Outdated & silly-Thai-broker-habits.

paulren's picture
Category: 
Industry

Here are some SET/Broker poor practices addressed for long -but no changes.  After a while some investors and capital may just give up, which is what many retail investors have done as the participating retail investors/numbers keep showing.

Just two examples here below described, there are more further posted as time goes on:

1)  When a Thai listed company has a new share rights offering most all brokers here still require each investor to go to their bank and make a draft so to subscribe to the newly offered shares, then get this bank draft checque to their broker.    Can one imaging this outdated stupid system!  Say a listed company has 1000 shareholders, so this means 1000 have to each go to the bank use the bank teller (and the investor time) for about 1 hour to purchase this bank draft, of course with passport copy.  That is 1000 hours x 2 people (bank + investor), = 2000 of wasted hours.  Assuming no mistake on the drafts...but there are always some which then have to do it all over again -due to a typo. Lots of wasted hours besides paper!   When I ask brokers why such an outdated donkey system?  They tell us "its SEC/SET rule".  But is it?  likely nonsense because Tisco broker for example can do it directly (but only for large accounts and for a low yearly fee).  This so through a direct account debit which is how the rest of the world does it. No 2000 hours, no paperwork, no inconvenience.     Yet forever its been this way here forever, and brokers routinely and for years say they "know and are looking into changing this for the better", but it never does. Realize, foreign investors whom stay and live abroad can howver do this on line, followed up by a snail mail.   In French we say, plus ca change plus c'est la meme chose.  The more it changes the more its the same old way. 
 
2)  If you read any book or talk to any serious professional trader/speculator on stock market trading, the first rule is to always use automatic stop loss orders to prevent a disaster. This so to prevent a serious set back which would wipe out all the hard earned trading, gains and perhaps more.  (This rule applies far less to long term investors which hold shares for the fundamental good reasons, not to trade).  Automatic stop loss orders are the mantra to short term trading, trading as is here is ever so directly and indirectly advocated by Thai broker's marketing officers.   Mental stop loss orders often do not work in practice as too often the price drop is missed, the broker forgets to call -or the trader changes his mind, in frequently false hope it will come back.  Yet the SET exchange does not offer stop loss or limit stop loss orders.   Instead brokers came up with their own in house system called  " iAlgo".  Under this system a trader can enter a stop loss order, but and here is the big difference: its not entered with the SET exchange directly but through the brokers.  This is not good/ideal, as it allows for more abuse in that the broker could see these orders entered in-house and could so manipulate the price just below so only to trigger the stop loss orders and then to accumulate shares on the cheap -which got stopped out.   I do not favor using in house stop loss orders and abuses have been reported, and hence the SET still does not offer what I call legitimate automatic stop loss orders.   The more it changes the more its the same old way.   As always welcome any comments back.
 
Best Regards,
Paul A. Renaud.
www.thaistocks.com