Opening Cross: Will Asia's ‘Complex Tapestry' Weave More Success?
If this week's issue contains a little more Eastern promise than usual, it's because we're in Hong Kong this week to host - along with industry association FISD - our annual Asia-Pacific Financial Information Conference. And this year's event promises to be a real cracker, with many of the trends seen in the US and Europe now playing out across the Asia-Pacific region.
Fortunately, this doesn't include some of the worst trends. Asia remains a growth story, while the West still inches nervously towards recovery. Over the past couple of years, the economic crisis may even have contributed to Asia's steady growth, as traders and investors frustrated with the risks of "safe" investments in the US and Europe sought out higher-risk markets that deliver better returns.
But it isn't just an influx of Western cash and traders trying to make up for depressed margins elsewhere that is dictating the evolution of the pan-Asian markets-in fact, according to research firm Tabb Group, many of these markets are essentially closed to Western investors. Instead, these markets - a diverse cluster of cultures spread over huge distances - are observing the West's struggles with issues like fragmentation, cross-border arbitrage and low-latency trading, and are replicating these locally.
For example, the Tokyo Stock Exchange's Arrowhead trading platform that launched at the start of this year has had a huge impact on latency and data volumes in its domestic market - so much so, in fact, that some trading systems are having trouble dealing with the deluge of new data being generated, prompting SunGard Global Trading in Japan to partner with complex event processing technology vendor StreamBase Systems to help its clients build trading applications capable of processing high volumes of low-latency data, such as those now being generated by TSE.
Another instance where Asia is tapping the West for expertise is the trading link being developed by four ASEAN (Association of Southeast Asian Nations) exchanges, which earlier this year enlisted NYSE Technologies as its technology partner, outsourcing the heavy lifting to a company with experience of connecting markets and consolidating trading and datafeeds on a single platform.
(Asia outsourcing to the West? Not the other way around?)
Meanwhile, other initiatives are capitalizing on the appetite for the greater competition that can be achieved through fragmentation. One of the first in the recent swathe of projects was the New Zealand Exchange-backed AXE ECN, designed to compete with the Australian Securities Exchange, though this has been largely eclipsed by Chi-X's entry to the region with Chi-X Japan, Chi-X Australia, and the Chi-East dark pool, which received regulatory approval last week, clearing the way for the new venue to begin trading a range of pan-Asian stocks. Chi-X has experience of taking share in fragmenting markets, having done so in London and - to a lesser extent - in Canada.
In addition, Deutsche Börse is actively investigating the Asian markets with a view to launching a local version of its AlphaFlash feed of macroeconomic news for traders whose strategies depend on being first to interpret economic announcements and predict their impact. However, this raises another issue. While we blithely refer to "Asia" as a region, each country is separate, with its own exchange (or multiple exchanges), with no single currency or regulatory structure - a "complex tapestry of regulatory, currency, tax and technological hurdles," as Tabb Group puts it.
This will make it a challenge for these new initiatives to come to fruition as rapidly as they could in the US or Europe - but it's going to be fascinating to watch it all happen.
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: http://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.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
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. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
Man Group CTO eyes ‘significant impact’ for genAI across the fund
Man Group’s Gary Collier discussed the potential merits of and use cases for generative AI across the business at an event in London hosted by Bloomberg.
BNY Mellon deploys Nvidia DGX SuperPOD, identifies hundreds of AI use cases
BNY Mellon says it is the first bank to deploy Nvidia’s AI datacenter infrastructure, as it joins an increasing number of Wall Street firms that are embracing AI technologies.
This Week: Linedata acquires DreamQuark, Tradeweb, Rimes, Genesis, and more
A summary of some of the latest financial technology news.
Systematic tools gain favor in fixed income
Automation is enabling systematic strategies in fixed income that were previously reserved for equities trading. The tech gap between the two may be closing, but differences remain.
Euronext microwave link aims to cut HFT advantage in Europe
Exchange plans to level playing field between prop firms and banks in cash equities with cutting edge tech.
Why recent failures are a catalyst for DLT’s success
Deutsche Bank’s Mathew Kathayanat and Jie Yi Lee argue that DLT's high-profile failures don't mean the technology is dead. Now that the hype has died down, the path is cleared for more measured decisions about DLT’s applications.
‘Very careful thought’: T+1 will introduce costs, complexities for ETF traders
When the US moves to T+1 at the end of May 2024, firms trading ETFs will need to automate their workflows as much as possible to avoid "settlement misalignment" and additional costs.
Waters Wrap: Examining the changing EMS landscape
After LSEG’s decision to sunset Redi, Anthony examines what might lie ahead for the EMS space.
Most read
- Sell-Side Technology Awards 2024: All the winners
- Sell-Side Technology Awards 2024: Best sell-side front-office platform—Bloomberg
- Systematic tools gain favor in fixed income