SEBI changes the technology game..

Offlately SEBI has announced the below changes it has agreed to..

• Mobile Trading
• Smart Order Routing
• Call Auctions at market open
• Private treaties to be disclosed

so how can these changes improve the way we invest, well lets first look at mobile trading...already widely used in US, SEBI now has brought it here, Mobile Trading technology give you the freedom to trade directly from your mobile phone. I believe this is useful for people that travel a lot in the day. Mobile trading may be possible using “mini” sites like Sharekhan has recently provided, but the functionality is limited (can’t easily see order book changes, modify orders etc.). A mobile app will be more useful and can easily piggy back the current layers that brokers use online (SSL, web service layer). Plus mobile charting, screeners etc. are useful in that you can use them to actually place trades. The mobile operators, though, are of no use brokers don’t even need them other than if they will cut costs dramatically.

Now lets look at smart order routing, When you place your order it has to go on a specific exchange. With Smart Order Routing the broker can check the pricing on different exchanges (currently BSE/NSE but MCX-SX is coming soon) and place the order appropriately. Divided into chunks, this makes a lot of sense for automated order routing for which complex algorithms have already been designed; institutions like mutual funds or pension funds can use such a facility to auto-route orders appropriately.

Call Auctions, Brokers allow investors to place orders outside market hours, and these are placed into the exchange at 9 AM during hte market open. If there are a lot of orders at “market” there is a problem, the “market” hasn’t yet been discovered for the day, and prices can go haywire (they indeed do, as noted in many stocks, and brokers/punters take undue advantage). Call auctions help streamline the price discovery process.

and finally perhaps a very controversial topic, Many press entities like Times of India own stake in certain businesses as part of “Private Treaties”, in return for (partly) advertising real estate and coverage. This skews incentives in that sometimes negative news about the entity is held back or is spun around because the equity ownership may otherwise be in danger of losing value. In India selling editorial space is considered okay that is, you buy an ad, and they’ll write a column about your company. SEBI along with the Press Council has decided that such private equity ownership must be revealed on the media web sites


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