The Philippine Stock Exchange is ready to pilot-test in the next few weeks an online trading platform for trading participants that aims to harness technology to widen investor base in the country.
In a briefing, PSE president Hans Sicat said the exchange was expecting to recover its cost from the rollout of the trading platform “in three years or less.”
“It’s in full development right now. In the next few weeks, the first batch of eager participants will get their demo terminals,” Sicat said.
To date, most trades in the country are still done through phone calls or physical interaction with stockbrokers or agents. The new PSE program, called Online Service Bureau (OSB), seeks to take advantage of the Internet and the continuous growth of online transactions by allowing investors to place their orders to brokers online.
The OSB will act like a facilitator/aggregator for a technology provider, allowing broker-dealers the capability to offer an online platform to their clients at a much lower price than if they were to develop their own online trading IT solution.
With such a program, the PSE seeks to become an “enabler” in widening investor base. The PSE expects to recover its cost in three years or less on the assumption that the new platform could hook up at least 5,300 active online traders.
The exchange plans to offer tiered products, with the most basic trading platform available at a lower cost to subscribers who have the option to upgrade to additional services.
Sicat said the program would seek to attract a “new breed” or a new set of clients outside of those trading under the platforms offered by brokerage houses with such capability.
There are 10 to 15 trading participants or a small minority of 133 active brokerage houses that have developed their proprietary online trading platform, including CitisecOnline.com, First Metro Securities, 2TradeAsia.Com and BPI Securities.
Last May, the PSE signed an agreement with N2N Global Solutions Sdn. Bhd. (N2N), a wholly owned subsidiary of Malaysian-listed securities trading solutions provider N2N Connect Berhad, to promote online trading and direct market access to trading participants.
N2N will provide the software solution that will allow the PSE to offer 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.
Online investor accounts in the Philippines grew 48.4 percent in 2011, following a 26-percent increase in 2010 and a 47-percent jump in 2009. The surge to 52,750 online accounts last year, from 35,559 in 2010, was spurred by the double-digit annual growths in the online accounts of nearly all brokerages with online capabilities.