Measures sought to assist stock traders as commissions cut looms

Acknowledging that the looming cut was creating problems for the association's members, a source at ASCO said the issue would be taken up at a meeting this week.

"Remedial measures are necessary, given that we have failed to convince the Securities and Exchange Commission [SEC] to abolish the policy. That proved impossible," the source said.

The cut is one of the steps to be implemented in the lead-up to the liberalisation of brokerage commissions in 2010. Initially, a sliding trading scale will be applied before full liberalisation is implemented. Under full liberalisation, customers will freely negotiate commission fees.

Several brokerage houses suffered badly when the sliding scale was imposed in 2006, before the resumption of the fixed-commission structure. The SEC decreed that the fixed commission fee structure would stay in place for only three years. As the deadline draws near, brokerage houses are brainstorming to try to find a way forward.

The ASCO source said that two options would be proposed: raising the minimum salary of marketing officers from Bt15,000 a month on average; or the payment of incentives as part of the salary. After the sliding trading scale is imposed, the exchange will no longer have power over salaries. However, the extra incentives, to be included in salaries, would not exceed 25 per cent of commission fees and 13.75 per cent of online commission fees.

"This should help, as the SET will have no power in setting the salary ceiling. Now, it will be up to each brokerage house if they want to raise salaries. The options will be discussed in detail with members, but we're not sure if there will be a resolution," the source said.

Under the policy, the 25-per-cent incentive cut will be returned to marketing officers every six months, provided officers strictly follow SEC rules on taking orders and treatment of customers. They are required to record all conversations with clients. Complaints against officers will also be taken into account.

Last week, 1,700 of the industry's 5,700 marketing officers signed a statement urging the SEC to make the officers' case to the SET and the association as they have direct oversight of the issue. Marketing officers from 28 of 39 brokers believe the proposed 25-per-cent incentive cut is unfair.

Normally, in addition to a stock trader's salary or commission, an extra commission—known as the "incentive"—is paid when they beat the target, subject to conditions that the securities firms agree with their traders.