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Hong Kong and Singapore as Asia´s Financial Gateways

Celent predicts a paradigm shift around access to Asia. There is likely to be two gateways, providing access to different Asian regions, with Singapore emerging as the preferred gateway to Southeast Asia and Hong Kong becoming the gateway to Mainland China.

In a new report, the third of a series looking at the financial markets in Hong Kong and Singapore, Celent aims to provide a comparative analysis of Asia’s two main financial gateways, focusing particularly on derivatives. Asia’s Tale of Two Cities: Hong Kong and Singapore as Financial Gateways begins by noting that Western governments have emerged from the financial crisis in a weakened state, with economic prosperity blunted by high unemployment and an emerging debt crisis. The question is no longer when or if we need to enter the Asian markets, but how to best think about the issues of accessibility, entering the market, developing products, and forming strategic partnerships. The fundamental question that needs to be asked now is: “Where do we go from here, Hong Kong or Singapore?”

Although the HKEx and SGX may not be the biggest derivatives players in Asia-Pacific, they tend to be the most accessible for segments located outside the region. Taking advantage of their geographic location, political climate, and internal strengths, these city-states are poised to become hubs for trading of Asia’s regional products while also being easily accessed by US traders via retail trading accounts.

There are several factors that are likely to continue to drive growth in the derivatives market. These include:

• A relatively muted response to regulating over-the-counter markets as compared with the US and Europe. The type of products that led to the financial crisis in the West are not widely established throughout Asia, and as a result, the regulatory structure governing OTC markets are unlikely to change significantly.

• Continued desire to manage foreign exchange risk.

• Continued enhancement of processes of structuring derivatives risk management policies.

“We are seeing changes in relation to access to Asia. Hong Kong is no longer destined to become the sole hub to Southeast Asia,” says Alexander Camargo, Analyst and coauthor of the report. “Inherent strengths in Singapore are making it an extremely attractive financial gateway. Both English and Chinese are frequently spoken in Singapore, making it an ideal cross-roads for East and West. Furthermore, Singapore is viewed by most Asian countries as a neutral party and less politically tied to China than Hong Kong. This is likely to entice Indian investors and even Japanese and Korean investors to Singapore’s shores.”

However, this does not mean that Hong Kong will recede as a major financial center in Asia. Hong Kong residents are often fluent in both English and Chinese; contract laws are strong; and there remain strong historical ties to the West. As a Special Administrative Region of the People’s Republic of China, Hong Kong has stronger political ties to China. Hong Kong has also been busy integrating its financial markets with mainland China. These factors make it likely that Hong Kong will become a key gateway to mainland China.

This report begins with an overview of each country’s financial infrastructure and regulations, providing an introduction to the countries’ various demand market segments, followed by a look at the main exchanges, HKEx and SGX. A summary of HKEx and SGX focuses on derivatives trading, providing a brief description of products offered, market access, alliances, and clearing on the exchanges. The report then looks at each country’s fixed income markets, OTC derivatives, and FX markets. It concludes with a discussion of market supremacy and also the countries’ ongoing efforts to improve market structure and access.

Source: Bobsguide, 10.02.2012

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Filed under: Asia, China, Exchanges, Hong Kong, Indonesia, Japan, Korea, Malaysia, News, Singapore, Thailand, Vietnam, , , , , , , , , , , , , ,

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

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

SMX To List TOCOM Products

Singapore Mercantile Exchange (SMX), the first pan-Asian multi-product commodity and currency derivatives exchange, and the Tokyo Commodity Exchange, Inc. (TOCOM), Japan’s leading commodity futures exchange, today announced that they have signed a licensing agreement for SMX to list Contracts* on TOCOM products.

Building upon the Memorandum of Understanding (MoU) signed on 23 April 2010 to explore mutually beneficial partnerships, senior officials from both exchanges signed a licensing agreement which would see the listing of several SMX TOCOM Contracts for products already being traded on TOCOM. These include crude oil, gasoline, kerosene and gas oil. The agreement does not rule out the possibility of cross-listing wherein TOCOM might also list SMX products.

