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ASEAN markets cross trading links in demand – TABB Group

In new equity markets research published today, TABB Group says US and European demand for electronic linkage to Association of Southeast Asian Nations (ASEAN) exchanges is strong and primed to expand, as seamless access will attract brokers already trading in other parts of Asia. However, there is a wide range of needs across the different market segment, including direct market access (DMA), low-cost versus real-time market data, advanced order types, and reliable trading platforms.

TABB’s senior analyst Kevin McPartland, who authored the ASEAN Equity Markets Pinpoint report, an industry update on equity trading in the ASEAN region covering the Indonesia, Philippines, Thailand, Vietnam, Malaysia and Singapore exchanges, says the global financial crisis had little impact on growing buy-side demand for trading in ASEAN markets.

“More seamless access will drive brokers already operating in other parts of Asia to begin trading in the ASEAN markets,” he says, with the sell side set to benefit most from that seamless access. Explaining that the availability of real-time market data is crucial for all trading in the ASEAN markets, and that real time data is a requirement for the sell side even when trade volumes are low or non-existent, he adds, “High costs and time zones do tend to limit buy-side market data usage outside of the region.”

Addressing the relationship between the buy side and sell side, McPartland says that although no single broker currently dominates across all Asian markets, over 90% of buy-side firms are unwilling to give brokers full discretion over their orders. However, while the buy side does look to their brokers for market access, they agree that more seamless access would lower costs for execution and market data. There is also significant support for the idea of central ASEAN execution venue, McPartland adds.

The report’s in-depth coverage includes 24 charts:

  • Support for a central ASEAN venue
  • Improving ASEAN trading
  • Sell-side interest in ASEAN linkage
  • % of bulge-bracket participants trading in each market
  • Impact of the financial crisis on ASEAN interest
  • Roadblocks to sell-side trading in ASEAN markets
  • Buy-side broker usage – all Asia ·
  • Buy-side broker usage – ASEAN markets
  • Top brokers by country (by # of mentions)
  • Bulge-bracket participants trading in each market
  • Mid-tier participants trading in each market
  • Buy-side interest in a seamless ASEAN linkage
  • Roadblocks to buy-side access of ASEAN markets
  • Average number of buy-side orders per week
  • Average blended commission rates (bps)
  • % for which counterparty risk is an issue
  • Importance of each component when trading in ASEAN markets
  • Markets providing real-time market data to sell side
  • Market data sources for sell side
  • Markets providing real-time market data to buy side
  • Reasons for buy side’s lack of market data
  • How the buy side trades ASEAN markets
  • % of buy side using multiple data providers ·
  • Sell-side and buy-side market data providers

TABB Group collected data through interviews with heads of electronic trading from 12 top global broker-dealers, 9 hedge funds and 14 institutional asset managers. On the buy side, participants had combined global assets under management (AuM) of approximately $6 trillion and are currently trading in Asia from slightly under $10 million to over $5 billion monthly.

Source: MondoVisione, 23.10.2009

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Filed under: Asia, Data Management, Exchanges, Indonesia, Malaysia, Market Data, News, Singapore, Thailand, Trading Technology, Vietnam, , , , , , , , , , , , , , , , , , , , , ,

ConvergEx Rolls Out Five Additional DMA Connections to Emerging Markets

ConvergEx, a provider of investment technology solutions and global agency brokerage services, has added five new direct market access (DMA) connections: NASDAQ Dubai, the Indonesia Stock Exchange, the Taiwan Stock Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

With these additional markets, ConvergEx now offers DMA connections in 65 destinations around the world, as well as over 110 global markets through its portfolio and sales trading businesses. Clients can access these electronic connections through any ConvergEx supported front-end trading system, including all major order management (OMS) and execution management (EMS) platforms, the company explained. “These new connections keep our clients at the forefront of rapidly growing and increasingly important emerging marketplaces,” said William Capuzzi, president of ConvergEx’s G-Trade Services.

“Our clients appreciate the unique investment opportunities these markets offer as well as the ease of access our connections provide. ConvergEx understands the importance of building and maintaining state-of-the-art technology and lightning fast connections so we always keep one step ahead of client demand.”

Source: Securities Industry News, 11.08.2009

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Asean bourses pledge electronic trading link

So far Southeast Asia’s stock exchanges have been good at signing MOUs but not so good at actually harmonising markets. Will this time be different?

Five Southeast Asian stock exchanges have signed an agreement to establish a single electronic trading link for regional or global investors to access their markets on a uniform basis, and thereby establish Asean markets as an asset class.

