Published On: Sun, Jul 4th, 2010

2010 Q2 Electronic Trading Industry in Asia Highlights.

2010 Q2 Electronic Trading Industry in Asia HighlightsThe second quarter of 2010 has come to a close. It was a busy and eventful 91 days in Asia’s electronic trading industry where I was able to identify 228 separate activities in the zone. By far the most active segment was in the exchange space. The more mature equity bourses were continuing their build-out in the face of exchange competition.

The Tokyo Stock Exchange (TSE), Australian Securities Exchange (ASX) and the Singapore Exchange (SGX) all continued to deliver improved infrastructure, services and co-location as these markets dig-in for the high stakes competition sweeping across Asia. On the futures and commodities front probably the most significant event was the launch of China’s Index future April 16. Another exchange in India was launched the United Stock Exchange (USE). This is a Bombay Stock Exchange (BSE) owned exchange trading in currency futures intended to compete against the successful National Stock Exchange (NSE) currency futures. Speaking of the BSE it made two key appointments to its board and cut exchange fees in half. The NSE announced the launch of the S&P 500 futures contract. And finally, We saw Thailand gripped in civil unrest that saw the Stock Exchange of Thailand (SET) close for two days. THe SET also appointed a new exchange president June 1.

Japan’s commodity bourses appear to be consolidating under the Tokyo Commodity Exchange (TOCOM). C-COM has suspended most of its products and will move to TOCOM particularly oil and also, TOCOM has relaunched Gas Oil at the exchange to round out its energy offering. TOCOM has also signed MOUs with Singapore Mercantile Exchange (SMX) and the Singapore Commodity Exchange (SICOM). Speaking of which it looks like SMX will launch gold (32oz), WTI Crude (USD) and a Brent Crude (EUR) sometime in August when it finally goes live. SICOM launched a deferred settlement gold contract as well and the Hong Kong Mercantile (HKMeX) plans a gold contract too. No idea how they plan to get any kind of liquidity with this kind of fragmentation.

Korea Exchange (KRX) is seeing record volumes at the futures segment and China is too. China is now the largest commodity market in the world. There was much more that went on at the exchange but you’ll just have to visit AsiaEtrading.com to find out.

Let’s move on to the vendor space. KVH and Equinix continued to expand as the demand for colo ramps up in Asia. RTS and ORC Software both market making vendors won some business this past quarter. The equities vendors (I know they say they are multi asset) Fidessa, Charles River and Sungard continued to expand too. Tora and TradingScreen expanded their functionality with a crossing tool and a short selling reporting tool, respectively. IRESS now offers Smart Order Routing and NYSE Technologies became the first market data technology vendor at the BSE. There was other developments but I have to move on.

The brokerage industry continued to expand service and markets as well. Soc Gen now offers electronic trading in Malaysia and Taiwan. MUFG and Morgan Stanley plan a JV in Japan. MSET also launched customisable trading algorithms in Asia. Chi-X, Nomura and Instinet added to headcount and MF Global and ITG announced new senior management. Nomura launched their dark pool NX in Hong Kong, Liquidnet in New Zealand and UBS PIN now offers Mid-Point crossing in Australia. And lastly, Au Viet Securities listed on the Hanoi Stock Exchange (HNX) as it ramps up its regional ambitions.

From the regulators we saw continued restrictions on Short Selling from the HK SFC and the Japan FSA. ASIC started reporting short positions in Australia. The CFTC now allows Malaysian futures brokers to deal directly with US customer and SEBI is moving to Normal Rolling Settlement. Merrill Lynch and UBS were fined in Hong Kong, IMC in Australia and SBI Securities in Japan.

The last noteworthy item was the prop desk at Deutsche bank in Tokyo that sent 900,000+ orders to sell the Nikkei 225 index future.

While this is just a summary of the events that happened last quarter in Asia’s electronic trading industry a more comprehensive and detailed account can be found at AsiaEtrading.com

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