Bursa Malaysia Bhd
(Oct 16, RM7.91)
According to a recent article in a local daily, Bursa intends to fast track the launch of its new trading platform, Bursa Trade Securities 2 (BTS2), to Dec 2 this year. The new system was originally expected to go live in the first quarter of 2014.

Bursa last upgraded its equities trading platform in December 2008.

The group said the transformation in information technology is needed as the current BTS is at the “end of its life” and will no longer be renewed. The technology refresh will see the current NSC trading engine from NYSE being replaced with X-Stream iNET from NASDAQ OMX.

Although the exchange does not expect any changes to the current market structure and trading practices, save dynamic limits which cover all securities with the exception of IPOs, BTS2 has many additional functions which will gradually be brought to the marketplace. Besides dynamic limits, Bursa will be introducing two new order types, namely the Stop Market and Stop Limit Order.

In July 2013, the group improved its trading system by introducing new order and validity types such as Market to Limit Order, Fill and Kill, and Minimum Quantity, when keying in orders.

We concur with management’s view that the upgrade is appropriate given the availability of more advanced technology as well as the growing sophistication of domestic market participants. The new features will enable players to execute more diverse trading and risk management strategies.

The earlier launch of BTS2 will signify the successful implementation of all initiatives under Strategic Intent 1 (SI1) of its 2013 Business Plan, that is, to create a more facilitative trading environment.

We maintain our “buy” recommendation on Bursa with an unchanged fair value of RM9 per share. Our capital expenditure assumption of RM150 million for 2013 financial year ending Dec 31 (FY13) to FY15 has already taken into account the enhancement expenses which, we understand, will be spread over the next two years. — AmResearch, Oct 16

This article first appeared in The Edge Financial Daily, on October 17, 2013.