BROKER FINDS STRENGTH IN PROPRIETARY TRADING

       To prepare for the upcoming liberalisation of brokerage commissions, Phatra Securities has diversified its income structure by focusing heavily on proprietary trading and revamped its management team. The company's board of directors has chosen Apinant Klewpatinond, currently managing director for investment, to fill Suvit Mapaisansin's shoes as CEO, while Suvit will become chairman of the investment committee and executive director, chairman Banyong Pongsanich said yesterday.
       The appointments will take effect after the Securities and Exchange Commission gives its nod.
       The management revamp does not change business policy but it makes the roles of those who are in charge clearer, he said.
       The company's core businesses from now on will be the proprietary and agency businesses.
       "All organisations must restructure themselves to comply with global changes. Any organisation that has high flexibility in restructuring, has a good chance to survive. "The company in the past underwent organisation restructuring several times to adapt to the situation. This included selling a major stake to Merrill Lynch before buying it back and cutting headcount to 200 from 250 early this year," he said.
       Minimum commissions are currently fixed at 0.25 per cent and 0.20 per cent of transaction value for traditional and online trading.
       This will change to a sliding scale on January 1, and to negotiable rates without a minimum in early 2011.However, brokerages with an executive partner can charge the partner a lower rate.
       Suvit said Phatra Securities has been doing proprietary trading for two years and its portfolio has reached Bt2.9 billion, of which Bt2 billion is longterm investment and Bt9 million is trading.
       Proprietary trade involves the purchase and sale of securities for the brokerage's own account.
       Phatra Securities' proprietary trade for the first half already contributed Bt60 million in profit, matching its profit for all of last year.
       "The proprietary trade business outlook is prosperous," he said.
       "It helps balance the company's income structure and reduces the reliance on commissions. Now, the proprietary business accounts for 35 per cent of the company's income while the agency business makes up the rest," he said.
       He admitted that the sliding scale for commissions to be implemented next year would impact the company but it would not be significant as the company's average commission stands at 0.18 per cent.
       The company's foreign customers represent 50 per cent of its business while local institutional investors are 20 per cent and the rest is retail investors.
       "The company's trading volume averages Bt1 billion to Bt2 billion a day and it would be hurt if the sliding scale is enforced but we can't say to what degree. At present, [executive partner] Merrill Lynch pays 0.15 per cent while general investors pay 0.25 per cent," he said.
       "Local customers are willing to pay if the research has enough quality," he said.
       The idea to overhaul management came from him, he said. It would strengthen the company and maximise benefits for the organisation, and shareholders in the long run.
       "I'm still the company's director and executive director who jointly sets the company's business direction and policy. Also, I'm chairman of the investment committee, which takes responsibility for making decisions on the company's investment and risk, while the new CEO will be in charge of customer management to prevent conflicts of interest," he said.
       Phatra Securities is also conducting a study to establish an asset management company.
       Suvit said the securities house's earnings this year would be better than last year, as net profit had already reached Bt130.61 million in just six months compared with Bt207.13 million for all of 2008.