FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

Derivatives: Struggling Into the New Era – Outlook 2013/14

The past few years have been challenging for the global economy but it seems as though the derivatives industry sustained more than its share of insults and injuries over the past year or so. Still reeling from the trauma of MF Global in October of 2011, exchange-traded volume went into its first nosedive in decades.

Urgent regulatory requirements added intense cost and time pressures to company staffs that were already stretched. A non-clearing FCM, Peregrine Financial, collapsed in scandal. OTC derivatives struggled with complex regulatory mandates and weak volume.

Perhaps the only positive for the year was that mergers and acquisitions at both the macro and micro level imply that innovation and creativity are still powerful industry drivers. That in turn suggests that the creative dynamism that has characterized the derivatives industry for so many years still has some innings to go.

Read the detailed report about Derivatives market outlook, challenges and issue of big deals, exchange mergers and new start ups, customer protection, Regulatory,Extraterritorial and Tax problems  and more. 

Source: WEF 25.04.2013 by Nicolas Ronalds

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Filed under: Asia, Brazil, Exchanges, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

KRX Listing 10 additional Stock Futures on Dec 14, 2009

10 additional single stock futures will be listed on Dec 14, 2009 since the Korea Exchange introduced 15 single stock futures for the first time on May 6, 2008.

Of the stocks that satisfy the selection criteria related to the market share within the industry group and liquidity, the 10 single stock futures to be listed in December have been chosen by taking into consideration the inputs of securities companies, including how frequently the underlying stock has been used in developing equity linked products such as ELWs, ELSs and single stock options.

The issues selected are:

  • Kia Motors(Motor Vehicle),
  • Daewoo Securities(Securities),
  • Korean Air(Transport),
  • Doosan Infracore(Machinery),
  • Samsung C&T(Distribution),
  • Hynix(Semiconductor),
  • Hyundai Steel(Steel),
  • GSE&C(Construction),
  • NHN(Service),
  • SK Energy(Chemical)

As a result, after December 14, 2009, total of 25 single stock futures will be listed on the Korea Exchange.

It is expected that listing of these additional single stock futures will further facilitate new trading strategies to meet the demand of foreign and domestic market participants.

Source:MondoVisione, 17.11.2009

Filed under: Asia, Exchanges, Korea, News, , , , ,

Bursa Malaysia and KRX: Support of the Malaysia International Islamic Financial Centre’s Initiative aims to boost Growth of Islamic Finance Market- Event 19.11.2009

The Korea Exchange (KRX) and Bursa Malaysia will be playing host to the Korean investment bankers, advisers, issuers and institutional investors at its inaugural KRX-Bursa Malaysia Islamic Capital Market Conference, which will be held on 19 November 2009 in Seoul, Korea. This conference which is co-organised in support of the Malaysia International Islamic Financial Centre (MIFC) initiative, aims to share Malaysia’s Islamic finance experience and to promote the opportunities in the Malaysian Islamic capital market landscape. This collaborative effort hopes to strengthen the growth opportunities of Islamic finance amongst the discerning Korean investors and issuers.

This conference is timely as there is a strong interest for Korea to grow the Islamic finance industry, following from the proposed liberalisation measures by the Korean government which are aimed to allow the issuance of Islamic bonds or sukuk as well as allow incomes from sukuk to be tax-exempted. These proposed laws are expected to be passed by the Korean government’s National Assembly later this year.

In conjunction with the KRX-Bursa Malaysia Islamic Capital Market Conference, delegates of the MIFC initiative, which comprises senior management of Bank Negara Malaysia (Central Bank of Malaysia), Securities Commission Malaysia and Bursa Malaysia, will be participating in the conference. Malaysia acknowledges Korea as a potential Islamic financial market and welcomes Korea’s participation in shaping the Islamic finance landscape together, via leveraging on Malaysia’s more than 30 years of experience in developing the world’s most comprehensive Islamic financial system.

Chief Executive Officer of Bursa Malaysia Berhad, Dato’ Yusli Mohamed Yusoff said, “We hope this conference will stimulate interest in the Shari’ah compliant products which are currently in demand from investors who are seeking returns from alternative and ethical investments. In addition, this visit by the delegates from the MIFC will pave the way for more opportunities to exchange ideas in Islamic finance and forge greater working relations between Korea and Malaysia for the interest of growing this important industry. We are confident that the Malaysian and Korean authorities as well as KRX and Bursa Malaysia would be able to leverage on our respective strengths in the establishment of an Islamic capital market in Korea.”

This KRX-Bursa Malaysia Islamic Capital Market Conference is expected to attract 200 participants and will provide a platform for all attendees to gain an insight into the outlook and trends of Islamic capital markets. Key discussion topics will centre around the liberalisation of Islamic financial markets, investment and business opportunities in Islamic capital market, the Islamic finance landscape and framework as well as the growth of Islamic finance products in Asia and globally.