Agreement terms include the license for SMX to use TOCOM prices as the last settlement price, delivery price, reference price and daily settlement price and/or final settlement price for SMX TOCOM Contracts.

Mr. Thomas McMahon, Chief Executive Officer of SMX, said: “This agreement is exciting for us for several reasons. Aside from augmenting our initial MoU and being able to roll-out contracts the markets are already familiar with, our foremost aim to develop a credible pan-Asian platform is being achieved at good speed. We are encouraged by TOCOM’s enthusiasm and foresight for a united Asian derivatives marketplace, and will be announcing more of such developments in the coming months. We must embrace exchange partnerships as crucial steps to reducing fragmentation of derivatives trading during Asian business hours.”

Mr. Tadashi Ezaki, President and Chief Executive Officer of TOCOM, said: “SMX is the up-and-coming derivatives exchange in Asia, which commenced trading in August this year and grows rapidly with an increasing range of listed products. We expect that licensing SMX to use TOCOM prices for their new products to be listed shall help increase arbitrage between TOCOM and SMX increase, and accordingly enhance the convenience of the markets. We continue to work together with SMX to further develop derivatives trading in Asia.”

The listed commodities currently trading on TOCOM include futures and options contracts for gold, and futures contracts for silver, platinum, palladium, gasoline, kerosene, gas oil, crude oil, rubber and Nikkei-TOCOM Commodity Index. SMX launched live trading on 31 August 2010 with four products consisting of Futures Contracts on crude oil benchmarks Brent Crude Oil priced in Euros and West Texas Intermediate Crude Oil, Gold with physical delivery-based settlement and Euro-US Dollar Currency Futures.

In August 2010, market leaders in low latency services in Japan and Singapore – KVH Co., Ltd. (KVH) and Singapore Telecommunications (SingTel) respectively announced provision of KVH-SingTel?s low latency network solutions to market participants, enabling both exchanges to facilitate an ultra low latency and fully redundant network service between Japan and Singapore.

* Subject to regulatory approval by the Monetary Authority of Singapore (MAS)

Source:MondoVisione 15.10.2010

 

Filed under: Exchanges, Japan, News, Singapore, , , , , , , , , , , ,

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, , , , , , , , , , ,

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, , , , , , , , , , , , ,

Singapore overtakes Hong Kong in list of best financial centres

Singapore and Hong Kong have swapped places in the City of London’s Global Financial Centres Index (GFCI), sitting in the top five alongside London, New York and Zurich.

Singapore now ranks third in the overall top financial centres list, rising by 26 points, more than any other top 20 centre. It overtakes Hong Kong, which is now in fourth place.

The GFCI questionnaire asked which centres are likely to become more significant in the next few years. People anticipate Asia will challenge the main leading centres the most.

However, in this survey, London takes the top spot, while New York comes in second place and Zurich in fifth.

Dublin is the highest-placed European ‘offshore’ finance centre on the list, ranked 13th out of the 59 international centres listed.

Clustered together, Jersey (14th), Luxembourg (15th) and Guernsey’s (16th) rating scores are split only by decimal places.

The survey found the offshore and niche centres continue to grow in importance. Nine of the GFCI top 25 centres are niche.

It also highlights the fact that tax environment is now being noted as a crucial area of competitiveness by a greater proportion of respondents to the GFCI questionnaire.

In the asset management subsector, specialist centres such as Jersey, Guernsey, Edinburgh and Dublin all move up the rankings compared with the main GFCI, said the report.

Peter Niven, chief executive of Guernsey Finance, said the island’s improved ranking in the main index “reflects the fact that since the last report we have enhanced our offering to clients through the introduction of a new trust law, new company law and new company registry, while also stepping up our promotional and marketing activity both in existing markets like London as well as new jurisdictions such as China.”

Elsewhere in the international arena, Dubai is cited as the place financial companies are most likely to open a new office, despite its current relatively low ranking of 23rd in the GFCI.

The report suggested the rise in importance of Dubai has meant other Middle Eastern countries, including Bahrain (43rd) and Qatar (45th) are also gaining profile.

