The decline in stock transactions and the low risk appetite of retail investors led to a steep decline in the number active brokers on the capital market. The Bucharest Stock Exchange therefore became trapped in a vicious circle of underdevelopment: brokers are still too many for how low the liquidity of the stock market and the actual number of investors are, yet there are not enough of them to bring new clients and companies on the market.
“We would like to see more investors and we need more brokers to look for them. But one cannot afford to pay more brokers without having more investors,” says Razvan Pasol, general manager of brokerage firm Intercapital Invest.
The market lost mostly retail investors, so the hardest hit by the decline in liquidity were the small brokers. Another thing that led to the decline in the number of brokers was the online trading platforms, which became more and more popular among small investors, because they were cheaper and faster than a broker. Estimates point to 75% of the trading done online in the future, while ‘traditional’ investors who need advice and assistance will still prefer to work with a broker.
(English version by Loredana Fratila-Cristescu)