By David Ingham
Bahrain-based e-broker says its 'direct access' approach gives online traders a better deal by letting them trade equities directly on US stock markets.
Competition in the Middle East's e-brokerage market is intensifying with the launch of a 'direct access' service from Taibdirect.com.
With a direct access service, buyers of equities deal directly with US stock exchanges, instead of their trades being routed through a third party broker. According to proponents of direct access, this means trades can be transacted almost instantaneously, and can continue beyond close of play in the after hours market.
“Today, investors from the Gulf are extremely discerning and selective and deserve and demand the best and the fastest methods of service, and we are excited about being able to offer them the capability to trade on-line in the real sense, and obtain instantaneous live responses,” said Iqbal G. Mamdani, vice chairman and chief executive officer, TAIB Bank. TAIB Bank has launched Taibdirect.com under its TAIB Securities subsidiary.
The way that online trades are executed is currently a subject of much debate in the USA. Normally with an e-broker, a trade is routed to a third party broker once a customer presses the 'trade' button. The third party broker is then responsible for making sure that trade takes place.
According to critics of this model, these third party brokers can sometimes drag their feet making trades after a customer's order has come in. The result of this can be a gap between the price the customer wanted to transact at and the price at which the trade was actually done. All clear?
With direct access to stock exchanges, there's no such lag. On the other hand, transaction charges with a direct access service can be far higher than the meagre charges levied by big e-brokers.
Yet another thing for ordinary members of the public to have fathom out.