Opening Cross: Emerging Markets Are Hot

…And humid, as I discovered during our Asia-Pacific Financial Information Conference (hosted jointly with our friends at FISD) in Hong Kong last week. And though Asia attracts the most attention, Latin America (Tullett Prebon increased its LatAm emerging markets team in North America last week), Eastern Europe and Africa are all on investors’ radars.
For example, Thomson Reuters has stepped up the data it carries from African exchanges over the past 12 months—most recently with data from the Mauritius-based Global Board of Trade, a new pan-African, multi-asset exchange. In addition to basic exchange prices, the vendor is also providing company fundamentals and financials, estimates and M&A data.
In some markets, this information can be hard to obtain—possibly protected by arcane licensing regimes, or just requiring significant effort to pull together by oneself—if it exists at all. These are instances where not only do vendors prove their value-add, but indexes can offer convenient investment vehicles, created by specialists who understand a market so that individual investors don’t have to.
“A BRIC index is a vehicle for people to put money into emerging markets right away without having to research individual companies in a region. They don’t have to do the research, they just need to know the buzzword,” says David Blitzer, managing director and chairman of the index committee at Standard & Poor’s. “The same goes for Vietnam, for example—someone says it’s a hot market, but it’s hard to do the research, so you use an index.”
Another fast-growing trend in Asia is high-frequency trading. The Tokyo Stock Exchange’s new Arrowhead high-performance trading system has contributed to that, reducing latency, increasing data volumes, and placing more pressure on the infrastructure of the markets overall, and other exchanges are now in the midst of major upgrades. For example, the Singapore Exchange is setting up a co-location facility to provide low-latency access to its data and trading platforms, while Hong Kong Exchanges and Clearing is rolling out a swathe of upgrades, and is building a next-generation datacenter to support co-location and new datafeed products.
Panelists at the conference pointed out that HFT can generate big profits, but also requires significant technology investment and continuous infrastructure optimization.
“Is it required for us to use high-frequency trading? Yes, definitely, but we have yet to quantify the key performance indicators around HFT,” says Victor Ekong, head of market data technology at Citigroup.
One driver for the growth of HFT may be not just that Asian markets still offer more opportunity for higher returns than the US and Europe—in fact, conference speakers say they are seeing investment reduced in those markets to fund more activity in Asia—but that since HFT is less mature in Asia, so too is regulation of HFT. And in particular—with more demand for closer regulatory scrutiny of HFT (see our Latency Web Seminar writeup in this issue of IMD)—the region lacks a central, standardized regulatory regime to monitor and police the practice.
“Absent this regulatory catalyst, there exists regulatory arbitrage and regulatory competition, because regulators are not only policing their own capital markets—they are also promoting them. Every regulator wants its market to be the gateway to Asia, and must be willing to work with the broker community to open up markets,” says James Pak, chief strategy and product officer at Chi-X Global.
Let’s just hope that hospitality doesn’t invite an unwelcome guest in the form of an Asian “Flash Crash” that these growing markets are simply not prepared for.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: https://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Data Management
S&P Global partners with IBM, Eventus launches Frank AI, Tradeweb expands algo execution abilities, and more
The Waters Cooler: Arcesium makes waves with Aquata Marketplace, NYSE Cloud flows into Blue Ocean Technologies, and more in this week’s news roundup.
Is market data compliance too complex for AI?
The IMD Wrap: Reb looks at two recent studies and an article by CJC, which cast doubt on AI’s ability to manage complexity.
Robinhood looks to ‘Chaos Monkey’ for op resilience playbook
As firms look to break down silos across business divisions to bolster operational resilience, the US broker is ditching emails, while utilizing chaos engineering and automating everything in sight.
Can AI be the solution to ESG backlash?
AI is streamlining the complexities of ESG data management, but there are still ongoing challenges.
Drilling down into data redistribution
A series of podcasts focusing on data redistribution across the financial services industry.
Will return-to-office mandates fuel market data brain drain?
The IMD Wrap: Increasingly, market data systems can be operated completely remotely. So, why are firms insisting that data professionals return to the office?
Industry vets ally to launch full-service data consultancy
The new company combines the skills and experience of individuals and firms that each serve different needs of the data industry.
M&G Investments replaces research platform with Bloomberg’s RMS
The chief investment officer of the London-based asset manager explains why the firm opted to use Bloomberg’s RMS platform for its research capabilities.