to trade in high risk products like structured warrants, derivatives, equity linked notes and financial products that only high net worth or ‘sophisticated’ clients can participate in and can afford to lose. Both the remisiers and ‘sophisticated’ clients must satisfy the Exchange that they are competent to trade in such high leverage products and would not blame anyone should they incur any losses. Some brokerages have renamed or rebranded their remisiers who have been certified competent to buy and sell such products as Investment Specialists or other more professional sounding names.

The rebranding is in line with the Exchange’s new direction in wanting remisiers to offer more services to their clients. Presumably remisiers who have passed the tests in a couple of new modules offered by the Exchange could now give professional and financial advice to their clients to buy and sell stocks and other financial products and services, and not just order takers.

With the stock market being dominated by computer trading and HFT, where such traders are relying on the speed and computation power of their computers to front run or scalping profits from the market, stock trading is no longer as it used to be when fundamentals and long term investments could make good profits in the long term. Stock trading is now primarily short term in nature when speed becomes the essence to make profits from the market. The human traders and speculators do not stand a chance to trade against super computers plugged into the Exchange. Some operators even moved their computers next door to the Exchange to gain the nano seconds advantage to execute a trade for sure profit.

Under such circumstances and a market that is determined by technologies, it is only wise for the Exchange to advise the remisiers to look at other avenues to earn a living, like selling other products, the latest being gold bullions. Chew Su Tat, Head of Sales and Clients at the SGX said, ‘If this (relying on calls from short term traders) is your sole business model, it’s not likely to be sustainable in the long term.’ He called on remisiers to rely more on internet trading to increase their client’s trading activities. How would this help the clients to profit from the market if the clients are also short term traders competing against the computers is another matter. Would sales technique, fundamental analysis and technical analysis help when the computers are still skimming the markets against all short term traders?

The daily value of trades done in the market has been declining and is averaging around $1b. The football season has taken its toll and the recent numbers have gone below $1b daily. Is there hope for a revival in the industry? The Exchange has released figures showing an increase in the number of remisiers in the industry despite many of the veterans having to call it a day when their monthly commissions are barely $1,000.

There are now 3,900 remisiers against 3000 in 2009. The number of CDP accounts has also gone up with 68,000 new accounts being added in the last 12 months. And the remisiers are getting more professional with the upgrading courses they have taken. Surely these must be positive signs for a recovery in the market and maybe a super bull run on the cards.

What is the reality? Would more remisiers coming into the industry mean more commissions earned by each remisier? Investment specialists, fundamental analysis, technical analysis, sales techniques, more CDP account opening, more financial products for sale, and whatever, are they going to improve trading activities and the income of the remisiers when computers tradings are still allowed to dominate and destroy the market speculators and genuine investors? Or is the message clear enough, changing name is not enough, changing trade or profession is the way to go for the remisiers?

How could a lucrative industry, with only basic stocks and shares and warrants, now no longer viable as an industry. How could the addition of so many complex and sophisticated financial products, instead of elevating the stock market into a booming industry, turning the stock market into a failed industry? What is going on?

Is there an elephant in the room? Where, where got? All is fine, trust me. Maybe all the remisiers will soon become millionaire remisiers like Peter Lim. Or is it million air remisiers? The wind down of the stock market as an industry is nearing its end and the clock will soon stop ticking. Would rebranding help to save the industry?

Time to prepare a place in the museum for another disappearing trade.


Kopi Level - Yellow

14 comments:

Anonymous said...

Anyone dares to tell the truth?

Anonymous said...

Capable PAP Ministers - The disappearing species

Anonymous said...

Both the remisiers and ‘sophisticated’ clients must satisfy the Exchange that they are competent to trade in such high leverage products and would not blame anyone should they incur any losses.

Managers in Temasek and GIC .... are they certified to trade and invest in such products or not ah?

Anonymous said...

redbean
I don't know what is the "elephant in the room" secret you are referring to.
But I hope you don't say anything.

I see SGX as a PAP linked institution ... so I'm more than happy to see it suffer and expose the incompetence of PAP.

Anonymous said...

Why would the chicken play the jackpot machine?

The chicken hopes it would be the lucky one, knowing the odds are against him.

Why would the chicken play the stock market?

The chicken thinks it is very clever and can beat the computers programmed to make money from him.

Would there be chicken that made money from the stock market?

Yes, one in a hundred.

oldhorse42 said...

More and more cdp accounts are being open. This testified to the growing interest to trade. Despite the talk of pay first before you trade. No more trade first then pay.
I trade internet all the time. My remiser receive a cut of the commission . Even though he did no work to help me with trade. Getting paid for doing no work.
The white elephant in the room is not high speed trade or algorithm trading.
It is the remiser who do not see the writing on the all with the advent of technology!

Anonymous said...

"Getting paid for doing no work"
Most trading clients assume they will have no credit problem till the shit hits the fan. That's why a remisier is around to assume credit risk and to advise Buffet wannabes.

Chua Chin Leng aka redbean said...

Hi oldhorse,

Whether the remisier takes a cut in the commission or not, you will still pay the same commission. Many traders did not know that the remisiers take the first cut of the rizk. You may not run away but for a pool of investors there are bound to be some that would run road. And you, the commission that the remisiers are getting is nothing compare with the potential losses they would have to carry.

When clients run road, the losses are huge, could be hundreds of thousands or even millions.

The brokerages are using the remisiers to share the risk. Without the remisiers, the volume in the market will practically disappear or so low that the industry will no longer be viable.

The volume generated by online traders is so small that it does not make economic sense for the brokerages to operate them. They are for show only. Most brokerages are bleeding in their onlne business.

Chua Chin Leng aka redbean said...

Hi oldhorse,

Whether the remisier takes a cut in the commission or not, you will still pay the same commission. Many traders did not know that the remisiers take the first cut of the risk. You may not run away but for a pool of investors there are bound to be some that would run road. And the commission that the remisiers are getting is nothing compare with the potential losses they would have to carry.

When clients run road, the losses are huge, could be hundreds of thousands or even millions.

The brokerages are using the remisiers to share the risk. Without the remisiers, the volume in the market will practically disappear or so low that the industry will no longer be viable.

The volume generated by online traders is so small that it does not make economic sense for the brokerages to operate them. They are for show only. Most brokerages are bleeding in their onlne business.

b said...

Over time, many trades will disappear and new ones will emerge. Change is the only constant.

Anonymous said...

Some trades will disappear with little impact on the economy. Losing a stock market is not a small matter.

shivani malhotra said...

Keep updating the more news and updates on stock market, as this news and updates are really very beneficial to all of us.
Stock Tips

Anonymous said...

/// Change is the only constant. ///
@ b.

No lah!
How can this be?
PAP will always be the government.
LKY will live forever.
And Singaporeans will always have the endurance to Pay & Pay.

Matilah_Singapura said...

Like I said, the machines and lean systems are taking over. Look at the commission on trades now: it's never been so low.

So today's remisers have to move up the "value chain" or leave or fade into obsolescence. Up the value chain is to head for private banking/ wealth/ capital areas where service counts and you can charge for it.

The stock market will continue, even if it is run entirely by machines.

Singapore is very quiet, but activity in the robotics and automated systems spaces has never been more lively.

Human remisers are not the only ones destined for the the dustbin of history. You can count on taxi, bus and truck drivers too.