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