Remisiers who fail exam can still trade

A COMPROMISE deal has been struck for anxious professional share dealers who fail to pass an examination on complex financial products by a June 30 deadline.

They get to keep trading - but must accept a smaller cut on the commission income on trades involving such products.

These so-called remisiers, who have faced months of uncertainty, will be allowed to keep valuable clients wishing to trade designated "specified investment products" (SIPs) such as covered warrants and exchange-traded funds (ETFs), as well as the usual shares listed on the Singapore Exchange.

Currently, remisiers - self- employed agents attached to broking houses - are entitled to a 40 per cent share of the commission levied on the shares executed by their clients.

But under the new deal, from July 1, they will have to content themselves with only a 25 per cent cut of the brokerage income on SIP trades done by their clients - via online trades or phone orders - if they fail to pass the Capital Markets And Financial Advisory Services Module 6A exam.

The exam proposal was unveiled by the Monetary Authority of Singapore last year in the wake of the global financial crisis, when inexperienced investors here got badly burnt by complex products that turned sour.

But many remisiers have failed to clear the exam hurdle, leaving unanswered questions over their status after the June 30 deadline.

The new deal followed a "unified approach" adopted by the Securities Association of Singapore, representing all the brokerages catering to retail clients, on what to do about the large number of remisiers yet to pass the exam but who have clients keen to trade SIPs.

Before this, bewildered remisiers in various brokerages had received conflicting notifications on where they would stand.

While only a few of them have clients actively trading SIPs, some are aghast at the manner in which the issue has been handled.

One brokerage had sent out a notice telling remisiers who had not passed the exam that while they may not get any brokerage fee on their clients' SIP trades, they would still be liable for any losses that might be incurred.

A few others had flagged the possibility that remisiers might have to pass clients trading SIPs to dealers who have already passed the exam.

But UOB Kay Hian senior executive director Esmond Choo noted: "We have to recognise that financial products are getting more complex. The bar needs to be raised in order to serve clients better. The last thing we want to do is to steal clients from one broker and give them to another broker."

Most remisiers contacted by The Straits Times believe the new reduced brokerage arrangement is fair, since the brokerage will have to incur additional costs in setting up a central dealing desk to deal with any of their clients' queries relating to SIP trades.

But Mr Jimmy Ho, president of the Society of Remisiers (Singapore), noted that for Internet SIP trades, the orders are executed by the clients on their computers, without involving any dealers. "Broking houses should maintain their 40 per cent remuneration to their remisiers in such cases, since no extra costs will be incurred by them here," he said. engyeow@sph.com.sg

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