Can BDM bring investors on line?

Plans for Internet service receive mixed reactions

By Aleksander Nowacki

In what some market watchers see as an attempt to attract new business and retain their existing clients, the Beskidzki Brokerage House (BDM) has launched a new Internet service allowing domestic investors to play on the U.S. and German stock markets. The offer is initially restricted to stocks alone, but if it is deemed a success by the brokerage, it will eventually include derivative instruments.

This comes on the heels of Internet Brokerage House (IDM)'s deal with BrokerCreditService of Novosibirsk, Russia, which would give Polish investors access to the Russian stock exchange - the best-performing exchange in the world this year. Dimitri Y. Karasev, international marketing manager at the Russian company, described the project as being at "an advanced stage," and said that he hoped it could be made operational by the end of the year.

According to Bartosz Dziemaszkiewicz, deputy president of the Individual Investors Association (SII), opportunities to invest on the world's largest markets have long drawn the interest of the association's members. "It's a symptom of the condition of the domestic market at present," he said. "(The market) has become increasingly claustrophobic for investors, as only a few stocks are liquid. Starting an Internet service is a natural development and a step in the right direction."

Although, as Dziemaszkiewicz pointed out, some investors have already taken advantage of the opportunities to invest abroad through foreign-language Internet portals, Dziemaszkiewicz expects other brokers to go down the same path. "It is difficult for brokers to attract new clients, as there are no spectacular IPOs in sight," he said. "I'm convinced other brokers will take up the initiative."

Władysław Kraus, clearings specialist at BDM and the person responsible for the project, is convinced that the new service can attract investors. "The language barrier is still an important consideration for many of our clients," he said. "Few investors speak English or German well enough to feel comfortable on those markets."

Kraus accepted that the firm would be unable to attract those investors who had already taken advantage of the existing opportunities. He expressed hope that "since the domestic market is showing signs of an approaching bull, the same may well happen on the world's leading exchanges."

Zbigniew Piekarski of Global Portfolio Management was less optimistic about the venture's chances. His predictions of future trends on the markets were much less upbeat than Kraus's, and he said that those who invest abroad "are going to lose a lot of money."

"They (the U.S. and German markets) are traders' markets," he explained. "Local investors don't have the same mentality." He went on to criticize the timing of the introduction of the service, saying that "summer is the worst time to do this sort of thing."

BDM did not dispute this criticism. "The implementation process took a very long time," Władysław Kraus said. "Once we'd managed to surmount all the obstacles in our way, we did not want to wait any longer."

The project does not require any significant investment on the part of the brokerage, as it will involve co-operation with foreign brokerage houses' research operations. Yet it is the help offered by the brokerage's employees that is said to be a big incentive for investors to switch to the new service.

So far, however, investors have not been rushing in.

"We can't say that there has been a lot of demand for the service as yet," Kraus said a week after its introduction. "But it's still very early in the day. We'll be able to draw preliminary conclusions at the end of the year."