DOHA: Stock brokerages have been warned by the regulator of the Qatari bourse against giving more than 50 percent discount in commissions they charge on sells and buys from stock traders.
In a circular issued to the brokerages, the Qatar Financial Markets Authority (QFMA), the regulator of Qatar Exchange (QE), said in a stern tone they must not cut their commissions by more than 50 percent.
Brokerages charge QR2.75 per QR1, 000 worth of sell or buy transactions carried out by them for their clients. The circular says brokers who violate the directive of the QFMA would be taken to task.
There are 11 brokerage houses and three of them are banks. Sources at the bourse told this newspaper the QFMA might have acted on complaints from some brokerages.
Some large brokerages, including the banks, were giving away high discounts to their big and prized customers and that might have enraged others, said the sources.
Some brokerages serving large asset management firms were giving away discounts of up to 100 percent to their prized customers, stock analyst Bashir Al Kahloot told this newspaper.
And it was common for some brokerages to give as much as 60 percent or more discounts to customers, said Al Kahloot. He said the new rule would severely affect the bigger brokerages and their smaller counterparts who do not have shark investors as their regular customers would benefit.
The problem with the market right now is that it has been facing a severe liquidity crunch. Trading sentiment remains subdued and liquidity level indicators like trading value and volumes have been falling by the day.
Discounted commissions matter in such a situation, said Al Kahloot. If the equity market were vibrant, such discounts wouldn’t have mattered at all, he added.
International wire agency Reuters that broke the news yesterday, meanwhile, said quoting analysts that the decision of the bourse regulator might reduce speculation in the market.
“Most of the speculators were getting discounts, so they may clear out now since it will be that much more expensive for entry (buys) and exit (sells),” the agency quoted an analyst as saying.
Liquidity in the market might be hurt. It might be reduced slightly, the analyst said.
The Peninsula
