I understand that in the old days, back in the 1980s and earlier, before there was electronic trading, there needed to be brokers and traders whom engaged in traditional open outcry trading on exchange trading floors, because the retail investors couldn't do that, so they used an stock broker as an intermediary.
But in an age of IT and electronic online trading, how do retail brokerage firms still survive?
For example, I invest in stocks as a retail investor on the SGX (Singapore's stock exchange). First, I need to open a Central Depository (CDP) account with the stock exchange
The CDP account is an account with the stock exchange that stores all the SGX stocks that I have bought. When I buy a stock through a brokerage firm, the firm doesn’t keep it. Rather, it goes into a Central Depository (CDP) account (sort of an stock exchange account that shows all the stocks I hold) held under my name.
I use this major brokerage firm in Singapore called Philips Securities. In my 10 years of stock investing, I've never spoke to any broker/remiser with Philips securities. Instead, I do everything through my Philips securities online account.
Most major brokers in Singapore now provide DMA services to their clients via on-line accounts.
I bought IPO stocks before through the ATM of the underwriter bank and these stocks appear directly under my CDP account rather than my brokerage firm. So the logic is when buying IPO stocks directly from the underwriter bank's ATM, i am dealing directly with the exchange.
So why don't more stock exchanges offer DMA platforms directly t0 the retail investor? Is there any special reason to?
Submitted May 18, 2018 at 08:19AM by curioustraveller1985 https://ift.tt/2IT9ziL
