Asian Securities Exchanges Landscape

by Arin Ray, December 30, 2008

Abstract

Bangalore, India 30 December 2008

Asian Securities Exchange Landscape

Global trading have witnessed high growth in the last few years, due in large part to growth within the Asian exchanges, where equity trades grew at almost at a 30 percent CAGR during the 2002 to 2007 period. While trading value in the Asian exchanges is currently much lower than the two main US exchanges, the Asian exchanges should overtake their US counterparts in the near future.

In a new report, Asian Securities Exchanges Landscape, Celent compares 16 Asian exchanges, examining major industry trends from 2002 to 2008. The listed exchanges in Asia are very profitable, experiencing high growth. In 2007, Asian equities trading was dominated by six exchanges, which accounted for 80 percent of total trading volume and 86 percent of trading value. However, equities trading activities at the Asian exchanges weakened significantly in 2008 as a result of the worldwide financial crisis.

The Asian exchanges derive their revenue from a variety of services. Equities trading is the most important revenue driver. Derivatives trading, listing and clearing services, and information products also constitute a major portion of the revenue for the exchanges. With a rapidly increasing number of initial public offerings occurring in Asia since 2003, listing revenues have been on the rise as well. The demand for market data has also been increasing, bringing the need for better information services to the forefront.

The derivatives market in Asia has continued to grow even since the start of the Asian crisis: 4.3 billion derivative contracts were traded at Asian stock exchanges in 2007. The Korea Exchange alone accounted for almost two-thirds of all derivatives contracts traded. Some exchanges provide a variety of instruments, while others specialize in a few derivative instruments. Stock index options are the most popular instruments in Asia, followed by commodity futures and stock index futures.

In contrast, the Asian bond markets are still underdeveloped. The number of bonds listed at the Asian exchanges has grown at a moderate rate compared to growth in the equities markets. Total bond trading value has remained more or less the same over the last six years. This trend, however, does not exhibit any slowdown in 2008 despite the slowdown in the equities markets.

"The Asian exchange industry, following a worldwide trend, has undergone major changes in structure and governance model, and many exchanges have become publicly traded companies through demutualization," says Arin Ray, Celent analyst and author of the report. "The exchanges are highly profitable and growing, with an average profitability of almost 50 percent."

The 34-page report contains 28 figures and two tables. A table of contents is available online.

of Celent's Capital Markets research service can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Bangalore, India 30 December 2008

Asian Securities Exchange Landscape

Executive Summary 3
Introduction 4
Industry Trends 6
  Demutualisation of Exchanges 6
Major Equities Exchanges 8
  Market Trends 8
Exchanges' Trading Activities 11
Comparison with US Exchanges 16
Market Concentration 17
  Derivatives Trading 19
  Market Trends 19
Fixed Income Trading 23
Stock Exchanges' Revenue Structure 25
  Revenue Structure 25
  Listing Service 28
  Information and Data Products 30
  Profit and Profitability of Exchanges 30
Conclusions 32

 

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