Indonesia is reconsidering its participation in a new Southeast Asian trading link following a period of rapid market growth that may make joining the initiative unnecessary.
The Association of Southeast Asian Nations (ASEAN) Trading Link will become operational in June when the Singapore Exchange (SGX) and Bursa Malaysia connect to each other. The Stock Exchange of Thailand will be added in August 2012, after its new trading engine goes live.
The new link is being built to provide brokers of participating ASEAN exchanges with the infrastructure to input orders directly on another participating ASEAN exchange.
But Fabrice Oriol, regional sales director, Southeast Asia for SunGard’s capital markets business, said the Indonesia Stock Exchange (IDX) is reassessing the value of the alliance.
“They think they have enough local potential to be open to just the regional markets themselves,” said Oriol. “Indonesia is staying outside of ASEAN for the time being. They think they have enough internal potential without the need to receive orders from other countries.”
SunGard is providing the trading technology which supports the trading link and Oriol said there was no guarantee Vietnam or the Philippines would join either.
“We hope they will. [The trading link is] better for smaller brokers in these countries. But many brokers already have the connectivity and don’t need too much to ride on that platform,” he said, adding while ASEAN’s was goal to help facilitate regional cross-border trading, it also represents a means of acquiring order flow from outside the region.
“What the network offers is a single access point on which any foreign broker can connect and place trades on any of these exchanges,” he said. “From a tech point of view, it’s one entry point to access multiple markets.”
The collaboration by seven ASEAN stock exchanges was formalised 8 April 2011 and the project aims to promote the growth of the ASEAN capital markets with the intent of bringing more ASEAN investment opportunities to more investors. The ASEAN Exchanges members are IDX, SGX, Bursa Malaysia, Hanoi Stock Exchange, Ho Chi Minh Stock Exchange the Philippine Stock Exchange and the Stock Exchange of Thailand.
The seven ASEAN exchanges have a combined market capitalisation of US$2 trillion and more than 3,600 companies listed on their exchanges.
At time of posting, the IDX and ASEAN Exchanges did not respond to telephone and email requests for comment.