Oligopolistic structures securities brokers' market

People think that securities companies, like geese that lay golden eggs, can bring huge profit to their owners. However, many of them are facing big difficulties.
There are more than 50 securities companies that are the members of the HCM City Securities Trading Centre, which are running some 100 trading floors. When the stock market boomed late last year, and many clients were refused service, many new securities companies were set up at that time to attract clients from senior companies.
The new companies tried to attract clients by impressive launching ceremonies, offering attractive gifts to first clients and preferential service fees at 0.15%.

It is quite strange that even when there are more choices with many newly set up securities companies, clients still want to make transactions at senior companies. More and more new accounts have been opened at big companies like SSI, BSC, VCBS, ACBS, even when the market is quiet.

According to Le Hai Duong, Head of BSC’s Brokerage Division, in March, the company had 1,000 new accounts, and the same number was seen in April. Meanwhile, Horizon Company, which made its debut in mid April, only has 300 accounts so far.

Analysts said that the ‘big four’ in the market, SSI, VCBS, BIDVS and ACBS, now hold up to 80% of the market share, while other new companies compete fiercely with each other for the remaining 20%.

However, despite the fierce competition, securities companies are still mushrooming. A lot of groups and corporations plan to set up financial and securities companies. At shareholders’ meetings of Pha Lai Thermo Power Plant, Hanaka, Vincom, Minh Phu, Techcombank, Bao Minh, all have approved plans to enter the financial market.

According to Nguyen Ngoc Thanh, Managing Director of VNDirect, the fierce competition will force securities companies to improve the quality of their services in order to retain clients. However, in several years, small companies will disappear from the market.

She said that the scenario occurred in Thailand and Taiwan in the past, where a series of securities companies were established at high tide, but smaller companies then merged with each other to form bigger and more competitive companies.

Source: VNE