Published On: Tue, Feb 9th, 2010

What Asia City Is The Best To Headquarter An Electronic Trading Business?

questionmarkSingapore is the best city in Asia to headquarter an electronic trading business according to a two week opinion poll conducted at the AsiaEtrading.com website. In what was the most successful poll to date and it came as no surprise. With a corporate tax rate of 18% (17% in 2010), a high standard of living, a great quality of life and wonderful weather all year-round the island at the apex of the Straits of Malacca won the day amongst pollers.

If we drill down the electronic trading environment the local Government and Monetary Authority of Singapore (MAS) oversee is the envy of the zone especially to Hong Kong, its regional rival, which came second in the poll. The Singapore Exchange (SGX) pioneered cross border futures trading in Asia offering complimentary contracts in Japan, Taiwan and Hong Kong. The Osaka Securities Exchange (OSE) was forced to offer futures trading in the Nikkei 225 one year after the SGX rolled it out in Singapore.

Singapore is leading the way in the dark pool space as well. A join venture announced last November with Chi-X to form Chi-East is Asia’s first exchange sponsored dark pool. Granted the Singapore pension market isn’t that large and there is a perception that this kind of offering with fragment liquidity but it is widely acknowledged that institutional investors need a place for “upstairs” trading with out signaling or moving the market and a dark pook is just the place.

Let’s not forget the commodities hub that Singapore is pushing to be. The SGX has a subsidiary called SICOM (Singapore Commodities Exchange) of which the MAS has allowed a competing commodities exchange to operate directly against it; the Singapore Mercantile Exchange (SMX). Singapore is even the third largest oil trading market in the world.

Fortis and Barclays are headquartered there. Eurex has established an access point of which Transmarket Group was its first client back in 2006. Trading vendors such as Trading Technologies, RTS and FlexTrade call Singapore home as well. Equities, futures, commodities, clearing, world class firms, low taxes and nice weather certainly make Singapore an electronic trading Mecca in Asia.

Here are the results of the poll
1) Singapore – 38.1%
2) Hong Kong – 29.8%
3) Mumbai – 15.4%
4) Tokyo – 9.0%
5) Shanghai – 7.7%

There was some consternation about the cities chosen in the poll and perhaps the result might be different if it included Sydney, Seoul or Taipei but I doubt it. Hong Kong is the gateway to China but its complacent retail-centric approach to trading is leaving it behind its regional rival. Mumbai is still growing up and will certainly be one to watch in the coming years. It has always been a commodities hub especially when the US declared independence from England and the ensuing war cut off cotton and forced the British to buy from India. Japan is the largest equities market in Asia but is now only coming around to industrial strength trading. Shanghai has a long way to go as well with respect to trading savvy and regulatory openness.

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Displaying 4 Comments
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  1. Matthew says:

    What about Bangkok. Low taxes, great incentives to establish regional hq.

    And quality of life is very good.

  2. John Fildes says:

    Steve,
    I note that you don’t list a negative against Sydney…
    First Co-Lo of any Asian Exchange, lowest latency of any Asian Exchange, no tax on trading, low clearing costs (Singapore is 4bps!), competitive venues in the wings and lifestyle!
    No wonder Susquehanna, Optiver, IMC and Tibra call Sydney home…
    Cheers,
    John

  3. Steve says:

    @Matt,

    I am sure its a great place to live but the stability of the government and a financial infrastructure that has some way to go yet probably doesn’t put Bangkok at the top of the list. There are good things coming out of Thailand and will be great to see it evolve.

    @John,

    It’s hard to argue with you. You raise some very good points. Each city will have its pros and cons and Sydney has been a leader in many ways in Asia. I acknowledge that the nature of the poll question allowed for varied and wide ranging responses depending on whether you are a small or large firm a buy or a sell side or even a local loyal to your home. We can certainly give Sydney an honourable mention but for a regional headquarters of a large firm I see geography as minus. But as I said the poll question is open to interpretation. Thanks for responding. Good to know some people come to the website.
    Steve

  4. Lara says:

    @John

    Whilst the props firms you mentioned all started their Asian adventure with offices downunder, you’ll find that they have since been opening up other Asian offices in the region to obtain regulatory/tax benefits which Australia can’t compete with!

    Susquehanna – Hong Kong
    Optiver – Taiwan
    IMC – Hong Kong
    Tibra – Hong Kong

    With both offices being able to cover the same timezone, there could even be an argument to shut down the Sydney offices! Granted this is highly unlikely though.

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