Arab stock exchanges have gone a long way from their old manual trading techniques that spanned the eighties and early nineties. All of these exchanges have now automated their trading systems using either international vendor systems or in-house developed software.
Although Arab markets made a late move towards automation when compared to international developed markets, they are picking up very quickly. New systems have offered more efficient trading, lower cost per trade and improved transparency across all markets.
Still, a newly released report from the Arab Advisors Group reveals that less than a third of Arab Stock Exchanges have a disaster recovery plan. Even more worryingly, less than 15 percent of the exchanges have a plan that is tested by all market participants. Saudi Arabia, Jordan and Morocco’s stock exchange lead the Arab World in online remote trading set-ups.
“Our research shows that most exchanges are still conservative in their approach,” said Jawad Abbassi, Arab Advisors Group’s president and the author of the report, entitled ‘Information Technology Implementation at Arab Stock Exchanges’. “Floor trading is mainly the trend because it provides for easier surveillance of brokers, protection from communication failures and preserves the old trading culture of broker interaction and news sharing.”
“Nevertheless, the markets of Saudi Arabia, Morocco and Jordan have already moved into complete floorless trading where all trading is now being conducted from broker offices connected via data networks,” Abbassi added. “Saudi Arabia has, by far, the largest number of remote trading stations. Jordan came in as a distant second closely followed by Egypt and then Morocco.”
Information dissemination is one of the most important aspects of a modern stock exchange. Investors and financial institutions need electronic access to market spot information. “Arab stock exchanges still need to develop their market dissemination services to reach the level present in developed markets”. Abbassi noted. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