Source: MondoVisione, 16.11.2009

Filed under: Asia, Events, Exchanges, Islamic Finance, Korea, Malaysia, News, Services, , , , , , , , , , ,

KRX Wins Stock Market System Development Project In Vietnam Stock Exchanges HOSE – HaSTC

Korea Exchange was finally selected as a priority negotiator in the international bidding for the construction of the Vietnamese stock market next-generation system announced on March 7, 2008 by the Vietnam Ho Chi Minh stock exchange(HOSE). Since KRX started global marketing in 2005 for the stock market IT solution export, this is one of the most successful results covering overseas projects.

KRX will provide total solution for the development of 13 stock market-related systems and the delivery of all related equipment in 2 exchanges, i.e. Ho Chi Minh and Hanoi including the Vietnam Securities depository covering trading, market surveillance, disclosure, sharing of information, clearing and settlement to upgrade the Vietnam’s stock market infrastructure. The construction project covering Vietnam’s stock market infrastructure next-generation system directly managed by the Vietnamese government is the largest scale project for a single order since KRX started overseas projects.

Recently, KRX has successfully completed the development of bond trading system, market maker monitoring system and Islam product trading system at Bursa Malaysia. With the winning of this project aimed at improving the IT infrastructure at the stock market of Vietnam, Korea’ technical capability in the stock market IT solutions has been recognized worldwide.

Development Projects

Completed the 1st(March 2008) and 2nd(January 2009) development of the bond trading system for Bursa Malaysia.

Completed development of the market maker monitoring system (MMM) (April 2009) for Bursa Malaysia.

Completed development of the Islam product trading (BCH) system (August 2009) for Bursa Malaysia.

Source: MondoVisione,08.10.2009

Filed under: Asia, Exchanges, Korea, News, Trading Technology, Vietnam, , , , , , , ,

‘Bubble-Mania’ in Shanghai Spreads to Global Markets

The S&P-500 Index, a global bellwether for the world stock markets, extended its best five-month winning streak since 1938, by advancing through the psychological 1,000-level, and is up nearly 50% from its 12-year low set on March 10th. The S&P-500 gained 7.4% in July, its best monthly performance since 1997, even as average earnings per-share tumbled -32% and sales slid -16% from a year ago.

Industrial commodities, often viewed as barometers for global economic trends, have also moved sharply higher. So far this year, copper has soared by +96%, nickel is up 62%, and zinc is +50% higher. China, which buys two-thirds of the world’s seaborne iron ore shipments, boosted imports 30% in the first seven-months of this year to 353-million tons, lifting its spot price to $91 /ton, up from $60 per ton in February. Crude oil rose above $71 /barrel this week, doubling in value since December.

In hindsight, while the “Group of Seven” (G-7) economies in North America, Europe, and Japan, were experiencing the most severe economic contractions since the Great Depression of the 1930’s, coupled with unemployment rates ratcheting upward to multi-decade highs, the emerging economic giant – China – was demonstrating its prowess, with the most ambitious stimulus plan the world has ever seen, to rescue its juggernaut economy from the brink of social disaster and unrest.

In a little more than nine months, the pendulum of investor sentiment in Asia has swung from the extreme of terrifying panic and fear, to the opposite side of the emotional spectrum – hope and unbridled greed. The Shanghai stock market index has surged +90% this year, owing its good fortune to 1.2-trillion of bank loans clandestinely funneled into the stock market by brokerage firms, leaving it awash with yuan and lifting share prices above what economic reality can support.

China’s ruling Politburo is demonstrating to the world its command and control over its stock market and economy. Over the past few years, Beijing has proven its ability to either massively deflate a stock market bubble, as seen in 2008, and the wizardry to re-inflate a stock market bubble this year. Beijing is following the Greenspan – Bernanke blueprints, – turning to massive money printing to re-inflate bubbles in asset markets, in order to jump start an economy from the doldrums, or in this latest case, from the grip of the Great Recession.

A relatively healthy banking system enabled the Chinese central bank to work its magic. China’s M2 money supply is growing at a record +28.5% annualized rate, and the money supply surge is coinciding with big rallies in stocks and property, spilling over into neighboring Hong Kong. State-controlled Chinese banks extended 7.4-trillion yuan ($1.2-trillion) of new loans in the first half of this year, equal to 25% of China’s entire economy – helping to fuel a powerful Shanghai red-chip rally.

One of the beneficiaries of the explosive growth of the Chinese money supply is the Shanghai gold market, which is trading near 6,600-yuan /ounce, and is also tracking powerful rallies in industrial commodities. China is poised to overtake India as the world’s top gold consumer this year, and there is speculation that Beijing will quietly buy the gold which the IMF wants to sell in the years ahead.

China, the world’s biggest gold mining nation, is seeking to boost gold output by 3% to 290-tons this year, far less than the 400-tons it consumed last year. Thus, China could become an even bigger importer of the yellow metal in the months ahead, helping to cushion inevitable corrections in the gold market. Given the trade-off between expanding growth and fighting asset-price inflation, Shanghai traders are betting that Beijing will opt to blow even bigger bubbles in asset markets.

Industrial Commodities Eyeing Shanghai

China’s super-easy monetary policy is designed to offset the damage to its export-dependent regions, which are suffering from the collapse in global trade. Beijing is also spending 4-trillion yuan on infrastructure projects, equal to roughly 15% of its economic output per year, to create jobs and stoke economic growth. So it was of great interest to global traders, when the Shanghai red-chips suddenly plunged -5% on July 29th, the biggest daily loss in eight-months, on rumors that Beijing would curb bank lending in the second half of this year.

