It was only a matter of time until retail investors were offered an online foreign exchange trading service in Asia. Standard Chartered, SG - the investment banking arm of SociTtT GTnTrale Group - and most recently ANZ Bank have already created online foreign exchange sites that allow the trading of spot transactions, currency swaps and currency forwards by corporate treasurers.
Now retail investors in Hong Kong can execute trades in real time on their own PC. SG and FIMAT have announced the launch of a free 24-hour, internet-based foreign exchange margin-trading service called eFXtrade. FIMAT is an institutional and private investor commodities broker, a wholly owned and independently managed subsidiary of the SociTtT GTnTrale Group.
With eFXtrade, real-time foreign exchange prices are quoted on screen and trades confirmed in a few seconds. Positions can be monitored and updated in real time. Retail investors of eFXtrade can trade on a leverage of 12.5 times of equity and there is a margin requirement of 8% of opening position.
SG's head of Asian Forex and Derivatives Sales, Vincent Lauwick, hails this as the first of its kind for retail investors in Asia. But such products are viable only if there is a market for them, and the research shows that there is potential. International Data Corporation research shows that 15% of the HKSAR population was connected to the internet at the end of 1999, and the annual growth rate for this statistic is estimated to be between 35% and 45%.
In addition, "Hong Kong is probably the oldest market for this type of product [margin trading] in Asia, where the retail investor is mature and knowledgeable," says Nelson Wong, general manager of online foreign exchange trading at SG. "There is no need to educate the customers on the product. eFXtrade will only enhance access to the markets with technology and information only previously available to professional traders."
Not quite. Retail investors can only trade on SG-quoted currency pairs, though traders can monitor market quotes provided by Global Treasury Information Services.
Further, launching such a product in the face of Asian market volatility doesn't seem to faze Wong: "The beauty of the system is that it offers customers control over the trade through different types of orders such as limit, stop, one cancels the other to preset your risk tolerance."
Looking ahead, eFXtrade aims to add more services, including forward and options trading, to its list, and to expand to Taiwan, Singapore, Australia and Japan within the next 12 months.
