Published On: Sat, Jul 9th, 2011

Asia Etrading 2011 Q2 Highlights

Asia Etrading 2011 Q2 HighlightsAsia’s electronic trading industry continued to see a flurry of activity in the second quarter of 2011.

We would have to say the highlight of the quarter was the long awaited launch of the Hong Kong Mercantile Exchange (HKMEx). Asia watchers would know that the Chinese regulator had been delaying the start date of this exchange for more than 3 years. The debut of their 32oz gold contract saw almost 4000 contracts trade hands in what was largely spread trading. The HKMEx has since averaged around 2400 contracts per day. Look for silver futures next.

Arguably, the SGX ASX merger could have been the highlight of the quarter as well. It depends on who you ask but our webinar on the merger saw 3 out of 4 of our panelists say “No” to the merger and our opinion poll results were divided at 50/50. What will happen next? We think that the ASX is preoccupied with the pending arrival of Chi-X Australia to be actively seeking a merger. However, the SGX and its CEO Magnus Bocker (he was instrumental in merging the Nordic exchanges) is busy revisiting potential merger partners. Perhaps with NASDAQ OMX his previous employer or maybe with TOCOM or OSE who interestingly enough all (including SGX) have trading engines running on NASDAQ technologies but we only speculate.

On the topic of exchanges in Asia the futures space saw the most activity. Silver futures were launched in Thailand and announced in Shanghai. The SMX started trading Cash-Settled AUD-USD and USD-JPY futures and Cash-Settled Gold, Silver and Copper futures contracts are forth coming as well. The DCE announced the listing of Coke futures. In India the MCX began trading a one gram gold contract and they also filed a DRHP with SEBI. SGX’s AsiaClear saw commodity participants increase.

On the equities side Bursa Malaysia implemented a new Day Order type. The SET upgraded their matching engine. The TSE continued to implement short-selling restrictions and postponed extending trading hours. The SGX reduced tick sizes to cut trading costs and added new ADRs of Japan and Korean Companies. Lastly, the ASEAN initiative continues to move forward.

And the western exchanges continued their push into Asia with NYSE LIFFE adding UOB as a new member. Eurex launched a new access point in Hong Kong and NYSE Technologies expanded connectivity into China. LSE saw its first Chinese Member and signed an MSA with the Mongolian Stock Exchange.

Brokers were also busy. Instinet launched an Australian liquidity pool. Nomura launched an execution consulting services in Asia. CITIC Securities became a minority shareholder in CLSA and Cheuvreux. Japan’s largest retail commodity broker Dot Commodity has been busy expanding its service too. They added CQG and joined the SGX as a member. Lastly, OMFinancial became the first New Zealand dairy futures broker.

The vendors continue to migrate and expand in Asia as well. RTS Realtime Systems opened an office in India and bought a local firm, First Futures Software. We suspect the purchase was used as a means of circumventing the tough empanelment process OMS/EMS vendors are subject to in India. Fidessa broke into China with Haitong Securities and their compliance solutions Sentinel was selected by Nomura Asset Management. Sungard, too, added Nanhua Futures in China to its global network and Pacific Asset Management implemented their Asset Arena software. Xenomorph opened a Singapore office. Broadridge entered into an agreement with Mitsui Knowledge Industry in Japan. Patsystems connected to HKMEx and in Australia Axioma opened an office and Westpac picked up Orc Software.

KVH and Equinix continue to expand in Asia in the colocation / proximity space. KVH and SingTel increased their network agreement and Interactive Data chose KVH’s proximity service. HKMEx and the upcoming Chi-X Australia will use Equinix as their primary data centers. KVH offers managed services where Equinix does not.

Probably the regulatory highlight this quarter was ASIC finally giving Chi-X Australia the green light and the release of the final Market Integrity Rules spelling out the competitive landscape. Also, the Taiwan FSC became a signatory to IOSCOs MMoU and SEBI allowed liquidity enhancement schemes in equity derivatives.

And fines were also handed out across the industry too. The SET fined Country Group Securities. The ASX Disciplinary Tribunal fined Macquarie Bank, IMC Pacific and ICAP.

There was also a series of people moves and departures. Tony Crane left TOCOM and has relocated to Europe. Joe Meyer left Chi-X Japan to become the CAO of the HKEx. Phill Jefferies left ULLink in Hong Kong. The SGX saw Rick Aston leave to join JP Morgan with the bourse hiring Julie Heng as the New Commodities Head and Nels Friets as Head of Securities. The former head of SICOM, Jeremy Ang, became CEO of Straits Financial Group and Tom McMahon left the SMX. Trevor Jarrett left Thomson Reuters to go to Caplin as GM. Thibaud Langlet left ITRS Group as MD and was replaced by James Mills. Kim Man Li left Goldman Sachs and Linedata finally hired an MD in Hong Kong, Sally Crane. NZX’s Head of Markets and Strategy, Fiona Mackenzie, left to join New Zealand’s Super Fund. Thailand’s SEC Board Chairman Vijit Supinit resigned and Martin Wheatley left the HK SFC to take up a post with the UK FSA. Gossip on the street has the ex-MD of RTS in Asia, Stefane Lannoy, joining HKMEx but we can read about that in Q3.

While there was much, much more going on in Asia we couldn’t possibly put it all in this article. You’ll have to get all the latest news and information on Asia’s electronic trading industry at AsiaEtrading.com. Be sure to subscribe to our free weekly newsletter so you won’t miss a thing.

Look for our Q3 highlights in October.

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