The Shanghai index is prone to sudden shake-outs, with the index trading at 35-times earnings, and Shenzhen’s small-cap shares trading at 45-times earnings. The Shanghai red-chip index has evolved into the locomotive for key industrial commodities, such as crude oil, base metals, and rubber. Industrial commodities rebounded from a nasty one-day shake-out on July 29th, after the People’s Bank of China wasted little time in denying rumors swirling in the media that it was considering the idea of enforcing quotas on bank loans.

The prospects for Chinese corporate earnings growth are of critical importance, with the Shanghai stock index flying higher in bubble territory. Large-scale industrial companies in 22 Chinese provinces saw their profits decline -21.2% in the first half to 894.14 billion yuan, but the decline rate was less from the first quarter’s 32% slide, and nowadays, “less bad,” means signs of recovery.

The most optimistic scenario calls for Chinese industrial profits to rebound to an annualized growth rate of +30% in the fourth quarter, due to the government’s massive stimulus. China’s Bank of Communications predicts the economy’s growth rate will accelerate to a pace of +9% in the third-quarter and +9.8% in the fourth-quarter. China’s crude steel output would surely top 500-million tons this year, equaling 40% of the world’s total production.

Korea Joins Alignment of B-R-I-C-K

Upbeat markets in China are helping underpin the BRIC nations, including Brazil, India, and Russia, which have the four best performing stock markets this year. Brazil’s Bovespa Index is up 79%, India’s Sensex Index is up 63%, and Russia’s RTS Index has gained 62-percent. The S&P-500 Index by comparison, is up 9.4% this year, while Japan’s Nikkei-225 index is up 7.5-percent.

One could add Korea to the alignment of B-R-I-C-K stars, since the Kospi Index has rebounded by 72% above its November low, emerging as the most favored market among global investors. With growing appetites for risky assets, global investors have rushed to snatch up Korean Kospi shares, particularly those in the information technology (IT) and the auto sectors. Foreigners were net buyers of $4.7 of Korean stocks in July, much larger than net-purchases of $2.6-billion of stocks in Taiwan, $1.9-billion shares in India, and $1.29 billion shares in South Africa.

“Money has no motherland, financiers are without patriotism and without decency, – their sole object is gain,” observed Napoleon Bonaparte. Highlighting the fickle nature of speculators, – foreigners bought a record $18-billion of Korean securities in the second-quarter of this year, or 24-times more than $750 million the previous quarter. In the third and fourth quarters of 2008, foreigners sold $17.9-billion and $17.4-billion, respectively, at the height of the global financial turmoil.

Foreign buying of Korean equities knocked the US-dollar 28% lower against the Korean-won, and the Japanese yen has tumbled 20% to 12.8-won, since March 10th, when global stock markets bottomed out. “Carry traders” are active in Seoul, and profiting from a stronger won. In a world where G-7 central banks are pegging rates at record low levels, it does not take much imagination to envision the Federal Reserve, the ECB, and the Bank of Japan underwriting rallies in the emerging currencies of Brazil, Russia, India, and Korea, just as Tokyo pumped massive liquidity straight into New Zealand and Australian dollars during its flirtation with the hallucinogenic drug – “Quantitative Easing” (QE) between 2001 and 2006.

Virtuous Cycle Swings in the Kremlin’s Favor

The resilience of China’s economy has rekindled the de-coupling debate, which hinges on the premise that the emerging economies in Brazil, Russia, India, China, (BRIC) can grow in spite of a declining G-7 economies. The so-called BRIC countries accounted for half of global growth in 2008 – China alone accounted for a quarter, and Brazil, India, and Russia combined equaled another quarter. Furthermore, the IMF notes that BRIC “accounted for more than 90% of the rise in consumption of energy products and metals, and 80% of grains since 2002.”

The virtuous cycle of events are now swinging back in the Kremlin’s favor, as global speculators flock back into hard-hit resource shares trading in Moscow. Russia’s central bank cut its main interest rates for the fourth time in less than three-months, after Moscow said the local economy contracted an annual 10.2% in the January-May period. Bank Rossii lowered the refinancing rate a half-point to 11% following on initial reduction on April 24th and two further cuts on May 13th and June 5th.

The Russian rouble has rebounded 16% against the US-dollar, since the first quarter, as Urals blend crude oil rebounded towards $70 a barrel, and base metals surged higher, boosting demand for Russia’s currency, a world leader in commodity exports. Russia is the world’s second-largest oil exporter behind Saudi Arabia, and supplies a quarter of Europe’s natural gas needs. Russia is also the world’s largest nickel and palladium miner, the second largest platinum miner, and the fourth-largest iron ore miner, behind Brazil, Australia, and India.

After reaching a record high of $597-billion last August, Moscow’s foreign currency reserves were dramatically depleted in the second-half of 2008, as the central bank spent more than $200-billion supporting the Russian rouble and bolstering the capital position of domestic banks. This year’s rebound in Urals blend crude oil has improved the Kremlin’s coffers, to the tune of $404-billion today. China, the world’s second-largest oil guzzler, imported 3.83-million barrels per day in July, or 25% more than a year earlier, the fastest pace in nearly two-years.

