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Maltese investors lacking in financial knowledge
by David Kelleher
Maltese investors lack knowledge and information on financial
matters and most of the time they put their money in funds or
equities without knowing exactly where it is going.
“Some investors come for advice and they don’t have
a clue what the fund they have invested in is all about, in
what currency they are dealing in and what level of risk the
fund carries,” Franco Xuereb, stockbroker at Bank of Valletta
Stockbrokers Limited said.
In an interview with The Malta Business Weekly, Mr Xuereb said
their was a lack of education on financial matters in Malta
and this knowledge was lacking not only among the public but
also among business executives and even university students.
“There are very few people who know anything about how
the stock market works, the difference between funds and equities,
high or low risk investments. The financial community lack the
information and knowledge that is so important in today’s
financial world,” Mr Xuereb said.
He added that the financial community had to do its best to
rectify the situation and the need to constantly inform the
public.
“One of our competitors issued a very basic booklet on
how to invest. That was a very good idea because in its simplicity
it helped to inform the man in the street the basic concepts
of investing. Here at BOVSL we would like to address the problem
and educate the people. Before I started working as a stockbroker
I thought people had an idea. Unfortunately, I was mistaken,”
Mr Xuereb told The Malta Business Weekly.
BOVSL will be officially launched next Tuesday by the Prime
Minister Dr Eddie Fenech Adami. Heading the company, Mr Xuereb
sees a lot of potential in the local market and BOVSL has a
number of short- and long-term projects in the pipeline.
Despite an initial negative reaction to the presence of BOV
as a stockbroking firm, Mr Xuereb believes the bank has now
been accepted by the other players.
“We are not here to fight with the others but to compete
fairly,” he explained. “When the law changed in July
2000, the Group saw the possibility of entering the sector as
well. After four months we received the licence from the MFSC
and started trading in mid-January,” he added.
Asked whether certain sectors were correct in saying that the
bank would be pushing its own products, Mr Xuereb said BOVSL
is a totally separate subsidiary of the BOV group.
“There is an agreement that stockbrokers will not advise
on their own shares. Clients are only advised by the stockbroking
arm of BOV. Branches cannot advise clients although they can
refer them to BOVSL. It would be illegal if they had to offer
financial advice,” Mr Xuereb emphasised.
BOVSL have, however, trained a number of staff at the branches
to act as representatives. These employees are given training
on how the stock exchange works, compliance and the software
used by BOVSL to take orders. At no time do they give advice
however,” Mr Xuereb added.
Regarding the company’s plans, he said that in the short-term
BOVSL wanted to continue building a good relationship with the
other stockbrokers. “We already have a feeling of acceptance
and that is very positive. We intend to consolidate our position
on the local market and we have applied for a
Category II licence from the MFSC which will enable us to sell
and buy foreign financial instruments,” Mr Xuereb said.
“On the other hand, our long-term plans include examining
and establishing alternative delivery channels. In Malta, stockbroking
services are quite stale and we would like to look at other
means. In fact we have a deal with GoMobile to supply them with
financial news and stock quotes,” he added.
Yet, BOVSL’s main project lies on the World Wide Web. Conscious
of the importance of the Net and possible revenues streams that
could be made available to the company, Mr Xuereb is looking
very closely at Internet trading.
“We want to reach a stage when clients will be able to
log on to our site and give us their orders. There are still
a number of issues to be solved, apart from the legalities,
especially how the stockbroker will be able to certify that
a client is really who he claims to be,” Mr Xuereb explained.
“We cannot continue to think locally. We must provide the
full range of services available to a stockbroker. This is very
important,” he added.
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