The new infrastructure that will be supplied to six ASEAN exchanges by NYSE Technologies, the commercial technology unit of exchange group NYSE Euronext, is expected to lure more overseas institutional liquidity into the region.
NYSE Technologies announced a deal at the beginning of this month to install a single point of connectivity and a consolidated market data feed for the national exchanges of six members of the Association of Southeast Asian Nations (ASEAN), which have agreed to create an electronic trading link between each other.
The agreement was signed by Indonesia, Malaysia, Philippines, Thailand and Singapore in February 2009, with Thailand joining in September 2009.
According to Peter Tierney, senior vice president, Asia-Pacific, NYSE Technologies, his firm’s solution will simplify access to ASEAN markets for both local and international institutions.
“If a trader in Europe or the US wants to trade in the ASEAN markets today, they need separate connections to each exchange for sending DMA orders, each broker they use in the region and further connections for receiving and consolidating market data,” Tierney told theTRADEnews.com. “By implementing a single link based on our Secure Financial Transaction Infrastructure (SFTI) network, this process becomes much cheaper and simpler.”
NYSE Technologies’ SFTI network is designed to carry high volumes of electronic trading and market data traffic, and provides users with a single point of connectivity for low-latency access to multiple markets. As well as making the ASEAN region a more attractive proposition for institutional traders, Tierney believes the technology upgrade will also entice new types of flow into the region.
“Joining the SFTI network will, in time, attract more institutional and high-frequency flow into the ASEAN markets that will complement the high level of retail activity that is already present in the region,” said Tierney.
Tierney notes that while the ASEAN region lacks a single currency and a common regulatory structure, the exchanges have started to harmonise their rules – such as trading hours and order types offered – in anticipation of the market infrastructure changes.
“Regional markets such as the ASEAN exchanges are increasingly realising that by partnering, they can delivery greater value to their brokers, investors and listed companies.” said Tierney. “Harmonising rules, leveraging global standards and sharing advanced technology will eliminate some of the obstacles for attracting international trading”