DRW to break into Hong Kong market for first time with new trading desk

New desk will initially focus on options, cash equities and futures, with plans to expand into other asset classes in the future.

Market maker DRW Holdings is set to expand into the Hong Kong market for the first time with a new trading desk, The TRADE can reveal.

The firm is currently in the process of gaining a financial services license from Hong Kong’s Securities and Futures Commission (SFC) and exploring exchange membership options with Hong Kong Exchanges and Clearing (HKEX) to begin market making in index futures and options and cash equities towards the end of this year.

Newly appointed managing director of the Hong Kong business at DRW, Stuart Knowling, will be responsible for the expansion plans.

Trading desk wise, the team will start off fairly small, as some trading strategies can take up to three to six months to develop. The team will also initially add quants, analysts and technology developers alongside traders.

“DRW’s plans to open an office in Hong Kong builds on the strength of our existing business in Singapore and expands our global footprint,” said Knowling. “We see Hong Kong as a gateway to China in terms of market access, but it also provides a deep pool of trading, quant, and tech hires.”

After a year of setting up its initial business, the market maker then intends to expand into other asset classes within the region. It is not so prevalent in equities in Asia and so this is one potential area for expansion. DRW has had a crypto business since 2014 and this could also be another area that it chooses to expand into further within Hong Kong.

Gateway to China

The move will further diversify DRW’s existing offering in Asia and expand its global footprint. The market maker has roughly 1700 members of staff globally, however, just 60 people on the ground in Singapore.

Hong Kong and Mainland China have launched several collaborative initiatives in recent years including the Stock Connect service aimed at expanding southbound and northbound ETF trading between the two.

Read more – More than two thirds of traders are looking to diversify through Asia and South America expansion

Swap Connect also launched in May of this year and will offer the first derivatives trading connection between Mainland China and Hong Kong. The initiatives mean those active in Hong Kong will also now have greater exposure to the Mainland.

Institutional investors are increasingly looking to Asia as a means for expansion, according to a recent report by Acuiti. Over half of respondents in Acuiti’s report confirmed definite plans to expand to new regions within the next three years, with 76% looking to expand to Asia – with Taiwan specifically top of the priority list, and 67% looking to expand into South America.