What is Your Prediction for Electronic Trading in Asia for 2014?
|“2013 has been a pivotal year for the Japanese financial markets, mainly due to the business aggregation of the two leading domestic securities exchanges TSE and OSE under the Japan Exchange Group umbrella. The upcoming year will see further consolidation, such as the phasing out of TSE’s old co-location facility and a complete migration into JPX Colo “All” (TSE) as well as JPX Colo “OPEN” (OSE) in March 2014. Also in March, JPX will migrate TSE’s current Tdex+ derivatives trading platform (based on LIFFE Connect® technology) into OSE’s J-Gate platform (based on Nasdaq OMX Click technology) and thus, we foresee elevated trading levels on the derivatives side due to all Japanese financial derivatives products being traded on a single platform.”|
|“As the US and EU OTC reporting environment solidifies, Asian regulators and exchanges will respond and implement their rules through 2014. The impact of this will be a key focus of the year for Asian finance professionals. I feel there is an opportunity to use the increased transparency of OTC reporting to enhance trading models and re-shape strategies. We also feel that there will be more macro volatility than most expect in 2014, largely due to the new Federal Reserve Chairman Janet Yellen’s on-going debate about unwinding QE in the US. ”|
|“A key 2014 milestone will be the merger of the TSE and OSE derivatives markets under JPX in March. As a result, major Japanese derivatives instruments (e.g. Nikkei 225 futures , JGB futures) will be traded on a single matching engine and operational efficiencies for market participants are expected to improve. This should encourage more liquidity from HFT on the Japanese derivatives market.”|
|“With the proliferation of EMS choices in the Asean region, we are seeing the click trading proprietary traders expanding beyond futures to cash equities using the same ladder trading techniques. What is different is, as they move from trading macro (homogenous) contracts to trading micro (heterogenous) contracts where there is a great deal more alpha to contend with, their knowledge of the local market microstructure and sales trading information flow suddenly becomes important for a better trading success rate. The role the local broker plays in this can make a difference for a trader. “|
|“We believe that the upcoming regulatory requirements and the hyper-competitive US environment will further increase demand from overseas traders to seek opportunities in China, Taiwan, emerging markets and also re-emerging markets such as Japan. With Abenomics launched, record equity volumes, a strong retail-driven FX marketplace and the upcoming completion of the integration of the derivatives market in March 2014, we see Japan, along with other markets, as one of the drivers for Asia’s success in 2014. “|
|“• Continuing reform, new incentive programs, and expanding asset class options will continue to open new opportunities for hedgefunds in China.
• Algo trading will continue to grow, albeit slowly. Algo trading is still new in China and comments from traders who have been using algo trading indicate that the performance benefits may not outweigh the costs and ‘incomplete’ sets of asset classes and financial instruments will continue to be an impediment. . “
|“Emerging markets will see a new phase of electronic trading innovation in 2014, driven by customer demand, diversification needs and market reform. The relative lack of legacy systems in these markets will support the shift to new technology. The key to success will be implementing solutions that adapt state-of-the-art approaches to local needs.”|