The BRIC nations are rethinking how their US-dollar currency reserves are managed, underlining a power shift from the United States, which spawned the global financial crisis. Russian chief Dmitry Medvedev has repeatedly questioned the US-dollar’s future as a global reserve currency. China is allowing companies in its southern provinces of Yunnan and Guangxi to use yuan to settle cross-border trade with Hong Kong and Southeast Asia to reduce exposure to the US-dollar.

India Weathers the “Great Recession”

Reserve Bank of India chief Duvvuri Subbarao says India’s modest dependence on exports will help Asia’s third largest economy, to weather the “Great Recession” and even stage a modest recovery later this year. Even during the depths of the October massacre in the Bombay Sensex Index, India managed to maintain a 5.3% growth rate in the fourth quarter, and India’s banking system had virtually no exposure to any kind of toxic asset, manufactured in the United States.

India’s factory output contracted by a slim 0.25% in January, the first decline this decade, and export earnings had fallen for six straight months. In January exports were 16% lower from a year earlier tumbling to $12.3-billion. So the Reserve Bank of India (RBI) scrambled to rescue the Bombay stock market, by slashing its lending rates six times from September thru April, by a total of 425-basis points.

click to enlarge

The Indian Sensex index began to decouple from Wall Street and Tokyo in early May, after it rallied 14% for its biggest weekly gain since 1992, when Indian Prime Minister Manmohan Singh won a second term. Bombay stocks soared with enthusiasm at the prospect that Singh’s new government, shorn of Communists, would privatize up to $20-billion of state-owned assets, increase foreign investment in highly profitable crown jewel companies, begin deregulation of banking and financial services, and gut restrictions on the closing of factories.

India’s factory sector, measured by the Purchasing Mgr’s Index, held strongly at a reading of 55.3 in July, or 2-points higher than China’s, signaling a strong industrial recovery in the second half of this year. If the decoupling of China, India, Russia, and Brazil becomes a reality, it could be good for the developed G-7 nations, as growing wealth in BRIC nations could, in theory, increase demand for goods made in battered nations like Japan, Germany, and the United States.

A decoupling between the emerging BRICK nations and the more developed G-7 economies would mean a huge shift in the global financial markets, away from the traditional pattern of emerging markets dancing to the tune of G-7 economies, which still account for 60% of global GDP. Instead, increasing independence could lead to a greater sphere of influence of the emerging giants, led by Beijing.

In the United States, Fed chief Bernanke is pumping a “bailout bubble” for Wall Street, similar to the policies of his mentor “Easy” Al Greenspan, who inflated the housing bubble, the sub-prime debt bubble, and the high-tech bubble. It’s a never ending cycle of boom-and-busts of bubbles, engineered by central banks. The revival of the “Commodity Super Cycle,” might already be in motion, and if a global economic recovery gains traction, soaring input costs would begin to crimp the profit margins of the giant Asian industrialists.

All the liquidity that’s been unleashed into the global banking system would play havoc with accelerating inflation. History shows that central banks won’t pre-empt inflation by withdrawing liquidity early. Instead, the money printers tend to inflate bubbles to dangerous proportions. Add to the mix, the vast leverage of the US-dollar and Japanese yen carry trades, it’s going to be a wild ride for the US Treasury bond market, which is increasingly dependent upon the whims of BRICK.

Source: SeekingAlpha, 05.08.2009 by Gary Dorsch

Filed under: Asia, Banking, Brazil, China, Exchanges, India, Korea, News, Risk Management, Services, , , , , , , , , , , , , , , , , , ,

CCX Chicago Climate Exchange signs agreement to collaborate on establishing Emissions Trading in Korea

Chicago Climate Exchange, Inc. (CCX®) signed a memorandum of understanding today in Washington, DC with Korea Power Exchange (KPX), Korea Exchange (KRX) and Korea Energy Management Corporation (KEMCO) to collaborate in preparing for the establishment of emissions trading in Korea.

Parties to the agreement will explore avenues of cooperation in the establishment of Korean emissions trading and matters relating to the infrastructure for emission trading, both of which could play an important role in promoting “low carbon green growth” in Korea.

“Emissions trading is a proven tool for using market-based mechanisms to address environmental challenges and we look forward to working with KEMCO, KRX and KPX, as well as the Ministry of Knowledge Economy and other Ministries in Korea, as Korea moves forward with its important ‘low carbon’ growth goals,” said Dr. Richard L. Sandor, Chairman of CCX and Executive Chairman of Climate Exchange plc.

By creatively integrating public concerns about environmental protection and his experience in financial innovation and business development, Dr. Sandor founded CCX in December 2003 and launched the European Climate Exchange (ECX) in April 2005. CCX also operates the Chicago Climate Futures Exchange (CCFE), which handles NOX, SOX and other criteria pollutant contracts based on the U.S. Clean Air Act.

