Why are retail investors not trading? Do a survey

The Society of Remisiers (Singapore), or SRS, has been grumbling that retail investors are not trading much and that remisiers’ incomes are dwindling to about $1,000 in commissions per month, on average.

In the media, the complaints have been voiced mostly by remisiers, financial journalists or the SRS. These have conveyed a very broad picture of the situation, are diverse and unfocused and have sometimes painted a distorted view, mixing non-issues with real issues.

There are few letters from the investing public, and it would be good if more retail investors tell us why they are not investing as much as before.

It would be better, however, to do a proper, structured study of their reasons for not trading as much as they used to. It would be scientific, objective and focused, instead of emotional.

Companies employ market surveys routinely to improve their business or find out why customers are not buying their products or services. Even government bodies nowadays resort to feedback meetings and questionnaires.

The SRS could initiate such a survey, in collaboration with the Securities Investors Association (Singapore), which has close to 70,000 members.

As the two are non-profit bodies, working to benefit remisiers and investors respectively, the Singapore Exchange (SGX) could fund the survey. Increased trading by retail investors would benefit the SGX. Or the Securities Association of Singapore could be the sponsor.

The survey could incorporate suggestions from retail investors on how the market dynamics can be improved to entice them to trade more.

The findings can then be summarised and made public to the various stakeholders, including the Monetary Authority of Singapore (MAS). After this, the MAS and SGX could issue a consultation paper.