daytrades march 1 afternoon, page-148

... and for those of you that haven't seen this article yet, it has just been released on the SMH website as breaking news:-

Source: www.smh.com.au/breakingnews

HotCopper to take on stock brokers
XAVIER LA CANNA
March 1, 2010 - 5:19PM

AAP

An Australian website aims to lure customers from traditional stock brokers by sharing half the commissions for initial public offerings (IPOs) with investors.

The HotCopper website, better known for its forums where investors discuss listed companies, began offering IPOs last week.

Already four companies have granted HotCopper a share allocation, with more on the way, HotCopper Services managing director Greg D'Arcy said.

Under the plan, HotCopper will pass on to investors who buy the stock half of the broker's commission paid by the listing company.

"Historically the broker fees for IPOs have been a well-kept secret," Mr D'Arcy said.

He said the fees brokers receive are traditionally about four to seven per cent for all monies raised in IPOs.

"Brokers tend to keep it to themselves and they never share it with retail investors, although occasionally institutional investors get some sort of clip back if they buy a large portion of the IPO," Mr D'Arcy said.

"But the mums and dads in the past have missed out. Half of them don't even know it is there," he said.

The company insists the move is not a short-term offer, and says it will "unsettle" the traditional IPO market.

In readiness for the move HotCopper recently was granted an Australian Financial Services Licence (AFSL).

"We are dealing directly with the companies, so if the company is paying five per cent to anyone with an AFSL who raises the money, we are splitting that down the middle," Mr D'Arcy said.

He said HotCopper had been looking at diversifying its income away from purely advertising, which had been badly impacted by the global financial crisis.

Stock Resource managing director Grant Craighead said anything which reduced fees for investors sounded like a good idea.

"It would be to the benefit of both the company and to shareholders," Mr Craighead said.

"Where it will be a challenge is the ability of HotCopper to provide advice, because at the moment they are not an advice provider, they are a gossip site, almost like social networking for investors," he said.

2010 AAP
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