Small investors face losses as brokers delay orders

Abu Dhabi: Some brokerage firms have suspended the purchase and selling orders of small investors until a respective client places a counter bid or offer to ensure the collection of both purchase and selling fees, several small investors complained to Gulf News.

The practice entails losses to be incurred by the small investors whose orders are placed on the shelf, missing opportunities of timely purchases or sales.

"I placed a selling order through my broker two days ago, and I have been making sure it is there since 9am. I keep watching the screen hoping for execution but it never occurs, although I have set the price required by the broker," a small investor complained.

"I know that I can file a complaint to the stock market, yet, as is the case with all small investors, we prefer not to complicate the relationship with the broker," he added.

Other small investors complain of negligence especially in times of a falling market, when the broker prefers to await a purchase order from one of his clients, with many brokerages focusing only on big investors.

Awareness

"Sometimes the lack of awareness among small investors results in placing orders at prices that are completely diverse relative to the prevailing market prices, which urges the broker to await the price movement in that direction, and that is observed by some small investors as intentional delay," said Abdullah Al Hamed, chief executive of Amanah Capital.

"Nevertheless, this does not negate the fact that there are some malpractices by several brokers," he admitted, acknowledging that big investors usually have priority.

Other brokerage firms deny such accusations as well, referring to the market regulations prohibiting any delays in the execution of orders.

"According to the market's regulations, any order received must be placed immediately to prevent losses, and violating these regulations entails punishment for the broker," Kefah Maharmah, general manager of Aldar Securities said.

"There are substantial fines imposed by the Abu Dhabi Securities Exchange (ADX) on the violating broker that can amount to Dh100.000.

"But the market cannot interfere in the internal operations of brokerages, rather we react to complaints filed by investors," Ganem Al Mazroui, ADX's director of operations said.

"Upon receiving the complaint, the market verifies the time and date of the order," he said.

"However, the delays are mostly reported at times when the value of traded shares was limited, while the average of Dh1 billion worth of trades does not encourage brokerages to fall into that violation, given the harsh consequences," added Al Mazroui.

The writer is a UAE-based journalist