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2010 Top 10 Developments in Asia’s Electronic Trading Industry;Asia E-Trading

2010 was the year that Asia’s electronic trading industry focused on competition and services in what have traditionally been anti-competitive market places. We recorded over 1000 separate news items this year in Asia alone. We recognize that some of the developments that made our list will not be relevant to everyone but as a neutral third party observer we have come up with a list that we feel are the Top 10 Developments in Asia’s Electronic Trading Industry in 2010.

Original Article: Asia E-Trading 2010 Top Developments

10) The US CFTC now allows Malaysian futures brokers to deal directly with US customer. Perhaps individually not a Top 10 item as other brokers in Asia have been given the nod by the US regulator too. But when taken together with the recent Bursa Malaysia exchange technology upgrades in both the equity and futures segments, migration to the CME Globex platform and the record prices in the Crude Palm Oil contract Malaysia is now poised to take its place as a south-east Asian trading center. It will become a key anchor in the ASEAN link planned in the coming years.

9) China’s Index future launched April 16 after many years of delay was an important development not only for electronic trading but also for China’s budding algorithmic and hedge fund industry. The index has quickly become one of the largest index futures now traded in Asia. Though the back month doesn’t trade as much as it should it will only be a matter of time before that open interest picks up too. It shouldn’t be long before we see index options and an interest rate future for China as well.

8 ) Singapore Mercantile Exchange launched in late August this year. Asia is demanding more and more commodities as wealth and consumption grow around the zone. Generally, in Asia, commodity exchanges tend to offer just one product but the Singapore Merc is offering a basket of commodities to trade both physical and cash contracts. Trading is available in WTI crude, currency, gold and black pepper to name a few. Interestingly, though, is that the SMX is owned entirely by Financial Technologies Group (FTIL) an India based company that will see its exchange compete head on with SICOM, the SGXs commodities arm. Expect to hear more from the SMX this year.

7) The Japan Securities Clearing Corporation (JSCC) began clearing trades for Proprietary Trading Systems (PTS) in August substantially reducing the costs in the post trade for alternatives in Japan. While the playing field still isn’t level with the Primary exchanges, this development at the JSCC was a boost for Japanese PTSs. SBI Japannext, a consortium PTS, has regularly traded 1 percent of daily volume on its venue as a result of this change. We expect fragmentation to accelerate in 2011 in Japan which is already around 3 to 5%.

6) The launch of Chi-east. The joint venture between the Singapore Exchange and Chi-X called Chi-east made it to our list of top 10 developments in Asia electronic trading industry in 2010. The venture is a big step for Singapore in terms of spurring exchange competition and becoming a regional one-stop-shop for trading in Asia. Chi-East is a broker to broker alternative that will offer off-shore crossing using different clearing facilities around Asia.

5) China is now the largest agricultural commodity market in the world with the Dalian Commodity Exchange seeing record volumes in Corn and the Soybean complex. Coupled with the Shanghai Futures Exchange and its metal products the opportunities and future for the electronic trading industry vertical in China and the rest of the world are huge.

4) Exchange competition in Australia. On March 31 the Australian government announced its support for Exchange competition in Australia. While we are still waiting the promise of competition is compelling. The Australian Securities Exchange (ASX) has long held a monopoly over the industry with poor service and high trading fees (explicit and implicit). The ASX passed its supervisory duties to the Australian Securities and Investments Commission (ASIC) August 1 and with the Market Integrity Rules being finalized it shouldn’t be long before trading in Australia is much cheaper and better served. The ASX SGX merger could put a spanner in the works, however.

3) Smart Order Routing in India – SEBI finally permitted Smart Order Routing in India in August of this year much to the National Stock Exchanges chagrin. The Bombay Stock Exchange promptly offered this service to its customers in a bid to take market share from its larger rival. India has the tightest spreads in Asia of around 6bps and with SORs on offer we can expect spreads to tighten even further and volumes to shoot up. This long overdue regulation puts India on the road to offering best execution far ahead of its BRIC peer China. Deutesche equities was the first FII to receive approval for using SORs to both the NSE and BSE.

2) SGX / ASX Merger – We have seen it in the US and Europe and it has finally come to Asia, exchange consolidation. While the news of this reverberated around the world like a tsunami the reality, in AsiaEtrading’s view, is that this is a merger of survival. Both exchanges are very small and in aggregate are still quite small but would command the largest futures market in Asia (not including China’s commodities of course). The announcement is further evidence that Asia is moving to a more competitive industry and should be a wake-up call to the rest of the region. Our webinar on the topic had the panelists agreeing that the merger won’t happen. We’ll wait and see if this merger does indeed take place.

