Integrating some 100-plus remisiers from another brokerage is not a smooth process, but UOB Kay Hian is determined to make the most of it so as to gain scale from this move.
UOB Kay Hian may have succeeded in courting some 100-plus remisiers from DBS Vickers to join them, but the tricky process of integration has just begun. This is because the transfer of remisiers involves the complicated issue of client ownership.
Under legal terms, clients brought in by remisiers belong to the house, as agreements are signed with the brokerage, not the remisiers. On the other hand, some argue that it is the unique proposition provided by remisiers that led clients to sign up with the house in the first place.
Aims to Benefit From Scale
Nevertheless, UOB Kay Hian is confident that the marriage will work, as DBS Bank looks to transfer its retail equity trading under DBS Vickers to United Overseas Bank (UOB) by year-end.
«The adoption of DBS Vickers' remisiers' business will improve our scale in Singapore. With scale, our overheads will be lower,» said Esmond Choo, UOB Kay Hian's senior executive director, who was quoted in «Business Times»(behind paywall).
Largest Brokerage
Choo, who runs the strategic planning and development of the group's equity and capital market business, said the basic costs of operating a stock brokerage are largely the same across players. Hence, it is critical to have higher business volumes in order to gain operating leverage. Post the transfer, UOB Kay Hian will have about 800 dealers and remisiers in Singapore, sealing its position as the largest brokerage in the city-state.
The brokerage, backed by UOB, was amongst a list of suitors courting DBS Vickers'remisier base en masse, instead of hiring them individually. About 100 DBS Vickers remisiers have agreed to the transfer, which will occur by this month.
Upskilling Its Remisiers
To drive the business, UOB Kay Hian aims to develop skill sets to help its remisiers stay relevant ane enable them to offer a comprehensive range of products to clients. The brokerage, with S$1.48 billion in net assets, has moved beyond traditional broking of local stocks to include alternative products, Choo said.
It is able to provide services in corporate advisory and fund-raising, and also leverage its wide network of corporate contacts and distribution capabilities to execute initial public offers (IPOs), secondary placements and other corporate finance and investment banking activities.
Financial Advisory
UOB Kay Hian's capital markets services (CMS) exempt financial advisor license allows trading representatives to provide execution-related advice in a diverse range of financial instruments such as stocks (local and overseas), derivatives, leveraged foreign exchange (LFX) and collective investment products such as unit trusts, futures, and options.
«UOB provides execution services in some of these products under the various exemptions under its CMS license. In addition, UOB provides Financial Advisory services under the Financial Advisers Act (FAA), in accordance with regulations prescribed by the FAA,» said Choo.
Reliant On Hong Kong and U.S. Markets
The brokerage's distribution footprint spans the financial centers in Singapore, Hong Kong, Thailand, Malaysia, Indonesia, London, New York, and Toronto. On top of that, it has a research office in Shanghai and an execution presence in the Philippines.
Trades in Singapore shares now account for less than half of its revenues, compared to more than 90 percent previously. Equity trading in major global markets such as Hong Kong and the US accounts for the other half of its revenues. Net profit for 2018 was S$74.8 million, lower than the S$76.2 million in 2017, as regional markets got weighed down by U.S.-China trade tensions.