On June 15 the Tokyo Stock Exchange (TSE) acquired a stake of almost five percent in the Singapore Stock Exchange (SGX) in a deal valued at around $340 million. While the TSE is now one of the exchanges aiming to trailblaze for Asia, only two years ago it was suffering from a poor technology infrastructure, according to Alasdair Haynes, CEO, ITG International. So what changed?
Technology changes that took years in other markets are now being achieved in Asia in far shorter timeframes. “Market leaders in Asia are customising existing technologies to fit the nuances of the region’s different countries and market structures. Electronic trading, algorithms and execution management systems are being made available to domestic investors as well as those global houses now building businesses in Asia. Likewise, the exchanges are assessing their options and building strategies to compete in the global race,” comments Haynes.
The TSE’s announcement prompted widespread speculation on future M&A activity amongst Asian stock exchanges. “Comparisons can be drawn between the recent announcements in Asia and the trend for stock exchange demutualisation and consolidation which started nearly ten years ago in the US and Europe,” points out Haynes. This has lulled many industry commentators into talking about Asia as a trend follower in the financial markets – the ‘last cab off the rank’ in a global wave of trading evolution, notes Haynes.
“Clearly significant investment is essential, but if that occurs, as these countries are assuring the world it will, I believe that what we are seeing now in the Asian trading landscape is not so much a déjà vu continuation of a pattern established in other markets, but more a sea-change that heralds wider impact,” he remarks. “The speed at which the trading markets are ‘catching up’ may soon level the global trading playing field, helping Asia shake off its reputation as an emerging market and become a world leader in this sector rather than a follower,” he continues.