Opening Cross: Asia Gets Faster at Getting Faster
More information, quicker: an issue faced by data professionals, and also by us, as back-to-back UK holidays force us to publish in an accelerated timeframe—at lower latency, if you will.
Already crucial in Europe and the US, low latency is becoming more important in Asia (see last week’s stories about co-lo centers from the Singapore Exchange and Australian Securities Exchange).
Last week alone, Interactive Data announced that its 7Ticks infrastructure business will use the networks, datacenter services and proximity hosting services of Japanese technology and network provider KVH to support its expansion into Japan, while Transatlantic cable and low-latency network provider Hibernia Atlantic expanded its Global Financial Network platform to Asia-Pacific, with roundtrip latency of 127.5 milliseconds between Chicago and Tokyo, and connectivity to Hong Kong and Singapore available soon.
However, at recent panel discussions hosted by FISD with Inside Market Data and Inside Reference Data in Australia and Singapore, the talk inevitably turned from low-latency data and co-location to market structures and M&A, and a couple of panelists in Singapore raised an interesting point—that markets in the region will need to make structural changes beyond fast market data if they want to attract high-frequency trading, especially around other trading, clearing and settlement costs.
For example, a key advantage of a merger between the Australian and Singapore exchanges would have been to “institutionalize” very retail-driven order books, said Scott Cooper, head of product marketing for Asia at BT Global Banking and Financial Markets. As the frequency of trading increases and trade sizes become correspondingly smaller, the cost of processing and clearing those trades must also change—or high-frequency trading will prove uneconomical and impractical.
Martin Haines, head of solutions for Asia at Thomson Reuters, went a step further, warning that exchange consolidation in the region is inevitable, and something where exchanges should seek leadership roles rather than ostracizing themselves.
“While we have seen some collaboration between exchanges in Asia, we haven’t seen any consolidation across countries, and I think the recent announcement [by the Australian government, nixing the merger] is bad news for the region, because the activity we’ve seen in Europe and the US is bound to happen in Asia, and I think Australia has made a big, big mistake by not embracing it,” Haines said. “The evolution of these markets will accelerate over the course of the next six to 12 or 15 months, and those exchanges that are ready for it will prosper, while those that aren’t will be subservient. I think we’ll see a lot of consolidation across this region very soon.”
At present, Asian exchanges barely compete directly with each other, let alone with the US and European markets that have been the drivers of consolidation so far. Exchanges that don’t compete don’t need M&A to gain scale over their rivals. However, new venues set up to compete directly with domestic markets in the region will change that, and may prompt exchanges to ally against new foes. Or perhaps the force for consolidation will come from outside the region, from the same US and European markets that are driving adoption of high-frequency trading by bringing their models to Asia—and once one interloper throws its weight behind an Asian market, that may be the catalyst required for other markets in the region to follow.
Perhaps the driver for that interloper will be the fragmentation created by new venues, as outsiders spy the opportunity to be a disruptive force in the development of these markets. Either way, participants are bracing for rapid change in Asia, with the trends that have consumed the West over recent years set to play out in an accelerated timeframe.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
This Week: Startup Skyfire launches payment network for AI agents; State Street; SteelEye and more
A summary of the latest financial technology news.
Waters Wavelength Podcast: Standard Chartered’s Brian O’Neill
Brian O’Neill from Standard Chartered joins the podcast to discuss cloud strategy, costs, and resiliency.
SS&C builds data mesh to unite acquired platforms
The vendor is using GenAI and APIs as part of the ongoing project.
Chevron’s absence leaves questions for elusive AI regulation in US
The US Supreme Court’s decision to overturn the Chevron deference presents unique considerations for potential AI rules.
Reading the bones: Citi, BNY, Morgan Stanley invest in AI, alt data, & private markets
Investment arms at large US banks are taken with emerging technologies such as generative AI, alternative and unstructured data, and private markets as they look to partner with, acquire, and invest in leading startups.
Startup helps buy-side firms retain ‘control’ over analytics
ExeQution Analytics provides a structured and flexible analytics framework based on the q programming language that can be integrated with kdb+ platforms.
The IMD Wrap: With Bloomberg’s headset app, you’ll never look at data the same way again
Max recently wrote about new developments being added to Bloomberg Pro for Vision. Today he gives a more personal perspective on the new technology.
LSEG unveils Workspace Teams, other products of Microsoft deal
The exchange revealed new developments in the ongoing Workspace/Teams collaboration as it works with Big Tech to improve trader workflows.