Emirates Securities out to make its voice heard

Emirates Securities managing director Mohammed Ali Yasin reveals why his brokerage firm is turning to IT

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By  GITEX Times Staff Published  November 20, 2006

|~|yasin200p.jpg|~|“In terms of using technology we are very flexible and embrace it,” explains Mohammed Ali Yasin, managing director at UAE-based brokerage firm Emirates Securities|~|GITEX TIMES: Give us an overview of Emirates Securities and your core business. MOHAMMED ALI YASIN: Emirates Securities was founded in 1986 and at that time it started before the regular market had opened in the UAE. Trading at the time was what they call OTC — over the counter — and the company was one of the first brokerage firms in the Emirate of Abu Dhabi, and in the UAE. In 1998 we lived through the crash and in 2000 SHUAA Capital — which is a leading investment bank based in Dubai — bought a 50% stake in Emirates Securities. We raised our capital up to US$3m, and it was one of the biggest capitals of any brokerage company at that time. Our core business is brokerage in local securities. When we say securities in the UAE, we are mostly referring to equities. Bonds are not very active at the moment, but local equities are what we are really here to do. We execute on behalf of our clients in the market — about 60% of which are institutional and high net worth individuals. The rest is retail. GT: So why does a brokerage company want to exhibit at an IT trade show? MY: What has really attracted us to GITEX is the fact that we have started internet trading and voice recognition solutions. These kind of services have, in a way, entered us into IT applications and we think those applications will be very useful. One of our major competitors — Mubasher — is a Saudi ISP that came into the market and suddenly licensed itself as a broker. Now it has made it into the top five, or at least it had in early 2006. We think that by going into places like GITEX, it will give us the vision that we as a broker can be an ISP. But we are a broker that is offering technology, and not an ISP provider offering brokerage. It makes a big difference. GT: Does GITEX offer you exposure to the right kind of clients? MY: GITEX has the largest number of visitors and it is growing rapidly every year. The profile of those investors are usually people who buy into IT and that means they are knowledgeable and likely to be in the medium to high end range [of net worth]. If we can hit 10% of those numbers visiting the exhibition I think it will represent a substantial number of new opportunities for us. GT: What are your key objectives at GITEX? MY: The key objectives are really to present our [voice recognition] solution and present something new to people. Because of the mix of people coming over, it is also a chance to talk to people who may have seen something similar or can suggest ideas about what our solution can be integrated with. Sometimes you’ll also get suppliers coming to you and telling you that they have something that could integrate with it. That would allow us to grow our bouquet of solutions at the same time as encouraging new investors to see us as a dynamic and IT literate company — not just somebody doing brokerage the old fashioned way. GT: Have you personally attended GITEX before? MY: I am a graduate of computer science and I worked in that business for about seven and a half years in the UAE. I participated in GITEX when I first started in IT with other companies, one of which was Emirates Computers. So I know the kind of people who come here, their profile, and the exciting time that they have here. I think that as a financial company that has come in to try to distribute its solutions here we are pioneers. I have seen Oracle Financials and SAP trying to do this, but I hope it will attract some attention for a small local company to come up with something like this. GT: Earlier this year you introduced an online trading solution. What impact is that having? MY: We’ve been surprised by the speed at which people have picked up the online trading. It has actually helped us to keep some of our clients because there are some vendors who tried to offer this a lot earlier than us. We are not the first ones to come up with it, but we learned from some of the mistakes other companies made so when we started we didn’t face so many problems. That was beneficial to us. We have found retail investors to be a lot more interested in this. Institutional or high net worth individuals do log in or have accounts, but they tend to keep it as a back-up in case they can’t get directly through the broker on the floor. The percentage of our daily trading that we do with it is still below what we believe we can reach, but in just a couple of months we already get 10% of our daily volumes from it.||**|||~|yasin200q.jpg|~|Emirates Securities’ managing director Mohammed Ali Yasin believes the company’s voice recognition trading service will keep it ahead of the regional competition|~|GT: And what about the voice recognition trading service that you have launched this week? MY: We think retail investors are more likely to benefit from this. Firstly, because we are offering indirect access to the market without waiting, and secondly because it is taking the load off our current brokers so that they are able to concentrate on the high net worth individuals and the institutions. The number of retail investors is bigger, but their volume is lower so by doing this we give them direct access without having to go and change prices. Sometimes, if the market moves five fils he needs to move his order five or ten fils, so I think this solution satisfies that kind of investor. We also think voice recognition will substitute the need for a call centre. A lot of companies say they have a call centre with 25 to 30 people sat in a room taking orders. We are hoping voice recognition will be able to replace that in time. GT: Who developed the voice application for you? MY: A company here called Emerging Technologies. The first use of that service was by Dubai Financial Market and Abu Dhabi Financial Market who offered it to clients that just wanted to call and find out about share prices. At the time, people used it by pressing numbers on the phone dial. They came to us and said they could do voice recognition, which for me seemed much more cost effective and not so reliant on people as a call centre. We actually agreed with them that once we had developed and marketed this then there would be a window of maybe four to six weeks before they could offer it to others. I know that others have actually contracted them, but they cannot talk about it yet. GT: Emirates Securities certainly appears to be an organisation that embraces technology. MY: When things became electronic in 2000 I found that my computer science experience was very useful in taking us to where we did. In terms of using technology we are very flexible and embrace it. I personally see the benefits of it. Now, some people say we use the Microsoft method of things. We move things, bring them online fast and they could have some bugs which we fix, but we don’t wait to give you the perfect machine and then find it is too late. Timing is very important. People coming now with internet trading solutions are too late to the market. And even if it is a better solution they’ll find that investors have already committed themselves to the competition and once that happens it is very difficult to change. Timing is very important. GT: How competitive is the UAE securities market? MY: By the end of 2004 there were about 18 brokerage companies out of which I’d say half of them were banks or bank-related companies. Last year — with the boom in the market — Dubai Financial Market in particular did a marketing campaign to try to invite a lot more people into brokering and said how much money and income they could make. Suddenly, we are now talking about 93 brokerage firms who are active and another eight will probably come by the end of the year to take it above 100. Some of the new companies that have opened were based in Egypt or Jordan and we have found that they have added new things to the market and raised the bar in terms of quality of service. But at the same time we saw a lot of people who were trying to ride the wave and did nothing to help the market or improve its image. GT: Will you do more trade by the end of this year than you did in 2005? MY: In 2005, more than US$21 billion worth of trade was executed through us. We are going to be very close to that. I don’t have the figure, but the last I saw we were up in the range of US$18 billion. The issue is that this year the market has halved the commission by which the brokers can charge their clients from 30 basis points to 15 basis points. So now, even if we did the same volume we’d have half the earnings. I think companies that planned for the future probably have a lot in reserve that will carry them through some of the tough years that may be ahead, but overall I think this business goes through cycles anywhere from three to five years. GT: What’s your outlook for the future? MY: We will see the consolidation trend becoming more evident in 2007. In 2005 the market volume that was traded was about US$139 billion. This year we are looking at a range anywhere between US$122 billion to maybe US$131 billion. It will be a small decrease, but we believe in 2007 it will be a bigger drop in terms of volume and that is really what effects the earnings of brokerage firms. ||**||

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