See More Do More. Bursa Trade Securities

An interesting change is about to take place in the Malaysian securities market. On 01/12/2008, Bursa will be running a new trading platform called Bursa Trade Securities.

More transparency? Less market manipuation? Only time will tell.

"See More Do More...Bursa Trade" that is the new marketing tag line for Bursa Trade. To "see more" go to www.bursatrade.com/

Anyway here's the Bursa Malaysia Press release (with highlights added) :

BURSA TRADE SECURITIES TO OFFER MORE TRADING OPPORTUNITIES FOR INVESTORS.

Bursa Malaysia’s new trading platform enables greater accessibility, efficiency and transparency.

Bursa Malaysia today announced the introduction of Bursa Trade Securities, a new trading platform for the securities market, which is targeted to be operational on 1 December 2008. The launch of this trading platform marks the completion of the exchange’s integrated trading system that will provide greater accessibility for both local and international investors, as well as enhance trading efficiency and transparency in the market

The launch of the new system on 1 December 2008 is subject to a successful Pre-Live implementation test with market participants scheduled for 29 November 2008.

The first phase of Bursa Trade was implemented in 2006 for the derivatives market. Bursa Trade, powered by NYSE Euronext Advanced Trading Solutions, underlines Bursa Malaysia’s commitment to enhance and upgrade its infrastructure and technology as part of its ongoing efforts to achieve an efficient marketplace.

Bursa Malaysia Berhad’s Chief Executive Officer, Dato’ Yusli Mohamed Yusoff said, “Global exchanges are leveraging heavily on technology to offer greater speed, access and control in trading. As our marketplace progresses in tandem with global market demands, this system’s new and improved features will allow market users and investors access to more trading opportunities.”

Some of the key features of Bursa Trade Securities are as follows:

Theoretical Opening Price (TOP)

Investors will be able to have ‘viewing ability’ of the theoretical opening prices for each stock under the pre-opening phase from 8:30am until the market opens for trading at 9am, as well as in the second session. The pre-opening price process enables real-time calculation of stock prices for first matching at opening phase. This allows investors to gauge market sentiment and prices better as the pre-opening period is made transparent. This is particularly useful for new listings.

Theoretical Closing Price (TCP)

This transparency of trading extends to the moment the market is about to end for both the first and second trading sessions. The theoretical closing price feature promotes natural discovery of closing prices for each session.

Trading At Last (TAL)

The last 10 minutes of each session will provide traders with the opportunity to close their positions. Matching will take place at a fixed price which will be either the last done price or the theoretical closing price.

Continuous trading

Bursa Trade Securities enables real-time and continuous matching of orders compared to 10 seconds matching under the current system. This makes the online trading experience faster and much more responsive.

Five best price limits

Investors would find this feature beneficial as it provides them with a clearer picture of market depth. The five-best price limits give investors more control of their trading decisions as opposed to the three-best price limits that is offered by the current system.

Odd Lots Settlement

Investors will now be able to do partial matching for odd lots which makes it more marketable. Odd lots can be partially matched based on price time priority.

Final Settlement Price for FKLI and OKLI

The implementation of Bursa Trade Securities will also have an impact on the derivatives market. There will be a change in the calculation of the Final Settlement Price (FSP) methodology for the derivatives products carrying the Kuala Lumpur Composite Index (KLCI) as the underlying instrument. The products affected will be the KLCI futures (FKLI) and the KLCI options (OKLI). This new methodology makes it less susceptible to market manipulation and smoothens out price volatility.

“Bursa Trade Securities is a scalable platform which can support future initiatives and innovative products such as multi- currency products. The introduction of Bursa Trade Securities will also enable the implementation of Direct Market Access (DMA) for equities which should be operational next year,” Dato’ Yusli added.

Dato’ Yusli also emphasised the exchange’s commitment to responsibly managing the implementation of this new trading system. Bursa Malaysia had carried out numerous user acceptance tests of Bursa Trade Securities with market participants since the beginning of this year in order to ensure that they were familiar with the new features.

He added, “As with any new technology and system implementation, there are inherent risks involved. We have put in place measures to ensure a seamless conversion to the new trading platform and to minimise any trading disruptions.

“Nevertheless, if an unexpected disruption should occur, as is the case under the current system, there are two possible resumption scenarios. If a major disruption occurs before the start of the trading day, Bursa Malaysia will be able to resume trading within the same day. If a major disruption occurs during the trading day, trading is expected to resume the next business day,” he concluded.

........................................

Side Comments : Perhaps Bursa should also implement shorter trading hours in this bearish trend. Shorter quality trading hours would be a more cost effective option.