Online brokers doing it tough
Sanford Securities is diversifying itself further from its online stock broking base as the sector continues to show signs that it is doing it tough.
Sanford's development of a diversification strategy comes as the world's biggest online stock broker Charles Schwabb shows further signs it is doing it tough in the face of falling revenue from its online broking operations in the US.
According to a report in the New York Times, Scwabb has told about half of its employees not to show up for work on three of the next five Fridays in a bid to improve the group's profit figure for the first quarter.
Schwab's chief financial officer Christopher Dodds says the three-day weekends are the latest in a series of steps the company has taken since November to reduce costs during a slump in stock trading by the individual investors.
Their trading, on which Schwab earns commissions, dropped off when prices of technology stocks collapsed in March last year and has not bounced back.
That slowdown contributed to a 27 per cent drop in the group's profit in the fourth quarter of last year.
Late last year, Schwabb slashed the salaries of its executives by 5 per cent to 50 per cent, froze most hiring and told employees to limit their spending on travel and entertainment.
"We are looking as a management team at a whole wide range of steps we could take without resorting to the blunt axe of layoffs," Dodds says.
While Schwabb suffers from its own success in the US, Sanford is putting renewed empahsis on wholesale operations such as its Virtual Broker wholesale broking business aimed at financial planners and its fledgling investment banking operations.
Revenue from online stock broking now makes up about a third of Sanford's revenue.
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