Algorithmic Trading

Western HFTs flock to Korea

Korean brokerage Samsung Securities has joined technology firm Orc Group's ExNet broker connectivity network, to meet demand from US and European high-frequency traders for access to the Korea Exchange.

Under the arrangement, mutual clients will be able to trade Kospi 200 futures and options on the Korea Exchange via Samsung Securities' membership and Orc's high performance connectivity solutions. The Kospi 200 index is one of the world's most heavily traded.

Demand for low-latency access to the Korea Exchange stems largely from US and European prop trading firms, using high-frequency trading strategies and direct market access, typically from bases in Hong Kong, Sydney and Singapore.

Some foreign trading firms view Korea as an “easy route” to China, because of the relatively close correlation between the Korean and Chinese economies. Whilst gaining access to China is relatively difficult for outsiders, due to the government restrictions on derivatives trading and associated qualified foreign institutional investor rules, Korea is much more open. As a result, some firms are trading the Kospi 200 as a broad proxy for China's CSI 300.

Orc's sponsored access system is designed to offer buy-side users access to liquidity pools and electronic communications networks without the need for exchange membership. Connecting to the network gives trading firms the ability to send and receive orders from more than 150 Orc sites.

“By joining Orc's ExNet network, Samsung Securities will now be able to facilitate access to the Korean markets to an even wider community of global trading firms,” said K Y Cho, head of derivatives sales and e-trading, Samsung Securities.

Trading technology provider IPC Systems launched a similar high-speed connectivity service to the Korea Exchange, in February 2011.

Last year, Samsung Securities announced plans to hire up to 20 staff in Taiwan and Singapore in 2011 as part of plans to become a regional player by 2015.