“CCX is the preeminent and most influential organization in carbon trading. This MOU not only represents a historic collaboration of the parties, but represents a crucial initiative between the United States and Korea,” said KPX CEO Il-Hwan Oh.

“CCX has many international connections we want to be part of. CCX has provided a market solution, with many products as everybody knows, and is facilitating the preparation for carbon trading, fostering green growth,” said KRX CEO Jung-Hwan Lee.

“We are confident the MOU will be part of developing infrastructure in Korea for emissions trading,” said KEMCO CEO Tae-Yong Lee.

Source: MondoVisone, 15.06.2009

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

Asian stock exchanges find ways around falling volumes

The financial crisis has reduced profits for Asia’s stock exchanges, but they are finding a variety of opportunities to grow revenues.

It’s a tough time to be an Asian stock exchange. A new study by Celent finds all of them suffering lower trading volumes, lower margins and reduced profits as a result of the global financial crisis and the introduction of alternative trading systems — at a time when new regulations and risk management issues are likely to impose additional challenges. Click here for original article.
Exchanges are, however, finding a variety of ways to maintain their position, and in many ways, may be in a better position than counterparts in Europe and America to grow.

On average, Asian exchanges enjoyed robust growth in the years before the crisis, with an almost 30% compound annual growth rate in revenues from 2005 through 2007. But in 2008 this reversed: for example, Singapore’s exchange saw net profit down 40% in the first three quarters of 2008; Hong Kong’s exchange saw revenues fall by 10% and profits down 17% in 2008. The news is similar for others in the region.

These declines are due to the lack of listings and steep declines in both cash and derivative trading. These had a knock-on effect on other revenue-generating services offered by exchanges, including clearing and information products.

Celent reckons these losses are not going to be easily reversed in 2009. Exchanges are relying more on new initiatives to maintain their quasi-monopolistic positions and their profitability.

These include trying to attract cross-border listings in emerging markets, going head-to-head with the likes of NYSE, Nasdaq and the London Stock Exchange. The Korea Exchange, for example, has entered into equity stakes in the new bourses of Laos and Cambodia, partly in order to get new companies there to cross-list in Seoul. Singapore’s exchange has a partnership with the provincial government of Fujian to attract its companies. Hong Kong and Shanghai have signed a number of collaborative measures.

Trading is the biggest revenue generator, and has come under pressure from the rise of alternative systems such as Instinet and Liquidnet, and from the promotion of dark pools by broker dealers or the likes of ITG.

However, in Asia, such alternatives do not threaten exchanges as they have done in the United States, in part because Asian bourses enjoy monopolistic positions among fragmented, less liquid markets. This has prevented alternatives from being able to undercut the exchanges on pricing or service, despite the anonymity they offer. In Hong Kong, alternative platforms actually operate as members of the exchange.

Only in Japan is there a true alternative market, with 2% of all electronic trading executed on true off-exchange platforms, and crossing networks are popular.

Nonetheless the exchanges can’t be complacent, and are improving their products and their pricing. This includes upgrading their systems to be faster and accommodate more trades, and improving their market-data services. Singapore is working to attract more algorithmic traders, both through operational improvements and perhaps fee cuts. Korea Exchange’s introduction last year of KoreaCross, a VWAP anonymous electronic platform for local and international institutional investors, will also spur block trading. Taiwan is taking similar action.

Other important initiatives that are sweeping the region are the development of derivatives trading and cross-border initiatives.

With regulation likely to encourage the OTC derivatives market to move onto an exchange, exchanges are trying to develop products that are standardised and easy to use, but also provide the benefits of OTC trades. For example, Korea Exchange has begun a market-making scheme to provide liquidity to 10-year Korea treasury bond futures. It has also allowed Eurex to list, trade and clear daily futures on Kospi 200 options worldwide after Korean trading hours.

Southeast Asia has seen five nations form an Asean electronic trading link, which should allow investors in their markets to trade regional securities through local brokers. Other examples of international initiatives include the Tokyo Stock Exchange taking a 5% stake in SGX in 2007, as part of a plan to give Tokyo access to superior technology.

The next most active area for growth is in product development, with Islamic products at the forefront. The idea is to attract investment from the Middle East. Last year, SGX listed Singapore’s first sharia-compliant ETF covering 100 eligible Japanese companies. Carbon emission products are also expected to grow, with Japanese bourses at the forefront.

Taken together, these and other initiatives should be enough to keep Asia’s exchanges on the path to growth, thanks to the region’s strong economic fundamentals and GDP growth prospects.

Source: AsianInvestor.net, 25.05.2009 by Jame DiBiasio

Filed under: Asia, China, Exchanges, FIX Connectivity, Hong Kong, Japan, Korea, Library, Malaysia, Market Data, News, Singapore, Trading Technology, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Korea Exchange launches new trading system

The Korea Exchange (KRX) launched successfully the next generation IT system (EXTURE) on March 23, 2009.

The EXTURE consolidates the trading systems, clearing and settlement systems and information dissemination systems of the 3 former exchanges that were consolidated under the KRX.

In terms of efficiency, processing capacity, flexibility and reliability, the KRX’s next generation IT system is one of the most advanced systems in the world. Thus, it is anticipated that it will become a new growth engine of the KRX.

