Foreign brokers explain reason for leaving RP

The foreign stock brokerage companies which have ceased their local operations this year attributed the poor market conditions as the primary consideration in their decision to pack up, and not a consequence of the prohibition of the broker-dealer function which the Philippine Stock Exchange insisted was the main culprit.

In an exit interview conducted by the Market Regulation Department of the Securities and Exchange Commission (SEC), top officials of Nomura Securities and Securities 2000 cited that the temporary halt in their Philippine operations was "a purely business decision on their part."

Both companies mentioned that the present poor market condition has not enabled them to generate the critical volume level that is necessary to raise the revenue to cover the fixed and overhead costs that they have to shell out to sustain full operations.

Nomura and Securities 2000 were the latest in the string of voluntary suspension of operations at the PSE this year, following similar moves by Orion-Squire Capital, UOB Securities, along with local firms UPCC Securities, FEB Stock Brokers Inc. and Topwin Securities.

Last year, the SEC said nine brokerage firms voluntarily suspended their businesses mainly to cut costs and prevent heavier losses. These include two foreign-based brokers: OCBC Securities and Sun Hung Kai Securities.

Apart from those halting operations, some of the PSE member firms are streamlining or downsizing their exposure, which means laying off personnel and shuttling down their provincial branches, as in the recent cases of PNB Securities, Angping and Associates and even Dutch financial giant ABN-Amro Capital.

In the case of Nomura, the company said it would be more economical and practical to downsize their presence in the Philippines by cutting down their trading-related operations (e.g. sale and backroom services) and instead just maintain their research operation.

In this manner, it said the decision to buy or sell Philippine stocks by their clients would not be affected as the research group would continue servicing the information needs of these foreign clients. Moreover, other Nomura branches in other parts of the world would continue to entertain buy and sell orders of Philippine stocks from their clients and just course all orders to other Philippine-based brokers. – Conrado Diaz Jr.