Securities firms cooperate on transaction network

ItÆs a B2C system with a B2B spin itching for an IPO on Nasdaq.

"Depending on the markets, we'll decide whether to dotcom it or just put Ltd behind the name," says Tetsuo Yamashita, group managing director of Japan Asia Securities (JA).

The "name" is Asia Stock E-xchange Network Ltd, where the "Ltd" is used tentatively. This web-based cross-border trading network, the brainchild of JA, allows investors to trade on the exchanges in Japan, Taiwan, Hong Kong and Korea with the five participating firms using one account.

The alliance expects the network will be in operation in June. It is also discussing the possibility of forming a joint venture company with a single website which will aim for an IPO on the Nasdaq board.

Because all settlements and custodian functions will be performed between the companies, the alliance says it's a site on the brokerage-to-brokerage level, hence B2B, rather than the B2C level.

Capital Securities (Taiwan), Dongwon Securities (Korea), Tai Fook Securities (HK), Aizawa Securities (Japan) and JA expect the system will attract about 20% of online traders in the region. The combined market capitalisation of the four exchanges as of March 31 was $5400 billion.

Korea leads on the rate of online share transactions with about 2.7 million online traders accounting for 51% of the country's total trading volume. Dongwon Securities expects its online transactions will increase from the current 65% to more than 80% in the near future.

Capital says Taiwan's 6% of net trading at present is expected to grow to 20% in two years. Tai Fook believes Hong Kong will conduct 10%-15% of its share transactions on the net in the next few years compared to today's 3%.

Aizawa forecasts Japan will have about three million online accounts responsible foráaround 10% of all trades in the market within one year. The country now has 800,000 online accountsámaking up 3% of all transactions.

At the signing ceremony yesterday, the chiefs were coy about their profit sharing arrangement, saying only that the project requires minimal inputs because of their existing online infrastructure. They say transaction fees will be "low" and investors can access overseas markets without going through normal procedures and regulations.

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