1) We ranked the Tokyo Stock Exchange Arrowhead upgrade as the most important development in Asia’s Electronic Trading industry in 2010. This was a significant and crucial development for one of the top exchanges in the world. Previously, order round trips were around 4 seconds and orders per second were on par with a Starbucks barista. The improved matching engine performance has tightened spreads, increased trading volumes and reduced order sizes. This in turn has attracted more sophisticated traders, reduced implicit trading costs and has generally benefited the Japanese trading industry significantly. Not only that, having come out of 2009 and the aftermath of the GFC, the successful upgrade was the turning point for what was a very activity business in 2010. To us it was the catalyst for the entire industry in Asia.

Source: http://www.asiaetrading.com, 02.01.2011

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Filed under: Australia, China, Exchanges, Hong Kong, India, Japan, Malaysia, News, Singapore, Trading Technology, , , , , , , , , , , , , , , , ,

RTS Offers Access to New Trading Platform for Pan-Asian Market on Singapore Mercantile Exchange

SMX Launch Further Builds on RTS Low Latency Solutions in Asia

RTS Realtime Systems Group, a leading global trading solutions provider, announced today that the firm will provide connectivity and low latency access to the Singapore Mercantile Exchange (SMX) from its first day of trading, which will be 31 August 2010.

The new pan-Asian commodity and currency derivatives exchange will launch using a state-of-the-art global futures and options trading platform for products which include precious metals, base metals, agricultural commodities, energy, currencies and commodity indices.

Leveraging on its parent conglomerate Financial Technologies (India) Limited, who has designed and provided the end-to-end technology solution, the Exchange provides an application programming interface (API) to enable global independent software vendor (ISV) integration and thus facilitate a cross section of trading members, institutions and other financial market participants to trade on the Exchange. Members also have the option to write their own APIs for connectivity. Financial Technologies (India) Limited’s highly robust and scalable trading technology gives SMX the agility and adaptability which ensures its edge in the financial markets.

RTS recently announced the global launch of a first-of-its-kind trading solution combining the advantages of “point-and-click” and algorithmic trading. Called RTD Tango Trader, it is designed to leverage firms’ existing infrastructure and enable more brokers, traders and clients to benefit from customized algorithms. The firm’s high performance solutions are used by leading financial firms to trade across asset classes on 120+ exchanges and execution venues globally, including a wide range of major Asian exchanges.

Alex Lamb, RTS Executive Board Member, said: “We are pleased to offer access from day one to this truly pan-Asian commodity and currency derivatives exchange for our clients in the region and across the world, particularly given the tremendous interest they’ve already expressed in the opportunity. The breadth of products will create new avenues for arbitrage and effective risk management.”

Thomas J. McMahon, Chief Executive Officer of SMX, said: “As we look forward to attracting new product listings from around the world and Asia, we are very pleased to welcome trading firms globally who use the advanced technology and infrastructure of RTS which brings in a number of important algorithmic traders to SMX. Our global trading venue is well positioned to serve as a gateway for commodities in Asia, synchronizing derivatives and physical trading in commodities within the Asian time zone.”

Source: RTS, 19.08.2010

Filed under: Exchanges, News, Singapore, Trading Technology, , , , , , , , , , ,

SMX Singapore Mercantile Exchange successfully completes Go-Live testing

Taking the next big step towards its launch, the Singapore Mercantile Exchange (“SMX” or the “Exchange”) has successfully completed the testing of its electronic trading platform, risk management and clearing & settlement systems. The Exchange received overwhelming support from the industry which included participation from clearing members, broking houses, high frequency traders, and independent software vendors. The Go-Live testing was conducted over four days from October 20 to October 23, 2009.

The Go-Live testing was conducted in an environment which mirrored the actual trading environment. Such testing enables market particpants to trade on the Exchange platform, get a feel of the Exchange systems and sort out any connectivity related issues, if any, which may crop up in a real life scenario. This Go-live test scenario also provides an opportunity to the Exchange to test and fine tune its own systems, where all the entities from the eco-system participated.

Thomas McMahon, CEO of SMX, said “We are very happy to announce that the Golive testing went off without a hitch and all systems and processes performed to our satisfaction. I would like to thank the participants for their over whelming support and for taking time off during their busy trading day, to punch orders and help us in testing the Exchange systems. This provides me with a lot of encouragment that the industry is eagerly awaiting the launch of the new Exchange.”

The total of 44 traders particpated in the testing which included representatives from 16 companies. A number of remote users accessed the Exchange platform from Indonesia, Japan, India and Australia, and were able to successfully place and execute orders on SMX.

