7 - 13 March 2001
Banking and brokering BOVSL's ideal combination
Bank of Valletta Stockbrokers Ltd (BOVSL) is a relatively new player in the financial market and is due to be formally inaugurated later this month by the Prime Minister. David Lindsay speaks with BOVSL stockbroker, Franco Xuereb, who heads the young dynamic team at BOVSL, to discover the company's plans and the direction it is now taking after being chosen by the Globe Organisation as sponsoring stockbrokers of their IPO.
What were the founding concepts behind BOVSL?
BOVSL has only been made possible due to changes in the law last July, which enabled financial services organisations, such as Bank of Valletta, to establish their own stockbroking firms.
As soon as those laws were passed, BoV obviously jumped to the opportunity and the decision to set up a BoV stockbroking firm was reached in August.
In December we were granted a license by the Malta Stock Exchange and, in fact, in mid-January we took up our trading seat at the Exchange.
What is the scope of activity for BOVSL?
The scope is, as part of the BoV Group, to give our clients a seamless financial service. Accordingly, a client could walk in to any BoV branch and make use of our services. In this respect, we have provided in depth training courses for people within each branch in terms of the mechanics of the Malta Stock Exchange, the compliance aspects, the company per se, and on the new software that has been specifically developed for the exercise.
Through the use of this software, a consumer could walk into a BoV branch, in San Gwann for example, and place an order, which would instantaneously be transferred here and we would buy or sell on the Exchange accordingly.
We are firm believers in utilising technology at its best.
However, one legal aspect of this scenario is that advice cannot be given out at BoV branches. BoV is still acting as a financial intermediary. Once a client walks into a BoV branch, the relationship is one strictly between BoV and the client BOVSL has nothing to do with the client at that stage.
While, of course, we do have the capacity to advise our direct sales, representatives at the individual branches are not actually representing BOVSL they are there in a BoV capacity.
Accordingly, any client seeking advice would still need to come to our offices.
You have already had one assignment, with the Globe Organisation's IPO, could you elaborate on the project?
The sponsoring stockbroking project we carried out with Globe was very good for us. It was a very good learning experience for us, being a new company.
Over and above that, however, we were very pleased that our first sponsoring stockbroking project was for one of our competitors. That showed trust in us and, in fact, helped us to integrate relatively quickly into the stockbroking community.
It additionally gave us the right platform and the right timing for us to become known within the stockbroking community and by the public at large. Although we're not officially launched yet, it served as a worthy pre-launch introduction.
The project is a good example of how BOVSL would like relations to be with other competing stockbrokers a process of collaboration, which is very important to the market. In this case we saw two competitors collaborating for an eventual IPO, which is extremely positive and we would like to see the market develop further in this respect.
When the laws I had mentioned earlier were passed, there was a lot of resistance from the local stockbroking community, which is understandable. You have a giant, in local standards, entering the playing field. The concerns of the other stockbrokers were obvious, but I must emphasise that we're not here to corner the market. Yes, we want to do business, attain our market share and make a profit something that is definitely high on our agenda is collaborating and co-operating the other stockbrokers.
As I said, in a relatively short period of time we managed to become accepted in the local stockbroking community and the Globe IPO was a classic example of how players in the same market can co-operate for the common good. We hope to see much more of this in the near future.
Another thing is that we definitely don't want to see in price wars, as everyone knows that such exercises are harmful to all parties concerned. Our pricing is public and is definitely not undercutting anyone.
How would you best describe the market you are entering into?
At the moment, unfortunately, it's a rather quiet market. But, as the Malta Stock Exchange chairman recently announced, there should be quite a few IPOs being launched this year. I think that this should help to revive the market and to generate interest.
While the Malta Stock Exchange works in quite an acceptable way, the Maltese market is small and one can't expect several thousands of shares to be transacted every day. The local market is still developing and, at the end of the day, it's always a question of demand and supply which is limited.
So, even with new IPOs coming out, one can't expect volumes to go sky high. However, the new IPOs would definitely give both the Exchange and business in general a boost.
What are BOVSL's short and long term plans?
Our first objective over the short term of attaining a license from the Malta Stock Exchange has been reached, while our second goal, of getting a license from the MFSC so as to be able to transact in foreign instruments, is in the process of being submitted.
Over the long term our main project is Internet brokering. We're working on a scheme whereby a client would be able to log on to our site, fill in the relevant form and place their order over the Internet.
Nowadays, when talking about competition, you can't just look at what's around you. We know a good deal of Maltese investors who are using the Internet and trading via that medium in foreign investments. In this respect, it's not just the local stockbrokers that are our competitors anymore, the big e-brokerage firms are also competitors and, if you don't give the service you're out. We have to have our eyes open to all aspects of brokering community.
We are in the process of establishing a business share within the market and are training both our own staff and staff at BoV branches to ensure that there is a streamlining of business processes.
We are investing heavily in people, which is undoubtedly our main strength it's good to have nice offices and equipment, but, unquestionably, you have to have the right people. Accordingly, investing our human resources is one of our main priorities.
Photo by Paul Blandford