PNGX seeks to further improve trading

PNGX Markets Limited (PNGX) recently made an announcement that could make stock trading easier and more accessible to more Papua New Guineans and make Papua New Guinea more attractive to overseas investors.

PNGX has signed a Memorandum of Understanding with XBourse Australia and Pacific Capital Markets Development to explore the development of cutting-edge digital solutions for the Papua New Guinea market.

XBourse is a leading technology services company specializing in the creation of innovative, tailor-made solutions for the financial markets. Pacific Capital Markets Development is an Australian company engaged in the development of capital markets in the Pacific region.

The objectives of the cooperation agreements are to improve capital market efficiency, promote market liquidity, attract investment and reduce market risk.

XBourse’s digital ledger technology (also known as blockchain) has the potential to power public and private capital markets in Papua New Guinea and the Pacific Rim.

but what does that mean? What is PNGX trying to achieve for PNG investors?
A blockchain CSD has many attractions for PNGX as it is cloud-based, scalable, fully auditable, and transparent. The concepts being developed would be world-class and offer real opportunities for Papua New Guinea to move to the next generation of stock market technologies.
Currently, when an investor trades on PNGX, the systems for settling the transaction and transferring shares are paper-based.

PNGX aims to set up a central electronic securities depository (CSD). A CSD is a specialized financial organization that holds securities such as shares in electronic form. This makes it easy to transfer ownership electronically rather than through a paper document transfer. Investors, including moms and dads, private entities, trust funds, pension funds, brokers and financial companies will be able to hold their securities where they can be available for electronic trading and settlement. This is much faster and easier than is currently the case where paper documents have to be used.

Another objective is to reduce the time required to settle a transaction. Because paper documents must be exchanged after a transaction, it currently takes 3 days after selling shares before you receive your money or 3 days after buying shares before your shares are registered in your name. The adoption of electronic stock and money transfer means that instead of taking 3 days after a transaction, you will receive your money and shares electronically almost immediately after the sale.

Another benefit would be that a CSD would allow PNGX and stockbrokers to develop mobile phone apps that would provide better information to investors. For example, investors could see their equity and cash holdings in the CSD at all times, like a bank account. This would allow investors to trade more easily.

Since the settlement and transfer would occur almost immediately, the risk to investors in the market would be significantly reduced. Additionally, the use of blockchain technology would reduce certain risks of fraud and market manipulation. A blockchain CSD would also improve the PNG Securities Commission’s ability to regulate the market.

At present, large foreign investors are often reluctant to invest in the PNG stock market, even though there is interest in investing here. Indeed, some of the key services needed to manage their holdings are currently not available in the country. A blockchain CSD would allow PNGX to provide these services and encourage greater foreign investment in the country.

Although it is easier for an international investor to buy shares, the ability to sell easily due to currency restrictions would still be an obstacle that needs to be overcome by the central bank if PNG is to attract more international investors and prevent more businesses from moving to Australia. market.

“The contribution of key market stakeholders, such as publicly traded companies, banks, pension funds and stockbrokers, is critical to the success of this project and ultimately the market for PNG,” PNGX Chief Executive Ms. Elizabeth Wamsa said.

“We will soon be holding industry forums to discuss the needs of users and regulators to enable the development of this digital solution,” she said.

When the new systems are developed, which will take time, investors will find it easier to invest in the Papua New Guinea market through current brokers JMP Securities Limited and Kina Securities Limited.

The information in this article is general in nature and you should take care to educate yourself about the specific characteristics of a particular investment before making a decision to invest in it.

PNGX recommends discussing your investment goals and needs with a qualified stockbroker or financial advisor. In PNG, you can either contact JMP Securities Limited ([email protected]) or Kina Securities Limited ([email protected]).

By following these articles and reading the information available on the PNGX website (www.pngx.com.pg) or by following PNGX on LinkedIn or Facebook, you can learn more and build your wealth by investing in PNG.

Comments are closed.