BSE to introduce online trading
Isaac Pinielo | Monday October 27, 2014 17:00
Commencement of the project will be in 2015 and it is expected to be completed the following year.
BSE deputy chief executive officer Thapelo Tsheole said the objective of introducing internet trading is to further extend the functionality of the Automated Trading System (ATS) that was introduced in 2012 to enable investors both in Botswana and abroad online access to trading.
“Internet-based trading will allow investors in Botswana and abroad to place, buy or sell orders for financial securities with the use of a brokerage’s internet-based proprietary trading platforms,” he said.
With this platform, stocks and bonds can all be traded online. Investors can now enter orders directly online, or even trade with other investors, Tsheole explained.
This platform is a deviation from the traditional trading ways whereby investors had to call up their stockbroker and place an order via telephone or in person. The brokerage firm would then enter the order in their system which was linked to trading floors and exchanges.
Tsheole explained that with internet trading, one can place trades from the convenience of their home or office without having to speak to a live agent.
He added that access will be through stockbrokers who will be responsible for the orders placed via the internet trading platform.
He said the service provider for this platform will be selected through a public tendering process.
“Internet trading enhances the visibility of the market and provides investors access to the market notwithstanding limitations of space, time and geography,” he stressed.
However, he said this system is open to disadvantages and realities such as mechanical failures and over-optimisation and that processes can be put in place to minimise such downtime.
The use of internet-based trading is said to be the ‘in-thing’ for many developing stock exchanges. It is believed to improve the speed of which transactions can be executed and settled, because there is no need for paper-based documents to be copied, filed and entered into an electronic format.
But skeptics fear that this platform will increase the number of discount brokerages because internet trading allows many brokers to further cut costs and part of the savings can be passed on to customers in the form of lower commissions.
Leading brokerage firm, Motswedi Securities has indicated that the concept is new in this country and that they are not familiar with it.
“Maybe the BSE have already come out with a position paper on this and will be in a better position to give a more detailed and informed comment,” said Garry Juma of Motswedi Securities.
In 2012, the BSE also joined other exchanges on the continent when it shifted from the manual trading system to the new electronic one otherwise referred to as the Automated Trading System (ATS).
Both the internet-based trading and the ATS are anticipated to improve efficiency in buying and selling securities.