The Sunday Leader

Rs. 500 Mn. Worth Of Day Trading Wiped Out

As Doubts Over Vendor’s Competency In Installing Front End Systems Emerge
Day trading in the Colombo bourse has died a natural death with the advent of a new automated trading system (ATS) instituted on February 24, which has merged the previous odd lot board with the main one.
As a result, day traders, who are mainly retailers, fight shy of placing quotes on the main board, fearing that the pickings made by investors on either “buy” or “sell” orders made by such day traders would be few and far between as the “minimum lot” (100 shares) criterion has been taken away under the new regime, with the merger of these two boards, thereby nullifying their trades.
Under the new system, a buyer has the freedom to just pick out a handful of stocks on offer for sale, rather than the total quantity on offer, or, for that matter a minimum number of 100 shares that the investor was mandated to buy as had been the case previously, to fulfil his portfolio requirements, which may number only a few shares, at the expense of scuttling the seller’s expectations.
The broker community has protested to the Colombo Stock Exchange (CSE) in regard to this lacuna created by the new ATS, with the CSE in reply saying that a policy decision will have to be taken to make the desired changes.  However, CSE as a matter of principle encourages day trading activities, usually indulged to by retailers.
But, as a result of this merger, daily turnover worth Rs. 500 million in good times has been lost due the absence of day traders who feel that their objectives will not be fulfilled under the new ATS regime, the source said. Questions are being raised as to whether the vendor of CSE’s new trading platform has had prior experience in initiating front end trading platforms, such as the one installed at the CSE on February 24, before, ie in other markets?
If not, brokers are asking the question on what basis was that particular vendor selected to implement such a front end new trading platform, at an unknown cost?
Is not the regulator accountable for actions of omission and commission committed by it?

1 Comment for “Rs. 500 Mn. Worth Of Day Trading Wiped Out”

  1. Rohan

    How is taking away day traders a Bad thing for a stock exchange? Day traders BY DEFINITION are not value investors (they are, as the name implies “day traders – by and sell with very short term thinking) so there’s no loss of Value in taking away their incentive to trade. The value of taking out day traders creating artificial bubbles is much higher than Rs. 500 Mn. And FYI, Rs. 500 Mn in good times is just trading volume, which is in no way related to the value they created. If I bought Rs. 500 Mn and then sold Rs. 500 Mn in one day, I have generated Rs. 500 Mn in turnover. Created Zero (Rs 0.00/=) of value. This is a highly misleading article.

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