Chile’s Santiago Stock Exchange (SSE) has committed to growing electronic trading volumes on its market, including the development of a new trading platform and a partnership with technology vendor Streambase.
The Latin American bourse is currently creating an equity trading platform that will have a latency of under one millisecond and a capacity of over 3,000 orders per second.
“The number of orders on the exchange grew by 68% in the second half of 2011,” Andrés Araya Falcone, CIO at the exchange, told theTRADEnews.com. “In addition, demand for DMA among foreign and international investors has also increased, and regulatory change that offers incentives for market makers, has also driven the need to provide these sorts of tools now.”
Falcone added that 4.5% of all trading conducted on the SSE comes from foreign investors using DMA.
Under its strategic partnership with Streambase, SSE will offer local brokers a framework for developing their own execution algorithms. Streambase will integrate its complex event processing engine with the bourse’s Telepregon electronic trading platform. Brokers currently use traditional programming languages such as .NET or Java to design their own algorithms.
Falcone says the algorithmic strategies – which include strategies such as VWAP, TWAP and implementation shortfall for equities and derivatives – can be modified by brokers to “reflect their own secret sauce and differentiate their trading strategies in the market”.
SSE is also part of Mercado Integrado Latino Americano (MILA), an exchange link-up project launched in May last year that joins markets in Chile, Colombia and Peru. However, different tax regimes across the three countries have limited the effectiveness of the cross-market access arrangement. According to the MILA website, US$15.5 million was traded through the network from 30 May until the end of 2011, with 50% of volume traded in Colombian securities, 49% in Chilean stocks and 1% in Peruvian stocks. Despite the low volumes, Falcone remains upbeat on MILA's future success.
“The importance of MILA is the benefits that the issuers, investors, intermediaries and the national economies obtain with this integrated market,” said Falcone, adding that the MILA exchanges were planning a MILA Day this year to encourage more foreign participation in the scheme. “The issuers now have access to a wider market and have the possibility to internationalise their companies. The investors have more alternatives to trade instruments. And the countries support the integration process of their economies.”
The SSE also plans to establish separate links with Brazil’s BM&F Bovespa and Mexico’s Bolsa Mexicana de Valores in the second half of this year.