NZ Exchange ponders Net trading issues

The New Zealand Stock Exchange is investigating ways to enable stock trading through a member firm via the Internet. However, NZSE information systems manager Wayne Zander says the exchange is taking a cautious approach and will not rush into Internet technology unless it is required and adds value. Currently the Exchange uses the Internet only to transfer investment information.

The New Zealand Stock Exchange is investigating ways to enable stock trading through a member firm via the Internet.

However, NZSE information systems manager Wayne Zander says the exchange is taking a cautious approach and will not rush into Internet technology unless it is required and adds value.

Trading over the Internet is viewed in the US as a major growth area, with some brokerage houses already using the Net to conduct online trading, allowing customers to buy and sell investments, ask investment questions and read investment news.

Zander says only investment information is being provided in New Zealand over the Internet - there is no trading.

However, the stock exchange is carrying out a strategic review looking at many areas of business, including access and globalisation. As part of the review it is investigating enabling investors to go through a member firm via the Internet. The review should take until the end of this year.

"We're looking at producing multi-tiered trading systems with different qualities of access at different prices, for different people."

Zander says the Internet makes it easier for to access exchanges overseas.

"It has globalised exchanges whether they like it or not. It's also enabled investors to have low-cost, global access to other markets as well. The investors are on the big win side."

Australian Stock Exchange spokesman Rory Collins has said the Internet is an ideal medium for stockbroking and will increase in importance in future. Zander says the NZSE is monitoring what the Australian Stock Exchange is doing.

"We're looking to adopt the things that make sense for us and the market in general. But we're not going to jump into the Internet just because it's a 'great thing'."

Zander doesn't believe the Internet will become a major part of trading, but a technology for enabling access.

He says if someone wants advice on making portfolio changes then they still have to speak to a person.

"But, some people may look in the papers and do it themselves and play with their parcel of money. They would think it (the Internet) was great."

Zander says it is up to the NZSE's member firms whether to become involved.

He says the quality of the settlement is important and needs protecting.

"If they (member firms) do trade for you, it will be delivered. If you start allowing retail access, do the people participating have the shares and the money? How do you guarantee settlement will occur?"

He says if someone puts in an order that changes the market, it is pushed out to all the other trading screens "within a few milliseconds."

"The question is, how can you have that sort of quality delivery over a public system like the Internet? You probably can't."

The globalisation means the NZSE has to be price competitive and provide quality, or it can lose business.

"Ultimately, if we don't have a good low cost, quality market then we will probably end up out of business - but that's not what we're anticipating."

He says the NZSE faces competition in several areas, including listings.

"To have a quality market you have to have stock that the market wants. We compete internationally for listings of our own New Zealand companies."

He says globalisation does concern the exchange, but it has done a lot to make it an internationally respected market.

"It's a different world to what it was five years ago."

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