The feedback received from the market participants has been very positive and encouraging. Traders are very enthused by the functionality offered by the Exchange platform for trade execution and the in-built real time risk management features of the system.

Barry White from Patsystems, one of the ISVs connected to the Exchange platform, said: “The Exchange platform provided by SMX has proven in these Go-live tests, its ability to offer users with an uncomplicated yet sophisticated solution for trading commodity derivatives. A number of our existing and potential customers who participated in the trading were very pleased with the performance of the system and Pro-Mark functionality in these tests.”

Mike Donahue, Managing Director, TransMarket Group Pte Ltd said “We are very enthusiastic about the imminent opening of SMX and are looking forward to increased access to the regional and global commodities markets during the Asian time zone.”

Over the last few months, SMX has been actively promoting its membership programmes. The Exchange has received keen interest from leading international and local insitutions based in Singapore and from market participants based in Indonesia, Hong Kong, Taiwan, Malaysia, Japan, Australia, India and Middle East.

“Our multi-product commodity derivatives exchange platform has successfully attracted a broad spectrum of leading international commodity players, as well as top financial and banking insitutions, traders and brokers from around the world. We are encouraged by the response from the global market players and are confident of building on this to create an attractive and vibrant pan-Asian exchange,” Mr McMahon added.

With the succesful completion of Go-live testing, SMX has moved one more step closer to its impending launch.

Source: SMX, 29.10.2009

Filed under: Asia, Energy & Environment, Exchanges, News, Singapore, , , , , , , ,

SMX selects FIX Client Simulator Aegisoft.

Aegisoft, a leading global provider of multi-market high performance trading platforms and FIX validation solutions, announced today that the Singapore Mercantile Exchange (SMX) has selected Aegisoft’s Client Simulator to ensure the orderly execution of FIX conformance testing.

SMX is the first pan-Asian international commodity and derivatives exchange offering market participants an opportunity to trade Asian commodities on one platform in the Asian time zone.

SMX needed an established solution that offered fast conformance test execution and quicker time to market for its members and ISVs. FIX-based orders submitted to its trading engine have to pass conformance tests to ensure trading activities operate smoothly. A solution was therefore required that could simulate messages being placed by SMX members in a trading scenario in order to quickly identify any problems which its members may encounter. Aegisoft was selected because of its proven track record and extensive knowledge of FIX-based testing.

“Aegisoft continues to experience rapid expansion across geographies and markets due to its breadth and depth of offerings,” said Norm Friedman, vice president of Aegisoft. “Our commitment to provide the industry’s most comprehensive FIX-based testing solution resonates with multi-market exchanges around the world. As trading volumes and market data messaging rates continue to rise, the importance of an end-to-end solution such as our FIXTest Marketplace can be applied to the real world challenges of faster time to market, better software quality and risk mitigation. The Singapore Mercantile Exchange’s selection of Client Simulator is affirmation that leading marketplaces and brokerage firms trust Aegisoft to provide proven FIX-based testing solutions.”

Client Simulator acts as a fully featured simulation of buy-side clients for the purpose of testing inbound FIX order flow. It supports multiple asset classes, including: Equities, Futures, Options and FX. Client Simulator reduces development and QA cycles so that customers can release their trading system faster and deliver the highest quality software.

Source: Aegisoft, 03.08.2009

Filed under: Exchanges, FIX Connectivity, News, Singapore, Trading Technology, , , , , , , ,

SMX announces clearing and settlement mandate

Standard Chartered will be the first bank to provide electronic funds transfer and settlement processing to the Singapore Mercantile Exchange’s members. Standard Chartered Bank will provide clearing and settlement to the new Singapore Mercantile Exchange (SMX) when it goes live in the fourth quarter.

The bank will be the first bank to provide electronic funds transfer and settlement processing to the exchange’s members. It will also provide banking services to SMX employees.

All settlement will be in US dollars, but additional currencies will be added based on member demand.

“This appointment as clearing bank for Singapore Mercantile Exchange reflects our position as a leading clearing bank for exchanges in Singapore,” says Jiten Arora, South Asia regional head of transaction banking at Standard Chartered Bank. “We have developed special capabilities to provide extended processing hours and timely reporting to the Singapore Mercantile Exchange and their clearing members.”

The bank has worked with SMX since its February inception helping to map out its clearing and settlement infrastructure. Standard Chartered will extend its hours from 9am to 3am Singapore-time in order to cover Asia-Pacific and the US. In addition, the bank has acted as a consultant on commodities trading.

