The recent mass sale of shares held under the name of Sunchob Fund and Kidu Fund was the largest stock trade recorded in the country’s history. The occasion was also a good opportunity for the stockbrokers who earn a certain percentage from every transaction. Currently, there are only eight registered brokerage firms in the country, three are private and the remaining five are institutional.
A share or a stock is a portion of ownership of a company offered to the public to raise funds.
One of the first steps to buy a share is by getting registered with an agent or a broker. A broker’s primary duty is to act as a middle-man and connect the investors with the market.
Phub Dhendup, a stockbroker from the Drukyul Securities Brokerage said a broker’s primary job is to help clients create a Central Depository Account. Besides that, brokers also place the buy or sell orders of clients.
“By regulation, we are not allowed to advise which shares to buy or sell but we are entitled to give the correct market information to our clients,” he said.
With millions of BNBL and RICBL shares offered for sale last time, it was a huge opportunity for the brokers. Brokers are entitled to as high as one and a half per cent commission fee for their services. But for the recent sale, the commission was set to a maximum of one per cent. From their fees, the brokers have to pay a certain percentage to the RSEBL.
According to Dorji Phuntsho, the CEO of the Royal Securities Exchange of Bhutan Limited, a broker can negotiate the commission depending on the volume of the order. He said, “It is between the broker and the client. In terms of opportunity, the brokerage firms to involve themselves with the clients have increased. If you look at the figures their cliental has also increased.”
Phub Dhendup said the recent floating of BNB and RICB shares benefited the stockbrokers a lot.
“Firstly we got introduced to a lot of new clients. We also got to educate a number of clients regarding shares and the stock market. Due to the auction, we also increased and improved our revenue,” he said.
The only challenge for the private brokers is the competition from the institutional brokers. As per some private brokerage firms, people prefer institutional brokers because they trust them more.
The Drukyul Securities generated more than Nu 150 M during the recent offer, recording the highest revenue among the three private brokerage firms in the country. But it was the institutional brokers that secured the highest number of trades, both in terms of volume of shares and total revenue generated.
Yeshi Dorji
Edited by Yeshi Gyaltshen
