Unified Southeast Asian stock trading system:
The Asian Board
By Jon Fernquest |
Today's Bangkok Post business covered the efforts being made to draw together the leading stocks of Southeast Asia into a single regional trading system called the "Asian Board."
Here is the article in full:
Asian Board close to reality
180 top securities from six marketsNUNTAWUN POLKUAMDEE
Wednesday April 02, 2008
A regional securities board is becoming closer to reality under plans to set up a 180-stock Asian Board comprising the top 30 stocks from six Asean countries.
Nongram Wongwanich, the chief operating officer of the Stock Exchange of Thailand, said the new Asian Board would include the markets of Thailand, Singapore, Malaysia, the Philippines, Indonesia and Vietnam.
She said Thailand would nominate the top 20 stocks in the SET50 index, as well as another 10 based on market demand.
Mrs Nongram declined to say when trading could actually start. Details regarding trading platforms, clearing and settlement procedures, taxation and commission treatment also have yet to be finalised.
The programme is expected to initially involve securities from the SET, the Singapore Stock Exchange, the Bursa Malaysia and the Philippine Stock Exchange. Indonesia and Vietnam are also expected to participate in the future.
Mrs Nongram said working committees in each country were now finalising details on trading platforms.
Once each country finalises its securities for the Asian Board, it is expected to take another six months to establish common gateway systems to link trading information from each participating market with local brokers.
"At the moment, there are no obstacles about time zones as we are all in the same region," Mrs Nongram said. "Currencies are an issue. But the trading platform will convert currencies into the local unit for each country."
Mrs Nongram said transaction costs would likely be higher through the Asian Board than if investments were made directly.
"But for retail investors, it certainly will be more convenient to invest overseas through this channel," she said.
A similar concept used in the Scandinavian countries showed a 60% increase in trade after three years, Mrs Nongram added."We have talked for many years about an Asian securities board, but the plan has always collapsed once discussions began on trading platforms and capital flows," Mrs Nongram said.
"Now, Thailand and other countries have eased their rules on capital flows, and we have found vendors that can facilitate the transmission of trading information across the [markets of] participants to help the process."
Mrs Nongram said local investors seeking to trade Asian Board securities would do so through their local brokers.
The SET board has already approved the regional trading plan. The exchange will hold talks with local brokers to discuss the implications of the cross-border trading platform, including the possibility that foreign trading volume could decline directly if investors seek to trade through the board.
"We think this is a good opportunity for Thai investors to invest overseas, and gain exposure to high-growth industries that the Thai market lacks, such as the palm oil industry," Mrs Nongram said.
In the future, the Asian Board could include new products, such as equity indices, she added.
(Source: Bangkok Post, business section, page B2, 02-04-08, temp-link)
Vocabulary:
close to reality - soon to exist
becoming closer to reality - approaching the time when it exists
X comprising Y - X includes Y
SET50 index - an index with the most important Thai s(See Wikipedia on the SET 50 and SET 100 Indexes)
a computing platform - a combination of software and hardware used to run a computer system, for example a computer gaming platform, a mobile phone platform, an operating system platform, or software platform (See Wikipedia)
a trading platform - the combination of software and hardware used for trading on a stock exchange
clearing and settlement - calculating the number of shares and money changing hands in a transaction and then arranging for the transfer of money and shares
a commission - the percentage of a sale that a salesman gets from making a sale
Stock Exchange of Thailand (SET) - the national stock exchange of Thailand located in Bangkok (See Wikipedia)
Singapore Stock Exchange - See Wikipedia
Bursa Malaysia - Malaysia's national stock exchange located in Kuala Lumpur (See Wikipedia)
Philippine Stock Exchange - the national stock exchange of the Phillipines located in Manila (See Wikipedia)
common - shared
common gateway systems - the computer connecting two countries, shared by the two countries
obstacles - things that cause difficulties, problems to overcome
time zones - a region of the world that shares the same time (See Wikipedia and list)
a channel - a vehicle or way of getting something done
invest overseas through this channel - invest in a foreign country using this way
facilitate - help, make something easier (See glossary)
the transmission of Y from A to B - sending information Y from place A to place B
facilitate the transmission of trading information - help send trading information between places
implications of X - possible future positive and negative effects of X, problems caused by X
cross-border - between different countries, across their borders
implications of the cross-border trading platform - what might happen when people can use this new and improved way of trading shares across national boundaries
gain exposure to high-growth industries - include high-growth industries in an investment portfolio
a stock index, an equity index - a weighted average of stock prices used to measure the average value of stock prices in a certain group of stocks, for example from a country, an industry, or a region of the world (See Wikipedia and a list of stock market indexes)
