Today marks a historic day for the Irish Stock Exchange (ISE) as the Xetra electronic trading system installed by Deutsche Borse goes live in the Irish market. A long-awaited event, seen as the ISE at last entering the 21st century, the switch to electronic trading will enable Irish stockbrokers to offer online Internet trading facilities to customers; buy and sell orders will be executed more quickly and general liquidity is expected to improve.
Expectations for the Xetra trading system are high and it is widely anticipated that share dealing in Ireland will become much more fluid and rapid.
Linked to the Frankfurt market, the new system will automatically match orders entered by buyers and sellers. For retail investors its introduction should result in a fall in the charges for buing and selling shares becase competition between brokers is expected to increase and new service providers are expected to enter the market.
Furthermore, some of the larger Irish stockbrokers, including Davy and Goodbody, are expected to become market makers in all leading Irish shares. Indeed Davy Stockbrokers have announced that not only will they cut their minimum charge to clients for buying and selling shares from July, but will introduce a full Internet service at the end of the year and review its existing commission charges. With electronic trading not even up and running yet, trading in the ISE's shares already looks appealing.
Potential customers might find the prospect of lower charges an added factor in swinging them towards Irish stocks. The introduction of the electronic trading platform will allow brokers to bring in execution-only online dealing services which means customers will have a choice in how they deal with brokers. Because online dealing is a lower cost service the charges will be lower than existing dealing charges.
Undoubtedly the prognosis for the new electronic system is good. It is certain to attract new investors, thereby increasing business volumes generally, whilst some exisitng customers will no doubt be attracted to a less costly exectuion-only type service rather than the traditional and more expensive service.
ISE chief executive Tom Healy has high hopes for electronic trading and has commended Deutsche Borse, in setting up the system, calling the German group "extraordinarily efficient and effective".
In fact, he expects turnover in 2000 to be above last year's where 93 billion euros was traded in equities and 111 billion euros in government bonds. In enlisting Deutsche Borse to establish Ireland's system, Healy has brought in a group about to effectively take over the running of the London Stock Exchange's operations. Deutsche Borse is highly regarded and it will probably take only a short while before the results of introducing the Xetra sytem on the Irish market start to kick in.
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