Online Trading – What’s going on?
You may have read the IRESS press release recently that announced a new data and trading integration with NEX Exchange. This enables electronic trading between brokers and market makers, improving the speed and efficiency of trading NEX Exchange listed equities and opening the door for online trading to investors.
That is very good news and has been in place for several weeks. Brokers and market makers have reacted very positively to this development and are supportive of delivering greater automation where it suits business models.
So when will investors reap the benefits of more efficient lower cost trading?
The efficiency delivered to the trading community should have a knock on effect to the investor community. Online trading could reduce costs and open up investors to the benefits of the online functionality with current offerings. However some brokers already offer very competitive voice trading and online trading is not necessarily the only driver of keen pricing. It’s a matter of shopping around to find the broker that offers the services an investor requires at a price they are happy to pay.
I want online trading now, why is it taking so long?
There are many challenges that face our broking community and unfortunately “switching on” NEX Exchange listings in current online trading systems is a considered development that requires prioritisation, scheduling, implementation and testing before go live.
The most important consideration is ensuring that systems have “safety nets” in place to protect clients. Automation does remove risk in many areas but brokers need to ensure that investors are protected from system failure and from actions that may cause extreme market reaction resulting in trades being filled at unexpected prices.
Finally for many brokers their infrastructure requires further developments from third party providers so they don’t directly control the timelines.
There are two brokers that have online trade order and fill reporting for investors. There is still an element of manual intervention and this will continue until they are satisfied that they have ironed out technical issues and have fully tested their systems.
Other brokers are in the process of adding NEX Exchange to platforms and will roll out when they are satisfied that systems are fit and ready for purpose.
Who are these brokers?
It is important to respect our trading community and when brokers announce updates we will post them on our website but in the meantime if you are an investor please discuss your requirements with brokers directly.
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