Invest with care
All online brokers provide representatives to process investors trades onto the ASX trading platform, and some services include straight-through order processing, where what the buy or sell investors
All online brokers provide representatives to process investors trades onto the ASX trading platform, and some services include straight-through order processing, where what the buy or sell investors want to execute goes straight from the traders keyboard and onto
the market.
But the Australian Securities and Investments Commission (ASIC) reminds share traders that if their orders are being processed by online brokers before proceeding onto market, the purchase or sale may be delayed a few minutes, so dont expect the price you see on screen to be the one you get for your shares.
The government body also warns: Look out for any statements from an online broker that guarantee instantaneous execution of customer orders. This cant be guaranteed. The commission also advises extreme caution when using straight-through processing, as trades cannot be withdrawn or altered, and if you buy or sell more than you have by mistake, the Internet broking service can fine you for not having the money in your trading account to buy the shares you have ordered, or not having the shares you have decided to sell. The Nationals service, for instance, charges up to $50 a day, plus charges levied by the ASX, when clients trades cannot be cleared.
The ASIC says that if you think your order to buy or sell may not have been acted on by the online broker, under no circumstances send another order just in case. Ring the broker to confirm the order, and be aware of how they confirm to you that your request has arrived and been executed, or one sale of $10,000 of BHP may suddenly become two sales of $10,000 BHP parcels that you might not possess. Saving copies of your trading orders and broker confirmation on hard disc can avert problems later on.
ASIC also advises online traders to use limit trading where possible, which enables investors to tell their online trader share prices above which they will not buy their chosen equity parcel, and below which they will not sell.
Web-based brokers such as Macquarie Bank and St George Bank are spicing up their offerings by moving into derivatives trading, offering investors access to options and warrants over the net. But a warning: options and warrants can be a tricky proposition for the uninitiated, so consulting a full-service broker first or attending an ASX seminar on how they work may help. Check the ASX Web site at www.asx.com.au to find out when seminars on stocks, options and warrants are coming up.
The ASIC warns potential online clients that they should ensure their online broker is registered with ASIC before subscribing. If your net-based broker also offers investment advice, then you are entitled to receive from them a booklet explaining how they deal with customer complaints, and access to an independent complaints resolution process should something
go wrong.
The ASIC says that online investors should also find out about levels of brokerage charged and any costs to subscribe to information sources linked to the online brokers Web site.
This article appeared in the April, 2000 issue of PC Authority.
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