The New Horizons of Electronic Trading

The Asia-Pacific region is at the forefront of electronic trading's transformative wave, driven by its economic growth, reflecting its maturing and increasingly integrated capital markets.

FREMONT, CA: Electronic trading is experiencing a notable upswing in the Asia-Pacific market. Much trading volume now flows through low-touch workflows and algorithmic methods. This surge is primarily propelled by the ongoing economic growth and heightened sophistication of APAC economies, resulting in more advanced and integrated capital markets.

Broker-dealer firms are further propelled by growing buy-side demand as investors seek expanded market access and advanced execution options, complemented by exchanges offering low latency connectivity and algorithm support.

In the dynamic landscape of electronic trading, access to diverse markets and seamless connectivity is paramount for firms to provide comprehensive services to their clients. Establishing direct connections with clients and swiftly adapting to evolving connectivity demands, such as low-latency exchange links, are essential capabilities. Equally critical is the access to market data, enabling effective monitoring and algorithmic order analysis, ensuring proper assessment of order performance.

Native algorithm support offered by APAC exchanges is valuable, allowing brokers to deliver consistent services across multiple venues, irrespective of each exchange's model compatibility. This native support extends the opportunity to resell algorithmic trading services, generating additional revenue streams for brokers.

The toolkit of trading and execution is further enriched by automated tools like smart order routing, basket trading, and direct market access, all contributing to enhanced business capabilities and execution outcomes. Native support for these services is pivotal, allowing brokers to normalise client order flows within a native platform, applying these tools uniformly across multiple markets and delivering a consistently robust service to customers.

Risk management is an imperative consideration in the multifaceted world of electronic trading. Brokers across diverse APAC markets must navigate risk profiles and regulatory environments. Maintaining a centralised, real-time view of the overall risk position, ideally integrated into the broader electronic trading platform, is indispensable for effective business operations.

Requirements that Software Vendors Offer

Integration

An integrated platform combining solutions like connectivity, market data, and algorithms simplifies operations by eliminating the need to integrate components from multiple vendors. This approach offers cost savings, enhances platform components like order analytics, and improves risk management across all trading activities. Vendors providing these comprehensive solutions save customers time and resources while delivering competitive advantages.

Features and Connectivity

Growing market complexity fuels the need for a broader spectrum of models, including benchmarks and tactical order types. This diversity enables brokers to meet a wider range of customer needs. Meanwhile, access to regional and global venues and comprehensive market data has become a fundamental requirement for APAC broker firms.

Compliance and Reliability

The decentralised regulatory landscape in the APAC region necessitates frequent platform updates to accommodate regulatory and exchange-mandated alterations. Global platforms hold an advantage in this regard, as they adhere to the standards set by the most stringent regulators worldwide. Reliability is paramount for broker firms, with some resorting to redundant backup platforms. Vendors should ensure consistent service and comprehensive support, mitigating the need for such backups.

Extensibility and Investment

Electronic trading platforms should incorporate modular functionality to enable customers to adapt to evolving requirements and respond to new client needs. Vendors must maintain an ongoing commitment to invest in their platforms to implement essential updates and introduce new features that facilitate the sustained growth of the capital markets.

Broker firms seek innovative electronic trading solutions in the intricate and challenging APAC market to capitalise on emerging opportunities. Beyond the initial selection, evaluating what additional value a vendor can provide through continuous investment and support for future growth and strategic initiatives is crucial.