The Internet is playing an increasing role in the lives of many South Africans. We do our banking on the Internet, we book air tickets and can even draft a will on the Internet! Small wonder, then, that more and more investors and share traders are choosing to trade in JSE-listed shares through the same medium.
According to Duncan Ingram, head of Absa Stockbrokers` Online Trading Service, online dealing volumes have rocketed since the company launched its new, upgraded trading site in April.
"Online trading accounts for about 35% of our regular business, compared with less than 20% a year ago. We see this moving to about 50:50 within two years," says Ingram.
While some investors and short-term traders prefer to phone their stockbroker and discuss the market before placing orders, there are many who simply want a convenient, quick and efficient order-placing facility. For the latter group, online share trading is ideal.
The growing popularity of online share trading also has to do with lower share dealing costs. "Absa Stockbrokers charges a flat brokerage rate of 0.4% of deal value, with a minimum charge of R120 plus VAT per deal," says Ingram.
"We`re the cheapest in South Africa for most deal values. We`ve positioned ourselves as a no-frills, low cost broker. Clients get an efficient trading platform and a top class settlement and safe custody service at relatively low cost. There are no safe custody fees, no basic charge per deal and no administration fee for clients who trade at least four times per year. That`s good value for money," he says.
Another attraction of online trading is the ability to place buy and sell orders at any time of the day or night. Orders placed outside of JSE trading hours are stored in the system and then implemented as soon as the market opens.
Ingram stresses that online share trading is not intended to replace traditional, telephone-based share trading. There will always be a place for the personal relationships that knowledgeable dealers develop with their clients.
"It`s a matter of horses for courses. Telephone trading is more expensive, but there`s a lot of added value in the one-on-one service. Online trading is hi-tech and impersonal, but it`s quick and efficient and you`ll save on share dealing costs. Take your pick," says Ingram.
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