Specifically, to effectively accommodate the market liquidity, the processing capacity of system has been upgraded to 40 million quotes per day, which is 2 times the capacity of existing system. The roundtrip latency for order execution has been reduced to less than 0.08 seconds, which is one of the best in the world.

With the launch of the next generation IT system, all functions related to trading, e.g., order routing, order matching and execution, dissemination of market data, management of customer account book, etc., which the 3 Markets have been handling independently, will be integrated and standardized into a single process. Consequently, the internal efficiency of the member companies will be enhanced and it will also be an occasion for fundamentally improving the KRX’s business practices.

Using the next generation IT system, the KRX intends to accommodate various products to be developed and introduced after the enforcement of the Financial Investment Services and Capital Market Act; establish the mechanisms for cross-boarder trading with such exchanges as CME and Eurex; and export the Korean-style market standards to the other foreign markets.

Source: KRX 25.03.2009

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

Nomura launches Electronic Trading Platform In Asia-Pacific – Trading Live In Japan, Hong Kong, Singapore and Australia

Nomura, the pre-eminent Asia-based investment bank, this week announced the launch of its Asian Electronic Trading platform, providing clients with Direct Market Access (“DMA”) and Algorithms via its “ModelEx” platform connecting to equity markets in Japan, Hong Kong, Singapore and Australia. ModelEx is Nomura’s algorithmic trading platform which allows clients to electronically access its suite of automated trading strategies.

The firm expects to launch the platform in India, Taiwan and Korea by April 2009.

Nomura is unique in the electronic trading services (ETS) business for its award winning quantitative analytics and risk models, which provide pre- and post-trade analytics, market microstructure and quantitative research to help clients generate new and innovative trading ideas.

The new ETS team combines the best electronic trading capabilities of the Lehman Brothers acquisition, including the quantitative analytics team, developers of the algorithms, information technology and operations personnel, with Nomura’s strong client relationships and dominance in Japan.

Previously, Nomura has been active in the Japan ETS market in both DMA and Direct-Strategy-Access (DSA), utilizing its “Experts” algorithmic platform. The current ETS team, led by Managing Director Rob Laible, has maintained the Nomura platform while at the same time building-out the pan-Asian capabilities of ModelEx in order to ensure seamless execution and provide superior analysis and a competitive edge for its clients.

“Nomura is committed to establishing a world-class suite of electronic trading products for its customers globally, and we’ve been very focused over the last few months on re-establishing a market-leading platform in Asia,” said Rob Laible, Head of Nomura Electronic Trading Services in Asia. “We are well-positioned to offer our long-only clients, hedge funds, pension funds, and other institutional investors value-added and customized trading solutions and execution services.”

Nomura’s Asia-Pacific Equities division delivers the full resources of a multi-product execution platform to its clients globally. Committed to a state-of-the art risk management platform and market-leading research coverage and insight, Nomura provides its clients with a full-service equity broker offering, including structured and flow derivatives sales and trading, cash sales and trading, program and electronic sales and trading, quantitative advisory/analytics, structured derivatives and prime services.

Source: MondoVisione, 26.02.2009

Filed under: Asia, Australia, News, Trading Technology, , , , , , , , , , , , , , , , , , , , , , ,

Korea Exchange To Launch Next-Generation Trading System Offering A World Class, Efficient Platform For Integrated IT Solutions

The new system is more advanced and faster, and will accommodate a wider range of financial products expected to come after the introduction of the Capital Market Consolidation Act.

The Korea Exchange (KRX), considered the world’s second largest derivatives exchange, has completed an upgrade of its trading system that creates an advanced platform for the benefit of investors in the local market.

The new system is expected to go live on March 23, but is already available for testing by KRX members.

The upgrade, which involves aligning the trading, settlement and information distribution systems, establishes a more efficient platform for obtaining product information, according to KRX.

The next-generation system includes: the KIND (KRX E-Disclosure) and data warehouse systems, which have both been operating since August 2008; a market surveillance system operating since October 2008; and the trading and settlement systems, which will commence operation in March.

Kim Jeong-woo, CIO of KRX, says the next-generation system maximises efficiency, flexibility and stability of trading.

“With its integrated functionality we are confident the system will prove to be the best, and most modern, of its kind,” Kim says. “Within the new system, all functions including order submissions, trading execution, price information delivery and client account management have been integrated and standardised as a single process.”

KRX’s capacity following the introduction of the new system will increase to 40 million quotes per day, twice the current volume. Trade executions or latency time, once the system comes into effect, will decrease to less than 0.08 seconds or 80 milliseconds per transaction, making the system one of the fastest in the world.

Singapore’s is still much faster, though, and remains a leader in Asia as the Singapore Exchange is able to provide access to its trading engines in one to 20 milliseconds.

The existing Main Frame environment has been converted to an Open Unix environment to maximize operating efficiency. In case of failure, the dual system allows for back-up equipment to automatically convert/restore the system on a real-time basis.

To cope with disasters such as fire, flooding, and earthquake, Disaster Recovery (DR) systems have been constructed in Seoul (for systems related to derivatives) and in Busan (for systems related to equities), so if one computer center collapses, the other area’s DR takes over.

