Defaulters face more exposure as brokers look to credit bureau

Business Times - 11 Jul 2008


Defaulters face more exposure as brokers look to credit bureau

Brokerages may join the bureau and share information on errant clients

By CHOW PENN NEE

(SINGAPORE) Regular credit card defaulters, or those with a poor credit history, already have trouble tapping banks for loans - as information about them is available with Credit Bureau Singapore (CBS). Soon brokerages may not want them as customers either - if their bid to join the Credit Bureau comes to fruition.

What's more, those who consistently default paying up on share trades might find it hard to raise credit elsewhere too. That is because by joining CBS, the brokerages will not just get a fuller picture of their clients' credit-worthiness, but they will share their own information about their customers with the bureau.

BT understands that 13 local and foreign brokerages represented by the Securities Association of Singapore (SAS) are keen on sharing data with the CBS. The CBS - which counts banks, credit card companies and other financial institutions as its members - houses data on credit-related information such as repayment histories, risks of default and demographics of the clients.

Sharing such information helps credit providers make better lending decisions quickly and more objectively. With a complete risk profile of a customer, credit providers are better able to determine the likelihood of the customer repaying, thus enhancing their risk assessment capabilities.

Lim Eng Hai, chief executive of SAS, confirmed the intention of brokerages to join CBS, telling BT: 'We're talking to the credit bureau. This (sharing of information) is something brokers are interested in.'

He added though, that it is not a done deal yet. 'We're still sorting out details, and have not made a decision.' He said there are still some issues to iron out, and that the SAS needs to find out what other requirements it needs to fulfil before joining CBS.

Getting a better insight into their clients' repayment history would be beneficial to brokers, he said. 'Stockbroking is the management of credit risk, and this will help us to access useful info to better assess credit risk,' Mr Lim pointed out. Currently, brokers do not have a platform where they share information on clients' credit-worthiness among themselves.

William Lim, executive director of CBS, told BT that negotiations have already reached a stage where the data to be shared by stock brokers has been laid down.

'The information that the brokerages can give us will include whether clients' accounts run into delinquencies, whether they are timely in their repayment of trades, the amount of trades, the aggregate number of trading accounts, and the aggregate contra loss amount.'

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