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International finance giants trade globally

INTERNATIONAL finance leader Merrill Lynch has experienced great interest in its international online trading system since being launched early this year.

Merrill Lynch Private Perth vice president (private client group) Grant Pearson said the system – which cost US$1 billion and was nine years in the making – was a world first.

International workstations have given WA investors the opportunity to trade in shares listed on overseas stock exchanges.

“What it seeks to do is create a more global way of looking at investing,” Mr Pearson said.

“This was previously a difficult thing to do. There were many faxes and phone calls, time zones and currencies – no access to online integrated reports – and the technology hadn't become sophisticated enough until recently.

“Most local firms had to trade through a third party in another country – which means there would generally be two sets of commission – and getting research in a timely manner was troublesome.”

Having overcome these factors, Mr Pearson said local traders were faced with the challenge of how to best utilise the technology.

“You look at Australia and we represent 1.5 per cent of what goes on in the world as far as stock market capitalisation, and the other 98.5 per cent is a pretty big elephant to chew,” he said.

Mr Pearson said the only companies that will be able to offer competitive advice in future markets would have a global presence.

“Australia has a very narrow base,” he said.

“We have some resources and some old-fashioned manufacturing companies, but generally we don’t have the right defences in place to deal with the new growth in technology and service industries.

“So, we have very limited options if we put all our eggs in one basket and don’t invest internationally – that’s very high risk.”

Mr Pearson said Merrill Lynch was distinct from other stockbrokers with international trading systems by its level of investment advice.

“While there are obvious immediacy advantages to using the Internet, it is almost like a big red doomsday button clients can push on impulse – so we need to give them guidance to avoid making rash, emotive decisions. The people who panicked during the Russian crisis last year have paid dearly.

“I even have an advisor because I’m too close to my investment to make an objective decision.”

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