The Irish Stock Exchange will change over to electronic trading tomorrow in a long awaited move which will allow Irish stockbrokers to offer online Internet trading facilities to customers. The trading floor of the exchange in Anglesea Street closed for the last time on Friday evening. From tomorrow morning trading will be carried out through a screen-based system. Brokers will be able to execute buy and sell orders more quickly and liquidity is expected to improve.
The new Xetra trading system is linked to the Frankfurt market and will automatically match orders entered by buyers and sellers. Following the introduction of the electronic trading platform, some of the larger Irish stockbrokers, including Davy and Goodbody, are expected to become market makers in all leading Irish shares.
Under this system the brokers would take a position in the shares and provide bid and offer prices for buyers and sellers. This will further improve the liquidity of the Irish market. For retail investors the introduction of the new electronic system should result in a fall in the charges for buying and selling shares because competition between brokers is expected to increase and new service providers are expected to enter the market. 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.
This should increase business volumes as more consumers are expected to be attracted into the market, but it also means that some existing customers will be attracted to the execution-only type service and away from the traditional and more expensive service. Davy Stockbrokers has announced it will cut its minimum charge to clients for buying and selling shares from £60 (€76) to £20 per trade from July. In addition it is planning a full Internet service from the last quarter of the year and is reviewing its existing commission charges. Other brokers are expected to follow in coming months.
