Thai brokerages pivot beyond commissions

Thailand's securities brokerage sector is accelerating its shift away from traditional commission-based revenue as profitability faces pressure from falling fees and unpredictable trading volumes. Companies are actively seeking to diversify their income sources.

Pichet Sithi-Amnuai, chairman of the Association of Thai Securities Companies (Asco), highlighted that the industry's resilience hinges on trading activity, financial strength, and the success of new investment products designed to attract a wider range of investors. He noted that consolidation is a natural progression, particularly for smaller firms struggling with capital and shrinking margins, though mergers and acquisitions often prove complex and time-consuming.

“

The sector's ability to weather the downturn depends on trading activity, capital strength, and the success of new investment products that can attract a broader investor base.

Daily market turnover remains a key indicator of the industry's health. With average daily trading values between 40-45 billion baht, many brokers face financial difficulties. A turnover of approximately 60 billion baht per day would be necessary for most firms to achieve profitability and long-term sustainability. Capital adequacy is also crucial, with smaller brokers potentially needing to raise capital or merge to strengthen their financial positions.

“

Consolidation is a natural part of the brokerage industry, particularly among smaller firms facing capital constraints and shrinking margins.

Despite regulatory efforts to encourage consolidation, M&A activity has been subdued. ML Thongmakut Thongyai, CEO of Krungthai XSpring Securities, observed that new entrants continue to target niche markets, even within what is considered a mature sector. Many existing players prefer to remain on the sidelines rather than engage in acquisitions or sales.

Structural challenges persist, including a modest expansion of Thailand's investor base over the last decade, with only about 14% of Thais actively investing. This limits brokers' ability to significantly grow their client numbers. Meanwhile, the entry of foreign brokerages intensifies competition.

“

Many operators prefer to remain on the sidelines rather than pursue acquisitions or sales, even under difficult business conditions.