15 May 2012
New stock trading platform allows Algorithmic trading tool
Algorithmic trading (algo trading), a tool used by institutional investors mostly in the western financial markets, will be an option to investors trading shares on Bursa Malaysia.
Bursa Malaysia requires all stockbroking companies to migrate their trading platforms to be able to be compliant with the stock exchange operator's Direct Market Access (DMA) gateway to an extended deadline of September 2012.
This new trading platform that will eventually be adopted by all stockbroking companies in Malaysia will allow an option of shares trading by automated pre-programmed decisions or also known as algo trading which will take the emotional factor out when buying or selling shares on the stock market.
“Many institutional fund managers (globally) rely on algo trading.
“This takes away the emotional factor from people to decide on what to do with a big position (in a stock) whether to take or give (sell) it to the market. “Retailers are still very much intact and very much acting on sentiment while big traders use machines so that they won't act on sentiment,” said N2N Connect Bhd's MD Andrew Tiang.
TA Securities Holdings Bhd, a wholly owned subsidiary of TA Enterprise Bhd said it was the first stockbroking company to comply and adopt this new system locally.
ACE market listed N2N Connect is the technology partner for TA SEcurities to implement their TraderConnet Pro infrastructure so that the latter can comply with Bursa's DMA.
Tiang said that this could be a growing trend in Malaysia and estimated that about 50% of all trades in financial markets today employed the algo trading style. He added that the old system called WinSCORE Broker Front End (BFE), which was targeted to be phased out by Sept 2012, was not compliant with algo tradsing because of the absence of an external open interface and speed.
TA Securities said in a press release that stock market trades could now be executed much faster than before with orders being entered directly into Bursa's trading engine, instead of indirectly via the BFE interface.
“The platform also facilitates new trading instruments or strategies such as good-till-date orders, block trading and algorithmic trading as well as offers advanced trading tools and charting services for the broking house and for individual traders,” TA said.
TA Enterprise's MD and CEO Datin Alicia Tiah said the company might save as much as RM500,000 per branch with the adoption of this new trading platform because the company does not have to spend as much on maintenance costs.
“We won't have the server which is very costly to maintain. We also target to open new branches from the seven that we have at the moment,” Tiah told journalists at the launch of the electronic trading platform yesterday.