The number of brokers has gone down by 60% since 2007 to 963. The decline is lower than the dramatic drop in the number of active investors, from 12,000 in 2007 to 3,000. Daily transactions in stocks have shrunk from an average of EUR20 million to less than EUR10 million.
“The dramatic decline in the number of brokers is tightly connected to the decline in transactions. Only senior brokers and professionals with a stable customer portfolio are now left on the market,” said Rares Nilas, general manager of brokerage firm BT Securities.
Brokers’ salaries are not that attractive any longer, either. Whereas they could make more than EUR3,500 (brokers’ incomes comprise a fixed component and a variable yet larger one, made from trading fees) per month in 2007, now the variable part of their income is significantly lower and they have to make do with their fixed salary, which barely reaches EUR1,000.
For a broker to make a decent living, he or she needs to trade at least EUR1 million per month, thus generate EUR5,000 in revenue from trading, of which his or her employer takes a cut. If the broker is good, the revenue is split fifty-fifty, so that they get EUR2,500.
The daily transactions currently amount to about EUR8.7 million on the Bucharest Stock Exchange, which means a broker generates about EUR1,800 in gross revenue for their employer. Then there are also the transaction costs (the fees paid to the Bucharest Stock Exchange, the National Securities Commission and the Central Depositary), as well as the monthly expenses of the company. The remaining amount is split fifty-fifty depending on how the contract was negotiated.
The low liquidity (the volume of traded stock) and low fees that the brokers had to charge to compete have driven many of them out of business. Since 2008, 17 companies have ceased operations so that there are only 59 left now, which is a lot compared with other markets like Poland, where transactions are tens of times higher.
The brokers to have left the market because of the crisis include Ventrust, Romaxa, Trend, HTI Valori Mobiliare and KD Capital.
(English version by Loredana Frățilă-Cristescu)