How to Trade Shares or Stocks in Bursa Malaysia

Bursa Malaysia new trading system (also known in the industry as BTS or Bursa Trade Securities) will go live on 1st December 2008.

Pro Trade Shares was informed that Bursa did the last familiarity testing last week on 15 November 2008. All stockbrokers have received circulars for any contigencies whereby Bursa will revert to SCORE if on the first day of trading if BTS goes down. Pro Trade Shares will present a series of posts to explain what are the changes involved with the new Bursa Trading System.

Basically, Bursa is changing its trading and matching system. The feel and look of the screen with brokers BFE (broker front end) will not be drastically changed. However there will be some additional information presented. Over the last 2 years all remisiers or dealer representatives has been told to upgrade their PC to use Windows XP with specific monitor resolution in order to display the additional informations in their BFE.

For this posts I will briefly explain the differences between the existing (and soon to be referred to as the old system) and the BTS.

Present system:
Order Matching : 10 seconds interval (yes that long!)
Pre-opening price : Not predictable or Non transparent
Closing price : Uncertain, can be manipulated and its the last done price
Order type : Only has market order and limit order type
Best price : show 3 best price for buy and sell order

BTS
Order matching : REAL TIME !
Pre-opening price : predictable / transparent (there is a formula)
Closing price : predictable / trading at last
Order type : more order types
Best price : 5 best price

As you can see above, there are some differences. The first is the matching time. Many people don’t know that the matching time is 10 second interval. Some people’s order will take the maximum 10 second if his/her dealer’s representatives key-in the order immediately after the last matching was done. Some people will see their order matched immediately if the dealer’s representative (DR) input their order 1 second before the matching interval. With BTS your order can match immediately if there is a corresponding seller or buyer at your requested price. That’s the Pro.

The Con is that in the current old system, you can still amend or cancel your order from the queue if you changed your mind but with BTS, your order might be matched before you can even pick up your phone to call your DR to amend or cancel your order.

The current algorithm for pre-opening will give unpredictable opening price of the counters and the current system also allow manipulation of the last done price (ie. the closing price). A good trader can easily ‘force’ a higher or lower closing price by taking the buyer or seller price.

In the next few postings Pro Trade Shares will explain how the mechanism of deciding the pre-opening and trading at last price so either subscribe to my RSS or visit us regularly for the updates.

News Alert Date: 3 July 2008 (10:00am local)

Bursa Malaysia experienced major system failure this morning.

All brokers were not able to lock into Bursa server to start their Broker Front End (BFE) trading system.

Some broker managed to start the system this morning but it went offline soon after.

Bursa has issued a press release that all trade order input or key into BFE will be cancelled (ie. null and void).

In the same press release, all trading for the first or morning session will be suspended.

I believe this is the first time in many years (as far as I am aware) that Bursa has experience total system failure. Normally their backup system will kicks in which still allow trading but at a slower matching session.

This is a major concern. Will the same thing happen when Bursa go live with their new Broker Trading System (BTS) in later part of next month?

This month will be the last time that user acceptance test (UAT) for all dealer’s representatives before BTS roll out.