As brokerage firms play an intermediary role between a trader and the market, making them crucial players in the securities market, investors need to choose a trustworthy and reliable broker – the first step before investing in stocks.
Investors need to know the importance of a brokerage firm, why there is the need for a broker when trading securities and why it is important to choose the right brokerage firm.
A stockbroker is an agent from a brokerage firm who is mainly responsible for opening trading accounts, investing, and managing the accounts on the behalf of the clients. Brokers are registered members of the stock exchange.
Trading nowadays, unlike in traditional markets where sellers and buyers meet to exchange money for goods, functions largely on electronic platforms, and anonymously as well.
The entirety of a securities market’s transactions, from buying/selling securities, to clearing/settling and transferring cash and securities, cannot be done entirely by investors, hence there is a need for a broker
to facilitate these transactions using their systems to connect all market operators.
Each stockbroker can provide their own unique add-on services to clients that differentiate them from their competitors. An established stockbroker can help the investor have a higher chance of success in the market using their own investment tools.
Choosing the right stockbroker
Different brokerage firms have different commission rates for their services. With commission part of the expenses investors need to spend when buying or selling stocks, an investor should find a firm that offers the lowest commission and doesn’t charge a minimum fee.
The commission rates of brokerage firms on the Cambodia Securities Exchange (CSX) range from 0.40 per cent to 0.90 per cent, with some firms charging a minimum fee while others do not.
For beginners trading a few stocks at a time, it could be more beneficial to choose a broker that does not charge a minimum fee. However, the lowest commission is not always the best deal as a full-service broker who offers more add-on services may do much of the legwork for an investor and therefore charge higher fees.
Some stockbrokers provide more convenient services and procedures, including opening a new trading account as well as depositing, withdrawing, and transferring funds.
Some firms offer investors a more supportive trading system for placing orders and trading.
A brokerage firm may have its own trading platform allowing investors to place orders and offering detailed trade reports and market statistics, overviews of the investment portfolio, corporate disclosures, market-related news and other important analysis tools.
Such services ensure investors have better access to fundamental and technical analysis tools before making investment decisions.
Cambodian brokerage firms utilise a unified trading platform – the Mobile Trading System (MTS) – that was established by CSX and is offered to all investors.
Some brokerage firms offer services such as free advice/recommendations, free stock market analysis reports and even free educational resources such as live webinars, thorough how-to guides, video tutorials and glossaries.
Investors can use more tools from high-quality brokers to increase their chances of success.
Another bonus for investors is brokerage firms offering good customer service, and professional and trusted advice on investments.
Brokerage firm ratings
CSX has created an award programme evaluating the performance of all members every quarter. This helps investors to identify reliable brokerage firms to provide professional advice on their investment strategies.
Investors can find on the CSX website the top five brokers/members’ performance on a monthly basis based on different criteria.
As investors have the right to create trading accounts with more than one brokerage firm, they can always include or replace firms across the available brokerage firms registered with the bourse.
Contributed by: The Cambodia Securities Exchange, Market Operations Department
Email: [email protected]
Tel: 023 95 88 88 023 95 88 85
Disclaimer: This article has been compiled solely for informative and educational purposes. It is not intended to offer any recommendations or act as investment advice. The Cambodia Securities Exchange is not liable for any losses or damages caused by using it in such a way.