-  According to a recent article in StarBiz, Bursa Malaysia Bhd intends to fast-track the launch of its new trading platform, Bursa Trade Securities 2 (BTS2), to 2 December 2013. The new system was originally expected to go live in the first quarter of 2014.

-  Bursa had last upgraded its equities trading platform in December 2008. The BTS project, which cost ~RM100mil, was introduced as a replacement of the 18-year SCORE system. The launch back then had indicated the completion of the exchange’s integrated trading system, Bursa Trade, and provided market participants greater efficiency and transparency in executing their trades.

-  The group said that the IT transformation was needed as the current BTS is at its end-of-life and will no longer be renewed. The technology refresh will see the current NSC trading engine from NYSE being replaced with X-Stream iNET from NASDAQ OMX.

-  Although the exchange does not expect any changes to current market structure and trading practices save dynamic limits which cover all securities with the exception of IPOs, BTS2 has many additional functions which will be gradually brought to the marketplace. Besides dynamic limits, Bursa will be introducing two new order types, namely Stop Market and Stop Limit Order.

-  The group had in July 2013 improved its trading system by introducing new order and validity types such as Market to Limit Order, Fill and Kill, and Minimum Quantity, when keying in orders.

-  We concur with management’s view that the upgrade is appropriate given the availability of more advanced technology as well as the growing sophistication of domestic market participants. The new features will enable the players to execute more diverse trading and risk management strategies.

-  The earlier launch of BTS2 will signify the successful implementation of all initiatives under Strategic Intent 1 (SI1) of its 2013 Business Plan, i.e. to create a more facilitative trading environment. Other measures under SI1 include the widening the coverage of RSS and SBL (July 2013) and the launch of e-Rights service for investors (March 2013).

-  We maintain our BUY recommendation on Bursa Malaysia with an unchanged fair value of RM9.00/share. Our capex assumption of RM150mil for FY13F-FY15F has already taken into account the enhancement expenses, which we understand, will be spread over the next 2 years. 

Source: AmeSecurities