Kenanga-Rakuten online broker seeks to capture 30% of retail trade in three years

This article first appeared in The Edge Financial Daily, on May 19, 2017.
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KUALA LUMPUR: Kenanga Investment Bank Bhd (KIBB), in a joint venture (JV) with Rakuten Securities Inc of Japan, targets to capture between 20% and 30% of the retail trade on Bursa Malaysia over the next three years, with the launch of its online trading platform.

Both companies have established a 50-50 JV called Rakuten Trade Sdn Bhd to offer the mobile application platform iSPEED.my, which is the localised version of Japan’s leading mobile app developed by Rakuten Securities. The JV sees KIBB providing its expertise on regulatory matters, brokerage expertise and access, while Rakuten brings its front-end technology expertise.

Rakuten Trade managing director Kaoru Arai said the company expects to make a profit within three years on the back of the high number of Internet-savvy people in Malaysia, plus the convenience offered by its online platform.

“We are honoured to be the first in Malaysia to obtain a capital markets services licence that allows us to introduce the country’s first complete online brokerage business,” he told reporters after the launch of iSPEED.my yesterday

“In line with the Securities Commission Malaysia’s (SC) digital agenda, our platform is designed to appeal to the needs of the new-generation investors who are digitally and e-commerce inclined, as well as existing technology-savvy traders who prefer self-directed trades,” he added.

On Nov 16 last year, Rakuten Trade had received an approval-in-principle for a capital markets services licence from the SC to deal in listed securities and provide investment advice. Total capital investment for the JV stood at RM30 million.

Deputy Finance Minister Datuk Lee Chee Leong said while the preferred access market is still through the traditional remisier, or broker-assisted trading, Malaysia has seen a gradual increase in online trading.

“As of 2016, online trading participation was at 25% of total market trades, increasing from 22% registered at the end of 2012,” he said.

In comparison, online trading accounted for 90% of equity transactions in Japan.

Rakuten Trade aims to revolutionise online stock trading in Malaysia with its platform, allowing customers to open an equity trading account completely online for trading on the local bourse. The platform also offers public access to financial research materials and real-time market information, extensive reward programmes and educational programmes, and provides for fast and seamless cash transfers.

The brokerage fee at iSPEED.my for investments amounting to less than RM1,000 is a flat rate of RM7; RM1,000 to RM9,999, a flat rate of RM8; RM10,000 to RM100,000, a rate of 0.1%; and RM100,000 and above, a flat rate of RM100.

KIBB shares closed up 0.5 sen or 0.74% at 68 sen yesterday, with a market capitalisation of RM491.33 million.