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PhillipCapital: 40 Years And Standing Strong
In the Spotlight | 19 June 2015
By: Louis Kent Lee
Articles (199) Profile

It is easy to overlook success, especially when you look at a well-known brand only at face value.

PhillipCapital is not a stranger to retail investors. In the market place, its name is largely endorsed.

Among accolades from being awarded the Best Retail Broker award consecutively since 2010, to winning the award of being Singapore’s largest Contracts For Difference (CFD) provider by market share for five consecutive years since 2010, PhillipCapital has come a long way and is celebrating its 40th anniversary this year.

Shares Investment visited PhillipCapital to talk to the man who has seen the peaks and valleys of the past four decades to shed clarity on the real story behind PhillipCapital.

This man is none other than Mr Lim Hua Min, Executive Chairman of PhillipCapital.

Mr Lim Hua Min, Executive Chairman of PhillipCapital

Humble Beginnings

PhillipCapital was founded as Phillip Securities on 18 June 1975 at Phillip Street, which is where the company got its name from.

Back then, technology was not that advanced, and the buying and selling of shares involved the physical matching of stacks of physical stock sheets.

Mr Lim shared that prior to starting PhillipCapital, he was working at the exchange for about three years. He saw a problem with the inability of brokerage firms to cope with large volumes of transactions, resulting in serious bottlenecks.

Reconciliation of the buy and sell orders were done inefficiently as a result, and it was a huge problem at that time.

That was when PhillipCapital was created in a bid to help solve this problem.

It was chaotic then. People were constantly shouting over the phone and walking up and down hurriedly in the room. Almost everyone was in the room at the same time.

Mr Lim at PhillipCapital’s office in the early days

From trading boys, to remisiers and their clients. When the market was hot, buying and selling volume from market participants naturally increased.

Placed orders for stocks would need to be reconciled everyday. This was no easy task. PhillipCapital was however able to perform such reconciliations.

In addition to that, its ability to finance the scale of growth, as most brokerage firms had to pay up for the positions on the clients’ behalf first, made it possible for PhillipCapital to take on the extra orders as the market grew hotter.

Phase Of Expansion

Mr Lim shared that in the first 10 years of Phillip-Capital’s journey, much was spent learning and adapting to the environment.

The second and third decade was spent more on moving abroad and expanding to the region. Today, PhillipCapital has progressed from a regional outfit to a Global outfit with an Asian expertise.

In the beginning when PhillipCapital started to grow, it needed more remisiers to extrapolate its reach.

It started to conduct classes to recruit remisiers and provided training and education for them. It was the first brokerage firm in Singapore to actively provide such training and education for the remisiers.

This resulted in an expansion of remisiers for PhillipCapital and also extrapolated its reach at that time.

The Move Into Hong Kong

In 1984, PhillipCapital made its move into Hong Kong. Comparatively, it was a much tougher market than Singapore.

In terms of competition, PhillipCapital was fighting amongst some 19 players in Singapore at that time. In Hong Kong however, there were at least 400 Hong Kong broking firms in the market.

Mr Lim expressed that the initial phase in Hong Kong was difficult, and the company started out in a 1,400 square feet office. That was ground zero.

Mr Lim at PhillipCapital's dealing room

Four decades on, PhillipCapital now occupies an office space of some 50,000 – 60,000 square feet. It has grown to become one of the prominent players in Hong Kong.

In terms of initial public offerings (IPOs), Mr Lim said, “We as a broker, does financing and does as much as HK$15 billion when it comes to IPOs”.

In fact, its Hong Kong muscle has gotten so strong that it is now its biggest overseas operations within its portfolio.

Memorable Moments

Mr Lim expressed that there were several memorable moments throughout the four decade journey with PhillipCapital.

Specifically, he recalled the Pan Electric crisis where seven out of 19 broking firms got into trouble over the weekend and the stock exchange had to suspend operations for three days.

At that time, everyone suffered whilst PhillipCapital’s impact was minimised. “We were one of the fortunate firms that did not get involved in forward contracts at that time.” Mr Lim said.

“We did two forward contracts one to two years before that but stopped it, as we felt it wasn’t wise. How could we earn three percent per month from the other party while he pledges 100 percent of his scrip with you? Essentially, you are buying from him for today’s price and selling it back to him in six months’ time with an 18 percent mark-up, while slapping a 1.5 percent charge per side of the transaction.

This just meant we literally could just hold his scrip for six months earning about 21 percent. It didn’t seem right.” Added Mr Lim.

Most of PhillipCapital’s competitors then were making good money from doing this before the trouble hit the fan.

Mr Lim accredited PhillipCapital’s fortunate escape from such trouble to being “prudent”.

PhillipCapital’s Plans For Future Growth; Diversification

PhillipCapital has been speeding its own process of diversification. Mr Lim explained that this is why the group as a whole has been developing a more comprehensive reach to its customers in the context of Personal Finance.

The group’s Personal Finance encompasses more than just stockbroking. It also includes mutual funds, derivatives, futures, options, foreign exchange (FX), CFDs and financial planning.

Mr Lim expressed that ideally, PhillipCapital’s strategy would be to first diversify its range of offerings, and then bring this broader base of offerings overseas to provide customers a more comprehensive service.

Using Technology To Change Stockbroking

With the rise of technology, the natural follow up to it would be how to use it better to complement its business segments.

Mr Lim explained that there is a need for current stock brokers to change their mind-sets in the ways things are done. This means that the current way things are done are still done within the comfort zone, and this will be a problem if change doesn’t come.

Mr Lim added that in order to provide a more holistic approach to servicing clients, tools like social media or even internet of things can be integrated and complement PhillipCapital’s current product offerings.

“If the current way of servicing your clients can only reach about 200 people, why not use technology to help you reach thousands or even more?” Mr Lim concluded.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

Please click here for more information about this author.

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