The GFCI rated 59 financial centres using 57 instrumental factors and 24,014 financial centre assessments, surveying 1,406 financial services professionals.

Of the 59 centres in the GFCI list, 25 have risen in the rankings, while 22 have fallen and 12 remain static, including London and New York.

Source: International Investments 26.09.2009

Filed under: News, , , , , , ,

Asia: Commodities Call On Technology

In a bid to attract investors, Asia’s new commodities exchanges are turning to technology providers for low-latency solutions and improved connectivity.
Within weeks of each other, plans for two new Asian commodities exchanges were revealed with much fanfare early this summer. Fully electronic markets are expected to open within the next nine months in Singapore and Hong Kong, and industry observers note that this signals a growing appetite for technology in Asia’s commodities exchanges.

While the two exchanges are still awaiting regulatory approval, commodities exchanges across the region have been improving connectivity and reducing latency in the last 12 months, and opportunities are increasing for investors looking to trade across a number of asset classes. Newcomers like Hong Kong and Singapore are hoping that easy and reliable access will help attract those investors to their fledgling exchanges. Building liquidity, however, could be an uphill battle.

“The popularity of commodities as an investment allocation opens up a broad opportunity for exchanges focusing on those types of instruments,” says Andy Nybo, a senior analyst at Westborough, Mass.-based research firm Tabb Group. Building liquidity is a long process, he says, combining demand for the products as well as incentives to trade them on a centralized exchange.

“These incentives cover a broad spectrum of categories,” Nybo says. “They can include financial incentives that lower the cost of trading, technology and systems that make the trading process more efficient, or access to new products and strategies that better meet the needs of the trading community.”

Growing Demand
Markus Gerdien, executive vice president of market technology at Nasdaq OMX, has had a front-row seat to the growing trend in Asia. In addition to the Hong Kong Exchange, Nasdaq OMX is providing technology to the planned Australian Financial and Energy Exchange, set to start trading before the end of the year.

The trend, Gerdien says, is driven by a combination of pressure from international brokerages and home-grown interest in more modern exchanges. Worldwide capital is now shifting quickly from one area to another, leading investors that may have previously specialized in one asset class to diversify. “Equity trading is a little bit challenged globally,” Gerdien says. “But commodities trading is booming, so capital is shifting quickly.”

Asia is a natural place for the capital to flow, as the region’s demand for commodities continues to grow rapidly. Local demand has also driven local interest in the exchanges. “I think local economies, in previous times, had a shortage of cash or a shortage of workforce,” Gerdien says. Today, however, local economies are more robust and able to create a fair amount of liquidity on their own.

Interest in commodities is coupled with the increasing automation of brokerages looking to trade on Asia’s commodities exchanges. The demand is both local and international. “I think all the international brokers have deployed [algorithmic strategies] for their trading, and the technology is becoming more and more available for local brokers and dealers,” Gerdien says. “The exchange itself needs to deal with an automated order flow that can be very high.”

The interest in commodities has galvanized a number of startups and increasing automation has led existing exchanges to re-examine their business models and trading platforms.

Opportunities On The Rise

The options for Asia’s new commodities exchanges today, argues White, are much wider than they were even 10 years ago. “The technology wasn’t in place to connect,” he says. “There needed to be separate order management systems, which make it difficult to trade into different exchanges.”

Now, traders can maintain their ties to larger, Western exchanges, while finding arbitrage opportunities across the globe.

“Connectivity and access are important for any exchange but there also needs to be latent demand for the products being traded,” Nybo says.

OMX’s Gerdien says that not every new exchange will prosper, but it is worth taking the risk to help support new ventures. He points to OMX’s success with the International Securities Exchange (ISE) as an example. “When they started six or seven years ago, they were three guys in a garage. We took a risk and provided them with our technology.”

Today, the ISE is a wholly owned subsidiary of Eurex and together they lead the world in individual equity and equity index derivatives.

Asia is offering opportunities to vendors that could be as promising as the ISE-OMX deal. With a number of new brokerages and exchanges to service, vendors in the region are feeling upbeat about the possibilities.

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Source: Watersonline, By Lauren Hilgers, 01.09.2008

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