The mechanism among the five countries — Indonesia, Malaysia, the Philippines, Singapore and Thailand — will enable their clearing houses to act as central counterparties that can clear and settle cross-border trades among them.

Brokers with seats in any of the five exchanges would not need to consider other participating exchanges as foreign, thereby reducing risk. Investors may come to see Asean as a trading bloc, with economies of scale helping to bring down transaction costs and improve liquidity. Creating a single market would spur liberalisation in other areas.

That, at least, is the theory, as announced after business hours yesterday. Executives at these bourses have been talking about building an electronic link for years. These markets are small, which drives up the cost of cross-border trades.

At a time when major bourses around the globe are tying up, alternative electronic trading venues are penetrating the region, and events are being driven by pan-European directives such as Mifid, Southeast Asia’s fragmented markets risk falling well behind. New technologies such as dark pools and direct-market access trading have marginalised them further, because of their illiquidity.

So exchange officials and politicians have long recognised the need to harmonise their systems in order to remain attractive to global investors, market Southeast Asia as an asset class, and enhance the pool of capital available locally.

But politics have gotten in the way: Singapore is the obvious hub for the region, a fact that Singaporean officials like to point out, which makes the other players jealous and unwilling to give up control over their little patches.

Nonetheless, there has been bilateral progress. SGX CEO Hsieh Fu-Hua first proposed such a multilateral link in 2006. The following year, SGX and Bursa Malaysia unveiled a cross-border electronic link for trading securities.

Now, along with this announcement of Asean-wide cooperation, SGX and the Stock Exchange of Thailand are also pledging to jointly promote market activities, as well as operational and regulatory information, and discuss the idea of cross-border trading of securities and derivatives.

SGX’s Hsieh says the e-trading link will be operational sometime in 2010. By putting a date on the project, he and his counterparts at other exchanges are taking a concrete step towards harmonising their markets for the first time.

Source: AsianInvestor, 24.02.2009

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6 Asian Stock Exchanges discuss trading tie-up

The FT reports that six Asian stock exchanges are working on plans to develop an integrated platform for display and execution of trades for the largest 180 companies in the region.
The plan is being elaborated by the stock exchanges of Thailand, Malaysia, Singapore, Vietnam, Indonesia and the Philippines, says the FT, which quotes Thai exchange chairman Pakorn Malakul Na Ayudhya.”What you see beginning to develop is the integration of stock exchanges in this part of the world,” he told the paper, pointing to recent initiatives by the mature bourses of Thailand and Korea to help set up fledgling stock market trading systems in Laos and Cambodia.

Collaboration between the six bigger exchanges would entail each bourse adding its 30 leading companies to a linked electronic trading platform, giving domestic investors in each country direct access via their local brokerage to a portfolio of 150 foreign companies.

The report does not go into detail on technology options available to the participating exchanges, although both Nyse Euronext and Nasdaq OMX are active in the regions, supplying trading systems to Malaysia and SGX respectively.

Source:Finextra 09.07.08

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ASEAN:Six-country Asian board due in 2009

Bangkok Post |NUNTAWUN POLKUAMDEE | 24.06.2007

The new six-country Asian board should begin operations by mid-2009, comprising 180 stocks representing the 30 largest listed companies for each market.

Nongram Wongwanich, an executive vice-president for the Stock Exchange of Thailand, said officials of the six participating exchanges hoped to select a vendor in August to set up a trading system for the new board.

The two vendors being considered are NYSE Euronext and the Nasdaq OMX Group. The vendor would be responsible for establishing a trading platform allowing real-time updates for all securities on the board.

The Asian board concept is aimed at facilitating links between the stock exchanges of Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam. The 180 securities to be included in the new board would have a combined market capitalisation of US$818.66 billion, or 59% of the combined market capitalisation of the six exchanges based on current data.

Financials would lead the board in terms of industry, followed by industries and consumer goods.

Mrs Nongram said that by joining together, the six Asean members could raise their profile in the global financial market beyond what any single exchange could do on its own.

If the Asean stock markets were combined, the resulting entity would rank 13th in the world, according to the World Federation of Exchanges. The Asian board alone would rank 20th among WFE members.The Asian board would first start with Thailand and Singapore, to be followed by the other four markets.

Mrs Nongram said the SET would select securities for participation based on companies ranked in the SET50 index. Final selections would be based on market capitalisation, trading liquidity and the availability of information, such as research coverage by analysts.

The SET would consider expanding the bid-offer limits for securities, as some exchanges allow matching at up to five levels compared with the three levels used in Thailand.

Filed under: Asia, Exchanges, Indonesia, Malaysia, News, Singapore, Thailand, Vietnam, , , , , , , ,