Day One: Sharebrokers Fumble In The Dark

Sydney Morning Herald

Tuesday November 29, 2005

Anneli Knight

IT WAS a case of flying blind and playing with new toys on the stockmarket yesterday, as brokers had their first day trading without broker identification information.

In the biggest change to the stockmarket since trading went electronic over a decade ago, brokers and their clients grappled with the new system.

In a first for the market, firms were able to choose how much information they would reveal about their trading patterns to competitors and clients through their IRESS trading screens. This is the first time clients have been able to view any trading information directly.

But there wasn't a wide uptake of this option. Only Merrill Lynch, Macquarie Bank, CommSec and UBS made their market share data available with a 10 minute delay. Credit Suisse First Boston started by offering detailed information about buy and sell price and volume traded on each stock but reduced this to market share only by early afternoon.

Goldman Sachs JBWere Melbourne head of sales trading, Patrick Crabb, said while no one expected any disasters, there was a different feel on the trading desks.

"The market still functioned - there was just a large chunk of information that was wasn't available. The transparency and the level of market intelligence was materially lower," he said.

"It is a bit like flying a plane. You still have the instruments and the plane is still flying, no problems, it is just flying slow with less feedback."

Simon Twiss, an equity dealer at ABN Amro Asset Management, said people found it hard to kick old habits when they watched the James Hardie share price drop suddenly amid heavy selling.

"It was interesting when Hardies took that fall, people were asking who it was [selling], just out of habit, and no one knew," he said.

"Obviously your first reaction is [to find out] who is doing that to the stock, but now you can't tell."

It was a quiet day on the market with low volumes traded.

Brokers said this was probably due to the new system and a weak lead from the US.

Jamie Spiteri from Shaw Stockbroking said clients and brokers were hesitant about trading under the new system.

© 2005 Sydney Morning Herald

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