Buying and Selling Online

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Buying and Selling Online

Online trading does not come with expert advice but does normallycome with live market updates so you can keep track of yourpurchases online and become an expert yourself.What is Internet Trading?We live in a technological era that allows us to do many things fromhome via the Internet. The emergence of online investing is aboutempowering the individual investor.Investors now have Web access to market data, company information,and educational materials, which greatly reduce the intermediationissues of investing. The online investor gains convenience and savestime with direct access (through the stock broker) to trading systemsand 24-hour access to information.Eighteen member firms of the Colombo Stock Exchange (CSE) provideonline trading facilities to investors. So you can invest in the ColomboStock Market from your own home/office.How does Internet trading work?Internet-based trading is an order routing and execution system,providing seamless trading in shares on the CSE.Given below are the easy steps1.You sign an agreement with a Stockbroker.2.The Stockbroker gives you a password, which enables youto access the order book and place orders through the broker youare registered with.3.You can also set up a portfolio so that the value of yourportfolio can be updated on a real-time basis.4.Once you feed in the order, the order goes to the broker’strading server and from the broker to the CSE.5.When the trade is executed, the confirmation along withthe order number and trade number and time of execution flowsback to you.What are the advantages of Internet Trading?1.You will have the facility to trade as and when you want,provided you have an Internet connection.2.During times of heightened market activity, when it maybedifficult to speak to a broker, you will be able to place your orderswithout difficulty.

3.It will also allow you to have direct facilities for trading andthus minimizing client-broker disputes.4.It also provides easy access to a larger potential marketglobally.Is trading through the Internet safe? The safety of transactions on the Internet depends on the systemsused.Online stockbrokers of the CSE have implemented security, technologyand fraud prevention methods to provide protection for all users of theonline trading facilities.Once you open an online trading account, you will receive a secureduser ID and password, the secrecy of which should be maintained byyou.How do I open an online trading account? The stockbroker websites provide the necessary forms usually to bedownloaded on their websites. You will need to fill

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CDS account opening forms

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Relevant account opening forms of stockbrokersForeign investors are required to open and maintain Share InvestmentExternal rupee Accounts (SIERA) for transfer of funds, in addition to theabove forms.Is there any deposit requirement for online trading?Some firms may request that you deposit a minimum amount in theform of cash or securities to trade using their Internet trading platform. This is done to reduce the credit risk of online transactions.

Is trading through the Internet costly?

All Stockbrokers who provide online trading facilities charge the sametransaction fees as brokers who do not yet offer online tradingfacilities. Presently online brokers do not charge any additional fees.Negotiable brokerages are only applicable for equity transactions overRs. 100 Mn and transactions in government securities.How can online trading be easy for me?Contrary to common perceptions, trading through the Internet doesnot require either any expertise in computers or any special financialskills.

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