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Securities brokerage fee running after VN Index
Several years ago, when the stock market fell deeply, nearly all securities companies announced transaction fee cuts in order to attract more clients. Nowadays, as the market has been recovering, the companies are considering raising fees again.
The Da Nang Securities Company has officially announced it has increased the transaction fee from 0.2% of total transaction values to 0.3%, commencing as of September. Bao Viet Securities has decided to remove the preferential fee scheme with a 50% discount applied since the beginning of the year. The new fee levels are between 0.25% and 0.45% of total transaction values. Vietcombank Securities’ levels now are 0.25-0.4%.
Currently, securities companies collect 0.1% in fee for big transactions and from big clients, and 0.35% for small transactions. However, the companies have to pay 0.03% of total transaction values to the Ministry of Finance under Decision No 1351 dated June 16, 2008. Therefore, the fees securities companies can pocket are between 0.1-0.3% of transaction values.
The fee levels prove to be much higher than those applied in other big markets in the world. According to Click & Phone Securities Company, the level is just 0.02% in the US market, and 0.03% in Japan and South Korea. The low fees have been applied because of the high competition among securities companies and the application of high technologies by the companies. Especially, remote securities brokerage services have been applied in the market for a long time (through Internet).
In Vietnam, most companies still provide direct brokerage services due to the habit of Vietnamese people. Therefore, Vietnamese companies have to pay a lot to receive orders directly, entering orders into the system and controlling orders.
However, Director of Click and Phone Le Quy Hoa said that the current average fee of 0.3% will decrease in the future as a result of the higher level of technologies applied in securities transactions.
Many securities companies have not made any announcements about plans to raise fees, while some others do not collect fees from investors. Dai Viet’s maximum fee level is 0.2%, Gia Quyen 0.15-0.25%, Au Viet 0.1% until the end of 2008, while Click & Phone is exempting fees until the end of September.
Ho Hai An, an investor at the Hanoi Securities Trading Centre, said that if securities companies raise fees (the average fees were 0.4-0.45% in 2007), investors will leave for other companies.
VNN
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