Exchange of Ideas: HKEX Hosting Services Ecosystem Forum 2016
A first phase of a closing auction covering certain large-cap and mid-cap stocks and all ETFs will start 25 July 2016, but short-selling will not be permitted, explained Roger Lee, Managing Director and Head of Markets, HKEX. The exchange’s volatility control mechanism, which will limit Hang Seng Index and H-shares index stocks’ price moves after a price spike, will be launched in August 2016 to hopefully leave trading firms time to prepare for a Shenzhen-Hong Kong connect, should it be announced.
Nianlong Weng, Assistant to the Managing Director, China Investment Information Services (CIIS) introduced the China Investment Information Platform, which offers market data access inbound for mainland investors and outbound for overseas investors.
As a subsidiary of the Shanghai Stock Exchange, CIIS provides tiered data access, from partners including China Securities Index, Dalian Commodity Exchange, Zengzhou Commodity Exchange, CFFEx and Deutsche Bourse.
Automation and balance
Technology spending and market resilience were the main themes of the panel on trading and technology hosted by Chris Lee, Senior Vice President, Client and Marketing Services, HKEX.
Brokers are spending on dark pools and blocks, rather than selling product suites, claimed Andrew Freyre-Sanders, Managing Director, Head of Equity Execution Services for CIMB Securities. Sometimes bear markets eliminate excess, he quipped.
For Simon Williams, Director, Head of APAC Equity Trading for BlackRock, solutions that automate compliance, operational and risk controls allow traders to improve implementation and get better trading outcomes for clients.
The technology arms race has dampened down in FX because a few microseconds doesn’t guarantee an advantage, explained Jay Hurley, Regional Head of eFX, APAC, State Street Global Markets. Exchange resilience has improved because redundancy is better built into systems now, argued Murat Atamer, Managing Director, Head of Electronic Trading, Bank of America Merrill Lynch. The balance between speed and safety must also not be forgotten, he added. If exchanges provide speed via thinner risk layers, traders are encouraged to reduce risk layers.
Exchanges are more resilient, Freyre-Sanders agreed, but end-to-end resiliency should extend further into the trading lifecycle. By taking ownership of the end-to-end experience, exchanges can engage with vendors to improve through providing more testing, for example.
As evidenced by the failed response of many market participants to the Swiss National Bank’s recent intervention in the FX market, participants may be more resilient but the market place may be more fragile, Hurley suggested.
No sudden movements
The day’s final panel on recent regulatory developments implications for Hong Kong and Chinese trading was moderated by Jessica Morrison, Co-Chair of the Asia Pacific Exchanges and Regulatory Subcommittee, FIX Trading Community, and Head of Asia Pacific Market Structure, Analytics and Commission Management, Deutsche Bank.
Many foreign investors still find China complicated and expensive to access, explained Dean Chisholm, Regional Head of Operations, Asia Pacific, Invesco. Simplifying access through one method without daily restrictions and either direct or indirect short-selling would make a big difference.
The new CSRC regime wants to sit back, learn from global best practice and proceed with no sudden movements, noted David Rabinowitz, Head of Electronic Trading and Market Structure, Asian Equities, UBS. China can learn from HKEX’s light touch approach, added Philip York, Chief Executive Officer, Alt 224 Group.
Hui recommended exchange participants prepare for the Shenzhen-Hong Kong Connect by learning more about the Chinese market’s dynamics and composition.
HKEX services investors and issuers from around the world, so it keeps an eye on developments around the world, Hui said. The key is not to look at China for just what it is, but what it will be, he added.
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