By GEOFF SENESCALL
Brokers are brooding over a Stock Exchange initiative to develop its own online trading system for the public.
Several question whether the exchange has the mandate from its broker members to introduce such a system, especially when firms have already invested heavily in their own equipment.
One such firm is
ASB Securities, which is at the forefront of online broking.
"If you are spending money developing a system yourself, should you then also be subsidising your competitors and paying for a generic system for them as well?" said managing director Tim Preston.
"This is something between ourselves and the exchange and you can be sure we will be taking it up directly with them."
The issue came to a head after the exchange held meetings nationwide to familiarise brokers with its plans.
Several institutional brokers from the large houses came away from the Auckland meeting last week furious about the initiative.
Because of the sensitive nature of the exchange's proposal, no one was willing to speak on the record.
Apart from the issue of using members' funds to develop a system, the main concern was over how controls would be administered once the public were given trading access.
Once someone registered through a broker, there would be no control over what the client did, but the broker would still be responsible.
Brokers also wanted to know how issues such as insider trading would be monitored.
Exchange managing director Bill Foster said he was comfortable with the feedback.
"Until you start talking with everybody you don't see what their worries are.
"Every time anything new comes along there will be some people who feel worried about the impact it might have on their business.
"The use of modern technology to improve access to markets is a constant concern to brokers, because it has the potential to both enhance and destroy their businesses."
The system could be working by October.
