Stockbrokers mixed on rating system
View(s):While some brokers say that implementing a rating system on broking houses will create investor confidence and give credibility to stockbrokers and traders, others lament that there won’t be a level playing field in the industry.
“We’re not deposit taking institutions. This is a commission based industry. With ratings coming in, some (fund managers, etc) will only want to deal with a company which has a higher rating this will force some (broking houses) out,” a CEO of a top broking house said. They were commenting on Securities and Exchange Chairman Thilak Karunaratne’s comments in the 2014 annual report that the regulator is considering a mandatory rating for stock broking firms to improve credibility.
Another CEO added that they only execute transactions on a common platform. “Maybe this platform should be rated,” he said, visibly upset. However some say this will spur confidence in the market. “It will also attract foreign investors,” a Managing Director of a newer broking house said. The SEC will have an industry consultation before implementing this.