BNP Paribas has pushed back the Hong Kong launch of its proprietary dark pool, BNP Paribas Internal eXchange (BIX), to Q4 this year because of a longer-than-expected approval process, according to Quentin Limouzi, the bank’s execution product head for Asia and Japan.
BNP Paribas initially launched BIX in Japan in June 2007, and had planned to roll the platform out to other Asian markets, such as Hong Kong, Singapore and Australia, in the following months before introducing the service in Europe. Punit Mittal, then head of liquidity sales for BNP Paribas in Japan, told The TRADE in May this year that BIX would be live “within the next few weeks”, with its Europe debut expected before the end of Q2 2009.
However, Limouzi told theTRADEnews.com, “The technology is there, the clients are asking for the service, but the regulatory process has taken longer than expected.”
The firm requires a ‘type 7’ alternative trading system licence from the Securities and Futures Commission to operate a crossing engine in Hong Kong. “A year ago, when we first started talking about it, there were no discussions about having a special licence. That came up later in the process,” said Limouzi.
Limouzi confirmed that BNP Paribas still intends to launch BIX in other countries over time and indicated that Australia’s liquid equities market was a likely next step. But he added, “Hong Kong is our priority right now and we don’t see a strong interest from the client base to further expand to other markets. In Singapore there is not enough volume, Korea is very domestic-focused, and there is not enough volume in other Asian markets.”
The version of BIX due to be released in Hong Kong is its third iteration, according to Limouzi. “We now have more crossing points within the spread and we let the client float and peg five different prices in the spread during market hours,” he said.
Mittal has now left the firm amid a reshuffle that has seen most of the equities electronic trading team relocate to Hong Kong from Japan. The firm retains salespeople in both Japan and Singapore.
“Most of the clients that trade electronically in Japan, are based outside the country, especially if they are foreign firms, so centralising operations in Hong Kong means we are closer to clients and there is less travelling,” explained Limouzi. “Also, with Hong Kong being the centre of Asia, it makes more sense for staff with
a regional role, like me, to be based there. Most of the banks are doing this right now.”