Negotiations for the mandate were conducted from April to July, with SMX officially appointing Standard Chartered its first banking partner last week. According to sources, the three month negotiation period is an “internal record” for the bank.

SMX is a new commodities derivatives exchange aimed at filling the gap in Asia between equity and single-product commodity exchanges. It is owned by India-based Financial Technologies, a financial services group that also owns the Dubai Gold and Commodities Exchange and various Indian markets including the Mumbai Commodities Exchange.

Currently in the testing and regulatory approval phase, SMX hopes to begin trading sometime after October 15. Once operational, products on the exchange will include agricultural stuffs, energy and base and precious metals.

Traders in Singapore are wary of the exchange’s ambitious opening timeline with many taking a wait-and-see attitude to the post-October 15 start date.

“A lot of benchmarks are unaddressed in Asia,” says Thomas McMahon, chief executive of SMX. “If you look at metals markets, the majority of production is here but prices are disconnected from market exchange. We see an opportunity here.”

McMahon explains that by using the term “mercantile” the exchange sees itself as a market for a broad-base of products. This differs from the Malaysia bourse and the agricultural futures exchange of Thailand that specialise in palm oil and rice respectively. By creating such a broad based exchange, SMX hopes to increase trading transparency and risk mitigation for commodities derivatives products in Asia.

A potential competitor is the Dubai Mercantile Exchange but McMahon dismisses it as energy focused.

When selecting Standard Chartered as its first clearing and settlement bank, McMahon cites its “seamless” reach across borders in Asia. This correlates well with SMX’s plans to become a pan-Asia exchange.

“For example, Standard Chartered’s India, Singapore and Hong Kong product offerings are very similar,” he says. “We [also] aim to be borderless.”

Sumit Aggarwal, Standard Chartered’s head of transaction banking in Singapore, reiterates the bank’s strong regional proposition, saying: “In Asia, our nearest foreign bank competitor has only half as many branches as we do. [SMX] is tapping the breadth of our presence and capability to provide specialised solutions.”

But the bank will not remain SMX’s only clearing and settlement partner.

“Standard Chartered is just one of a number of banks we will eventually have on board,” says McMahon. “As we reach into different regional markets, we’re going to look for entities with good, strong local connectivity.”

The exchange is currently in talks with three additional banks to provide clearing and settlement services. SMX declined to name the institutions but says it plans to bring on a mix of local and global banking players.

Clearing and settlement provided will be conducted through Standard Chartered’s Straight2Bank wholesale e-banking platform. The system will work with SMX’s straight-through processing (STP) solution from India’s Financial Technologies.

The exchange plans to achieve STP from day one though McMahon admits that “all exchanges are STP+1” for settlement.

“Customers will know where they are in their positions at the end of each day,” he says.

Standard Chartered is not new to servicing stock exchanges. The bank has been providing clearing and settlement services for various exchanges since the late 1990s starting with the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). Today, in addition to the BSE and NSE, it has mandates with the Jakarta Stock Exchange through its Permata Bank subsidiary, Nasdaq Dubai and Singapore’s other two exchanges — the Singapore Exchange and the Singapore Commodity Exchange.

When SMX does launch, whether in the fourth quarter or later, it aims to have at least 29 clearing and trading members. It is currently in talks with these entities.

Source: AsianInvestor.com, 29.07.2009

Filed under: Asia, Exchanges, India, News, Singapore, , , , , , , , , , ,

Progress Apama and FT India co-operated capital markets technology and trading expansion in India

Progress Software Corporation (NASDAQ: PRGS), has announced its expansion into India’s Capital Market through a strategic partnership with Financial Technologies (India) Ltd.

Financial Technologies will market the Progress® Apama® Capital Markets Framework, a set of capabilities for capital markets trading. Based on the Apama Complex Event Processing (CEP) Platform, the Apama Capital Markets Framework includes the Apama Algorithmic Trading Accelerator and the new Apama Risk FirewallTM, which offers support for real-time market risk management within trading applications.

Dr. John Bates, co-founder and general manager of the Apama Division of Progress Software said, “Our partnership with Financial Technologies signifies a key milestone in our expansion in global Capital Markets. In India, the Capital Markets segment is very dynamic and, with the introduction of direct market access almost 12 months ago, an exciting market where new demand is high for sophisticated and advanced trading technologies. Through this partnership, we will be able to leverage Financial Technologies’ well-established access to more than eighty percent of the Indian brokerage and institutional market. We look forward to a long and fruitful relationship with Financial Technologies.”