The new trading system is also timely because it will allow the KRX to accommodate a wider range of financial products that are expected to follow with the implementation of Korea’s new Capital Market Consolidation Act, which became effective yesterday. The Act lifts restrictions that have so far limited Korean financial institutions to a strictly defined range of services. Previously, Korean companies were not allowed to provide multiple products, spanning equities and derivatives trading, asset management and investment banking.

Member companies will be able to test the new system any time from now until March 23.

Source: KRX and AsianInvestor

Filed under: Data Management, Exchanges, Korea, Market Data, News, Trading Technology, , , , , , , , , , , , , ,

Tehran Stock Exchange Signs MOU With Korea Exchange

Tehran Stock Exchange Corporation (TSE) signed MoU with its Korean counterpart, Korea Exchange (KRX) on 21 January 2009.

Including six cooperation areas, the Memorandum is signed and exchanged in order to establish and encourage relations and collaboration between both Exchanges. Both parties are interested to have participation in mutual training of the personnel, information exchange, and promotion of securities markets and the tradable products, especially bonds trading system.

TSE and KRX are also looking forward to benefit each side’s consultancy services for development of risk management systems, as well as the joint working groups for focusing on the common interests.

Source: Mondovisione, 24.01.2009

Filed under: Exchanges, Islamic Finance, Korea, News, , , , , , , ,

Asian Exchanges: Opportunities in Asia’s SouthEast Asian Markets

MALAYSIA-With the financial crisis expected to slow technology adoption throughout the Asia-Pacific region in the coming year, many are expecting some of Asia’s smaller exchanges to play a growing role in the market.

The Vietnam, Thailand and Malaysia exchanges, for example, lag behind some of their neighbors in terms of trading technology. These markets lack some of the basics, and technology vendors in the region will benefit as they fill in the gaps.

Malaysia introduced a new trading platform in early December aimed at improving latency and allowing traders to access the exchange electronically. “As the Malaysian marketplace progresses, we must leverage new technologies to allow market users and investors access to more trading opportunities,” says Dato’ Yusli Mohamed Yusoff, CEO of the Bursa Malaysia Berhad. As the exchange goes, local brokerages will likely follow suit, adopting new technologies to stay competitive.

Traders and technology vendors also have their eyes on Vietnam and Thailand. GL Trade is planning on adding Thailand to its own DMA platform in 2009, going through local brokerage Seamico Securities Public Company Ltd.

Vietnam operates with an electronic matching system, but traders are still waiting for the exchange to improve its communication with brokerages. Other small exchanges are expected to come on the scene in 2009, including the Cambodian Stock Exchange, a joint venture between the Korea Exchange and the Cambodian government. The exchange may be small, but for technology vendors, the new markets will help keep sales up in tough times.

Source: Watersonline by Lauren Hilgers, 06.01.2009

Filed under: Exchanges, Indonesia, Malaysia, News, Singapore, Thailand, Trading Technology, Vietnam, , , , , , , , , , , , ,

Brazil, Mexico, South Korea, Singapore Debt compelling says PIMCO

Bonds sold by Brazil, South Korea, Mexico and Singapore will beat other emerging markets as they avoid a “domino effect” of defaults, according to Pacific Investment Management Co.

Debt sold by countries with large enough financial reserves to stimulate economic growth and access to support from the Federal Reserve’s $120 billion of currency swap lines will outperform, the world’s largest emerging-market bond investor said in a report.

Investors pulled $18 billion from emerging-market bond funds last year as Ecuador’s default last month accelerated losses, according to data compiled by EPFR Global. Brazil’s bonds due 2040, which fell as much as 25 percent last year, gained 30 percent since mid-October. Brazil, Turkey, Colombia and the Philippines raised $4.5 billion selling dollar- denominated bonds this week alone.

“Default probabilities for countries like Brazil, Korea, Mexico and Singapore remain very low,” Curtis Mewbourne, a managing director and co-head of emerging-market investments, wrote in a note published on Pimco’s Web site. “Current spreads for their debt represent a compelling risk-return opportunity.”

Pimco is most bullish on countries that have the resources or can borrow to stimulate their economies as exports slump, according to Mewbourne. He highlighted China’s $585 billion stimulus package and Russia’s $186 billion program.

Default Risk
Ecuador’s bonds plunged 73 percent in 2008 and Argentina’s lost 58 percent. Emerging-market local-currency debt rallied a record 8.2 percent in December in U.S. dollar terms, according to Merrill Lynch & Co.’s LDM Plus Index of local-currency sovereign notes.

Pimco’s $2.4 billion Emerging Markets Bond Fund lost 14 percent last year, Bloomberg data show.

The Fed announced currency swaps in October of $30 billion each for the central banks of Brazil, Mexico, South Korea and Singapore. The arrangements, due to expire in April, reduce the likelihood of capital outflows that marked the Asian financial crises of 1997, Mewbourne wrote.

Pimco, based in Newport Beach, California, said access to finance will be significantly reduced for Ecuador, Argentina and Venezuela because of their unconventional policies.

