The Philippine Stock Exchange plans to roll out in three months the basic module for an online trading service to trading participants, an initiative meant to make equities a more accessible asset class especially for retail investors.
This developed as the PSE signed an agreement with N2N Global Solutions Sdn. Bhd. (N2N), a wholly owned subsidiary of listed Malaysian securities trading solutions provider N2N Connect Berhad, to promote online trading and direct market access to trading participants.
“There has been a lot of interest,” PSE president Hans Sicat told reporters Tuesday. “It will be a complementary service.”
N2N will provide the software solution that will allow PSE to offer the following services: online trading for trading participants’ clients who want to execute and monitor their own orders; trading terminal for dealers/traders and more sophisticated clients; and direct market access with automated order-taking facility and algorithm trading for those who want fast execution of orders.
Through the direct market access facility, a client of a trading participant will be directly connected to the trading engine of the exchange and will experience lower trade latency. This, in turn, will eventually open up the market for high-frequency trading, which uses algorithmic and similar strategies and accounts for 30 percent of trading in some markets in Asia and even as high as 70 percent of trading volume in the United States.
“One of the key elements in our strategy to increase retail investor participation in the market is to promote online trading which has proven to be the fastest-growing investor segment in the country. Through this facility we are acquiring from N2N, we hope to resolve some of the barriers to brokers in providing online trading to their clients,” PSE president Hans Sicat said.
“The solutions provide PSE with a unified platform to connect more effectively with its trading participants, with the added advantage of having opportunities to connect with exchanges overseas. The PSE can improve risk management for itself and its trading participants, who can also access advanced tools to give them advantages in securities trading,” N2N Group managing director Andrew Tiang said.
Online investor accounts in the Philippines grew by 48.4 percent in 2011, following a 26-percent increase in 2010 and 47 percent in 2009. The surge to 52,750 online accounts last year, from 35,559 in 2010, was spurred by the double-digit annual growth in the online accounts of nearly all brokerages with online capabilities. Of the total online trading accounts, 99.8 percent were retail online accounts while the remainder represented institutional online accounts. Local accounts accounted for 97.4 percent of total online accounts at the Exchange while the rest were foreign online accounts.
N2N Connect’s key management has been involved in the information/communication technology industry for more than 30 years with 12 years of expertise in the financial industry.
N2N Group has operations in Singapore, Malaysia, Saudi Arabia, Kuwait, Vietnam, Hong Kong and Indonesia.