Dewang Neralla, director, technology of Financial Technologies said, “Technology for the financial markets is going through a rapid shift. With automation in exchanges and order management systems, brokerage houses are in need of automating their order flows for algorithmic trading through complex event processing engines, which can generate orders based on thousands of changing parameters with millisecond latency. We are delighted to partner with Progress® Apama®, a world leader in Complex Event Processing technology. This will complement our portfolio of solutions to brokerage houses, which includes our flagship order management system, ODIN, as well as back-office tools.”

Dr. John Bates continued: “Progress Apama has a significant client base around the world in banks, hedge funds, trading venues and regulators – including firms such as JP Morgan, ING, Bank of China, Deutsche Bank, NYSE Euronext, Turquoise, and the FSA (Financial Services Authority). Apama has demonstrated the power of its CEP platform to empower multi solutions in Algorithmic Trading, Market Aggregation, Market Surveillance, Pricing, and Smart Order Routing through its ‘Solution Accelerators’ model. Our growing customer base is evidence of how our approach is serving the market, and we very much look forward to working with Financial Technologies to take our solutions into the Indian market.”

Source: Automated Trader, 15.06.2009

Filed under: Asia, Exchanges, India, Trading Technology, , , , , , ,

Singapore Mercantile Exchange (SMX) Appoints Mr Thomas J. McMahon As CEO – Ex-Director Of NYMEX And Former Head Of HKMEX To Spearhead Singapore’s New Exchange

Singapore Mercantile Exchange (SMX) has announced the appointment of Mr Thomas (Tom) J. McMahon as its Chief Executive Officer.

Mr. Mcmahon brings with him over 25 years of Industry experience in Derivatives and Commodities across Asia and USA. Prior to joining SMX, he was Heading the HongKong Mercantile Exchange (HKMEX) and was former Director of NYMEX Asia. He possesses a deep understanding of the Asian financial and derivative markets having lived and worked in Tokyo, Singapore and Hong Kong for past several years and is well suited to establish SMX into a truly world class pan-asian commodity derivatives exchange from Singapore.

Mr McMahon joins an a formidable SMX leadership team including Mr Ang Swee Tian, Chairman of the SMX Board of Directors and a widely recognized and distinguished veteran of the futures industry, Mr. Jignesh Shah, Vice Chairman of SMX and Chairman and CEO of Financial Technologies India Limited, and Nobel Laureate Mr Myron Scholes, Member of SMX’s Advisory board, Mr. Tan Soo Nan, Member of SMX Board and former CEO of Temasek Capital and Senior Managing Director of DBS Bank.

“I am delighted that Tom will be joining the team” said Mr Ang Swee Tian. “His experience and industry network will serve us well in forging partnerships and drawing membership that will make SMX a leading derivative market platform for price discovery and risk management in the Asian time zone.”

Mr Jignesh Shah said, “I welcome Tom on board of SMX and am confident that under his leadership, SMX will estbalish itself not only as the first Pan-Asia commodities exchange from Singapore but also among the leading exchanges in the world.”

The newly appointed CEO, Mr. McMahon said “I am honoured to be appointed CEO of SMX and am extremely excited to be part of an highly accomplished and competant team that is committed to make SMX the leading global derivatives and commodities exchange from the East.

Financial Technologies Group, the promoter of SMX, brings huge credibility and pedigree to the venture as a recognized global leader in offering its industrial grade, robust and proven Exchange technology IP (Intellectual Property) and markets domain expertise to create the next generation multi-asset financial markets across the world.

Asia which is home to 60% of the world population and a major producer and consumer of most commodities, will play an increasingly important role in influencing and setting the global commodity prices and SMX will play a significant role in the same by providing a transparent and efficient platform for price discovery, risk management, trade execution and clearing.”

Financial Technologies promoted SMX, is the first Pan-Asian international commodity derivatives exchange located in Singapore and will offer a single platform for trading futures and options contracts on commodities such as precious metals, base metals, energy, agricultural products, currencies and commodity indices.

Financial Technologies Group (www.ftindia.com), which operates the largest exchange and ecosystem network with 10 exchanges and 6 ecosystem, connecting some of the fastest growing economies across Africa, Middle East, India and South East Asia. MCX (www.mcxindia.com) which ranks among the top 10 commodity exchanges globally and MCX Stock Exchange (www.mcx-sx.come) DGCX (www.dgcx.ae) in Dubai, BFX (www.bfx.bh) in Bahrain, GBOT (www.gbot.mu) in Maurititus are among the exchanges set-up by the group.

Source: SMX, 23.04.2009

Filed under: Asia, Exchanges, India, Singapore, Trading Technology, , , , , , , , , , , , ,