What is Online Trading?

I know online trading is very convenient. What is online trading?

sheena Asked on September 29, 2015 in Investment.
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Online trading refers to buying and selling of stocks over the internet. While trading is not limited only to shares, this is the market which is most volatile and exciting. Most online banking platforms today provide online trading services to allow investors to have better control of their funds unlike in the past where all transactions can only be done via a stockbroker.

Online trading is made possible with the introduction of the Internet in various financial services like banking and insurance, which is currently on the rise among users. The introduction of such technology has observed massive numbers of computer users who have slowly gained the confidence of using the internet to create business opportunities. Online trading is such that allows you to trade shares over the internet, very much similar to shopping online or paying your bills online.

The Kuala Lumpur Stock Exchange (KLSE) introduced the ECOS (Electronic Client-Ordering System) in 1995 which provides stockbrocking companies to direct their clients’ orders through to the exchange. They use a propriety system which is used by users to dial into the stockbroker’s system. This will require the stockbroking company to upgrade their systems to allow for such facilities to their clients. Once implemented, the clients can then check their stocks online as well as receive quotes and such. because of the fact that the internet uptake at that time was still low, the system did not gain the popularity that it has hoped to.

In Malaysia, you can trade only through a few licensed representatives or remisiers. Compared to the ECOS, you will not be able to send in your orders straight to the exchange, instead you will be inserting the information to the BFE (Brokers Front-End) system. The remisier or the broker will have to direct your orders to the exchange using the SCORE (Computerized Order Routing and Execution). Once there is a right price, the orders will be matched which then payment will be cleared using the SCANS (Security Clearing Automated Network System). To trade online, you must ensure that the broker and the remisiers are licensed by the Securities Commission, and that their trading facilities are approved by the Kuala Lumpur Stock Exchange.

Source: http://biz.advertising.com.my/online-trading.htm

haydenl Answered on September 29, 2015.
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