Exchange Technology in Asia-Pacific: Striving to Be Globally Competitive

by Anshuman Jaswal, PhD, March 30, 2015
Industry Trends
Asia-Pacific

Abstract

The Asia-Pacific capital markets are dominated by their respective national exchanges. The level of technology in these exchanges is usually related to how advanced and developed the capital markets are in a given country. However, what all of these exchanges and markets have in common is that they have made a strong effort to modernize their trading technology in the last five years, with the objective of being competitive vis-à-vis regional and global counterparts.

In the report Exchange Technology in Asia-Pacific: Striving to Be Globally Competitive, Celent focuses on the efforts made by the leading regional exchanges to improve their infrastructure. The economic growth of these national economies and the fast growth in volumes in recent times mean that there is a strong incentive for Asia-Pacific exchanges to invest in the latest technology in an effort to become and remain globally competitive and attractive.

Different exchanges have chosen varying strategies. Some have preferred to invest in in-house capabilities and tried to keep up with competitors who have chosen to go ahead with third party providers. Even within the exchanges that have chosen outside technology providers, there are different technology mixes. When modernizing trading platforms, post-trade processing services, and market surveillance technology in the last few years, the emphasis is on ensuring higher throughput at low latency, while ensuring that there are strong pre- and post-trade risk management capabilities in place.

The US is the leading market globally, followed closely by Europe. Due to regular technological upgrades, Asian capital markets are following a much closer trajectory (from APAC to APAC’ in the figure), as compared to earlier. Almost all of them have adopted more advanced trading systems in this period.

An interesting element of the recent development of the region’s exchanges and capital markets is the interlinkages between regional exchanges, as well as collaboration with leading global exchanges. While they could easily have restricted themselves to a zero-sum game and avoided any collaboration, exchanges have taken a more holistic approach, and many of them have tied up with several exchanges for the purpose of cross-trading, market data licensing, and other related aspects.

“The modernization efforts of the Asian exchanges are notable especially because even the smaller regional trading platforms have made them,” says Dr. Anshuman Jaswal, a senior analyst with Celent’s Securities & Investments practice and author of the report. “There is a shared awareness that without well-directed investment, they will cease to be competitive and relevant in a globalized marketplace.”

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 subsidiary 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

Executive Summary

1

 

Key Research Questions

1

Introduction

2

 

Key Research Questions

3

Market Overview

4

Comparison with North America and Europe

6

Areas for Growth and Improvement

9

Conclusion

10

Leveraging Celent’s Expertise

12

 

Support for Financial Institutions

12

 

Support for Vendors

12

Related Celent Research

13

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