Malaysia's sets two-tier broking commissions

Malaysia's sets two-tier broking commissions

KUALA LUMPUR (AFP): Malaysia's stock exchange yesterday
announced a two-tiered broker-to-broker commissions that will
slash margins for foreign brokers dealing in Malaysian shares
from abroad.

The Kuala Lumpur Stock Exchange fixed the rate following the
Malaysian government's announcement last week of a graduated and
regressive commission rate that from Monday will cut broking
commissions of local brokers.

"It (the new rate) looks quite bad. Foreign brokers are
expected to appeal to the authorities," said Yeoh Keat Seng,
director of research of Crosby Securities research arm in Kuala
Lumpur.

Singapore brokers, who have large dealings with local brokers,
will be the hardest hit, although others in Hong Kong, London and
New York, will equally be hurt, analysts here said.

From Monday, foreign brokers, who used to split commissions
equally with Malaysian brokers they have transactions with, will
now get less than their half share on a graduated basis as well.

While they still share 50:50 for transactions for the first
500,000 ringgit (US$200,000), foreign brokers will now only get
one third while local brokers retain two-thirds of the 0.75
percent commission for transactions of between 500,001 and two
million ringgit.

Commissions will be slashed down to three-tenths for foreign
brokers, while local brokers retain seven-tenth of the 0.5
percent commission earned for transactions of above two million
ringgit.

Other charges, including clearing fees, are to be borne by
foreign brokers, the exchange said, adding that all broking
houses are to abide by the new rate.

"Effectively foreign brokers will only earn between a miserly
0.1125 percent and 0.325 percent in commission for sharing deals
with Malaysian brokers," said a broker with a foreign broking
house.

The graduated scale followed the government's announcement
last week of a regressive commission rate for local brokers as
part of sweeping measures to liberalize the Malaysian capital
market.

Brokers, who used to charge a flat one percent commission,
will from Monday charge a one percent commission on transactions
under 500,000 ringgit, 0.75 percent on deals of between 500,001
ringgit and two million ringgit, and 0.5 percent on transacted
volumes over two million ringgit.

Malaysian officials said the lower fees were aimed at making
local broking houses more competitive in the region.