Brokers reap billions from trading at DSE in 2013

MarketThe Dar es Salaam Stock Exchange (DSE) brokers earned billions of shillings, last year and recorded significant achievement.

The stockbrokers earned an average of 6.5bn/- in terms of commissions, after pushing the bourse turnover to over 252bn/-- the highest mark since DSE was established 16 years ago.

The amount generated, if it’s divided equally among seven brokerage firms, each company banked roughly 930m/- in 2013. In total, the money brokers earned last year can be used to buy almost 65 Toyota Land Cruiser 5.7 liter V8, (VX) at ex-factory price of slightly over 80,000 US dollars each.

This means what brokers earned last year is more than enough to replace the entire ministers and their deputy fleet of 57 cars with a brand new vehicles, or each regional commissioners with two luxurious Toyota SUV.

The last year revenue was poorly compared to a compounded commission of 1.3bn/- generated in 2012, which was almost similar to 2011 brokers’ revenue. To buy and sell stocks, bonds and mutual funds, you need a broker.

In Tanzania a broker works at a brokerage firm. In other economies, a broker can also be an individual who has been licenced for brokerage activities.

The most basic function of a broker is to execute trade for the investor, but many brokers offer additional services like investment advice and portfolio management.

Brokers make money by charging commissions on each trade. These fee rates are determined by DSE.

In the country the fees are in three categories - the first is 1.7 per cent of transaction fund which is not exceeding 10m/-; on the next 40m/- 1.3 per cent; and any sum above 50m/- is 0.8 per cent.

The sum of 6.5bn/- was arrived at after taking the average of 0.8, 1.3 and 1.7 per cent and computed out of total last year’s turnover amount of 252.3bn/-. Therefore going by commissions percentage to generate 6.5bn/-, the turnover has to be enormous.

DSE Chief Executive Officer Moremi Marwa said recently that the bourse last year, registered an historic turnover which the market has ever seen in the last decade and half of its existence.

“Yes, it was historic year,” Mr Marwa told ‘Daily News’ minutes before opening the London Stock Exchange on Monday by phone from UK.

The CEO said though Tanzania Securities and Orbit Securities controlled 60 per cent of market share, Core Securities, with 20 per cent, registered a hefty turnover after making a single deal selling 8.0bn/- of TBL shares.

“However, for last year the big single transaction (8.0bn/-) was done between Core and Orbit-hence you can urge that Core’s market share was relatively large last year due to effect of this single transaction,” Mr Marwa said.

Mr Marwa, who on Monday was honoured to open the LSE, said on market share for brokers, on average, Orbit and Tanzania Securities commands about 60 per cent in total. “Core has about 20 per cent and the rest four shares the remaining 20 per cent,” The CEO said.

The others are Vertex International Securities, Zan Securities, Solomon Stockbrokers and Rasilimali Limited. Then, Tanzania Securities and Orbit received a bigger share. Between the two they take home 60 per cent of 6.5bn/- which was 3.9bn/-.

Core securities banked 1.3bn/- and the other four share among themselves 1.3bn/-. Orbit Securities Head of Dealings and Operations Simon Juventus said relatively speaking 2013 was a good brokerage year given the size of activities the bourse registered. “Yes, it was a remarkable year,” Mr Juventus said.

The brokers are not only ones who walked home with heft income but also the DSE and Capital Market and Securities Authority received a healthy share as they both get 0.14 per cent or 353.22m/- of the said transactions.

The turnover for 2013 was 252.3bn/-, which was five times higher than that of 2012 of 50.89bn/-. The 2013 turnover surpassed the transaction of three years namely 2012, 2011 of 51.76bn/- and 2010 of 35.97bn/-.

The 2013 increase was mainly attributed to some efforts that DSE have been pursuing in order to make the market more efficient, for instance introduced the Wide Area Network-where brokers can now access our trading platform remotely.

The bourse also extended trading hours from two hours to four hours a day, and reduced the settlement cycle from five days to three days on equity and from three days to one day on bonds.
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania
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