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Institutional investors used to have the edge with their access to better investment information more quickly. That has changed.
PSG Online joint MD Diedrich Schutte says the electronic information revolution has made it possible for his operation to provide similar information as quickly to individual investors who have Internet access. ``This has enabled individual clients to compete with institutions by making their own investment decisions.''
The firm's comprehensive brokerage service is based on Charles Schwab, the largest electronic trader in the US.
The wholly owned subsidiary of PSG Investments, which focuses on share trading, has attracted widespread interest since its inception in 1998. It now has more than 8000 clients countrywide across the colour, gender and language spectrum.
Schutte says PSG Online's typical client is 25 or older with a minimum salary of R10000. Services are geared to suit novice investors and veterans.
Since electronic trading makes buying and selling easier and more cost-effective, no minimum investment or transaction volume is required. As a result, trading in shares is made easy and accessible for most people.
PSG Online differs from competitors, which are either exclusively Internet traders or traditional brokers, says Schutte. It has found a niche market in between. In addition to the usual broking services, the company offers a wide variety of Internet-based services that range from linked facilities to portfolio evaluations.
The company basically deals with two kinds of clients: investors who require advice and information and independent, low-cost traders who prefer to do their own transactions.
The first type likes to use the commission-driven telephonic trader's advice and services. Here a dealer's livelihood depends on the value that he adds for clients as normal service fees apply. ``There will always be clients who prefer personal service,'' says Schutte.
Such clients enjoy traditional broking services -- telephonic contact is at hand with PSG Online dealers at fully fledged branches in Johannesburg, Pretoria and Cape Town. These centres provide advice and handle orders over the phone. For clients who prefer working this way, the Internet service is merely an add-on.
But Schutte says the importance of providing for the low-cost share trader is not overlooked. Because they tend to act independently and are usually price-sensitive, these clients demand access to electronic trading.
In this market, PSG Online has the edge in that, over and above electronic access, the company offers these clients competitive dealer accounts, detailed research and valuable investment tools such as charts and fundamental data facilities. This compares favourably with competitors offering access to e-trading at a discount.
PSG Online's Internet service is available for a 30-day trial period, after which the cost is R100 a month. Where monthly broking fees exceed R200, subscription fees are waived.
Transaction charges are set on a sliding scale, with a minimum fee of R80 per transaction. Clients who subscribe to the Internet and advisory service, for instance, pay a fee of 1,4% of the value of transactions below R25000; those who use only the Internet service pay 0,9%. This falls to 0,5% on transactions worth between R250 000 and R1m for both groups. Fees on transactions involving more than R1m are negotiable.
PSG Online is considering introducing several exciting additional services, including:
Information on unit trust trading in SA;
Basic short-term insurance services; and
Providing access to foreign share dealing.