Ecuador reneged on a $30 million coupon payment on Dec. 15, while keeping $5 billion of foreign-exchange reserves. Ecuador’s credit rating was cut to “selective default” by Standard & Poor’s.

Currency Weakness
Argentina in November approved plans to nationalize about $26 billion held by 10 private pensions in a move to shore up government finances.

The cost to hedge against a default by Argentina for five years rose to 3,713 basis points yesterday from 1,800 basis points three months ago, according to CMA Datavision prices in New York. The cost of contracts on Venezuela’s debt jumped to 2,918 from 1,292.

Credit-default swaps pay the buyer face value in exchange for the underlying securities if a borrower fails to adhere to its debt agreements. A basis point is equivalent to a cost of $1,000 a year to protect $10 million of debt.

Investors should expect a “wide range of different outcomes” in emerging markets, Mewbourne wrote. As policy makers in developing countries follow the U.S., Japan and Europe in cutting interest rates to boost their economies, the currencies will face “downward pressure,” Mewbourne said.

Bond Sales
China, South Korea, Turkey, the Czech Republic and Colombia have cut borrowing costs to counter slumping demand, a response previously reserved for the developed world, Mewbourne said. “We see the scope for even lower policy rates.”

Pimco has tempered its “secular enthusiasm for a generalized strengthening of emerging currencies,” Mewbourne wrote. He didn’t provide any specific currency forecasts.

The Philippines sold $1.5 billion of 10-year notes yesterday to yield 8.5 percent, or six percentage points more than Treasuries, while Turkey sold $1 billion of eight-year bonds to yield 5.01 percentage points above Treasuries. Brazil and Colombia each sold $1 billion of debt this week. Mexico sold $2 billion in bonds on Dec. 18.

Chile, Malaysia, South Korea and Indonesia may also tap the global sovereign debt market later in 2009, according to Brown Brothers Harriman & Co. in New York.

Source: Bloomberg, 08.01.2009  (David Yong in Singapore at dyong@bloomberg.net)

Filed under: Banking, Brazil, Korea, Mexico, News, Singapore, , , , , , , , , , , , , , , , ,

KRX And Eurex To Cooperate In Derivatives Trading

Eurex, the leading derivatives exchange, and Korea Exchange (KRX, http://www.krx.co.kr), a leading Asian exchange, today announced a wide-ranging product cooperation in trading and clearing derivatives. Andreas Preuss, CEO of Eurex, and Jung-hwan Lee, Chairman & CEO of KRX, signed an agreement in Seoul. According to this, KRX will grant Eurex the right to list, trade and clear Daily Futures on KOSPI 200 Options worldwide after Korean trading hours. Eurex as Europe’s largest derivatives exchange intends to launch its daily futures on this option on the Eurex platform in January 2010.

Mr. Jung-hwan Lee, Chairman & CEO of KRX, said “Our agreement with Eurex today is part of our strategy to extend the global reach of KRX markets and furthermore, it is in line with KRX vision of becoming a world-class premier exchange. Through this cooperation, we will provide round the clock trading opportunities in KOSPI 200 Options market which is already the most liquid exchange-traded derivative product in the world.”

Andreas Preuss, CEO of Eurex, said: “This cooperation is another milestone in our strategy to offer our customers access to all major asset classes and all major markets. The Eurex listing will enable international investors and traders to access the KOSPI 200 Options market during core European trading hours.”

Both partners believe that the cooperation will increase the liquidity and efficiency of the Korean market. This new extended market for KOSPI 200 Options will provide existing market participants trading and hedging opportunities for KRX positions after Korean trading hours and a possibility to take positions as the global market fluctuates.

KRX and Deutsche Börse signed a Memorandum of Understanding (MoU) on 30 January 2007. Among other activities, the MoU initiated a joint working group to explore cooperation in the derivatives market. Today’s announcement is one of the first joint projects of both partners.

Source: Mondovision, 14.12.2008

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

KRX To Establish Stock Exchange In Laos

The Korea Exchange (“KRX”), a leading regional equities and derivatives exchange, announced that it has secured a preliminary agreement with the Government of Laos to set up a stock exchange in the country’s capital of Vientiane.

The agreement will see the KRX take a 49 percent stake in the Laos stock exchange, which will be a joint venture between it and the Bank of Laos (BOL). As the technical and operational partner, KRX will provide its know-how in setting up the technical and regulatory infrastructure for an advanced international exchange.

The KRX has a strong track record in exporting its IT systems, both the Vietnam and Malaysian stock exchanges use KRX technology and it is also working on the establishment of a Cambodian exchange, which is due to open in 2009.

The decision to go ahead with the agreement came during a two-day conference in Vientiane in mid-November attended by Deputy Prime Minister Somsavat Lengsavad and Finance Minister Somdy Douangdy. Lee Chang Ho, President and CFO of the KRX Management Strategy Division, and BOL governor Phouphet Khamphounvong finalized the agreement.

Following the contract signing in February 2009, the joint venture will oversee the construction of a headquarters for the stock market and the formation of a committee to develop the regulatory framework.

The new exchange is scheduled to open by October 2010.

Source: KRX 02.11.2008

Filed under: Asia, Exchanges, Korea, News, Trading Technology, , , , , , ,