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Gearing up – Have no doubt, China is gearing up to be ahead of the game … and fast!

By Stephanie Lawton

FIXGlobal Face2Face forums were born of a desire to move away from salesfocused conferences, and towards real dialogue within the industry. The events are about education, experience sharing and critical assessment, of the development of electronic trading on a local, regional and global level. This month Face2Face hit Shanghai, and judging by the lively Q&A sessions that followed a full day of expert speaker sessions, China is more than holding its own in the electronic trading debate.

Another invitation to another conference pings into your inbox. The speakers have fabulous titles and an alphabet of letters after their name. The event promises to change the way you look at global markets, regional markets, and everything has a China angle. And yet, how many conferences end up feeling like sales pitches. And, in the spirit of honesty, how often, have we all witnessed a guest speaker’s presentation which has had a pretty solid chunk of sales-speak at the beginning, middle and end? Fast forward to Shanghai where, earlier this month, approx 180 people from the local and international financial community gathered together to debate the role of electronic trading in China at the FIXGlobal Face2Face. Almost two thirds of the vocal audience was from the buy and sell-side of the trading industry.
Don’t throw the protocol out with the vendor
Kicking off with an up-to-the-minute review on electronic trading trends and innovation were Citi’s Grace Lin and HSBC’s Gavin Williamson and Alan Dean. Of particular interest was the perspective of the speakers on the key drivers for asset manager, brokers and exchanges looking to develop or upgrade their electronic trading and FIX capabilities. A flurry of questions followed, with one brave individual suggesting the FIX messaging was too slow for the current high frequency – low latency environment. Alan Dean provided the most categorical answer… “Then you need to re-look at your vendor, as with FIX we are talking low micro-seconds.” Nothing like being put straight!

View from the Exchanges
Next up was an update on the development and implementation of FIX STEP/FAST at the Shanghai Stock Exchange (SSE). CTO of the SSE, Bai Shuo described the protocol as a variant of FIX, adapted for the local market. This streamlining – taking out aspects not relevant to the local market and adding in those the industry wanted – were essential to promote the protocol effectively to its users. A look at performance data of FIX STEP/FAST left other delegates in no doubt that Shanghai was poised to provide scalable capabilities that would attract a broad range of market participants.

Eric Yip, Head of Cash Markets for Hong Kong Exchanges and Clearing Limited, shared some updates on the global developments and regulatory issues concerning electronic trading and some of the lessons learned. Mr. Yip noted that changes in the Hong Kong marketplace would have to be driven by market demand and regulatory guidance. He also affirmed HKEx’s commitment to continuous improvement in market infrastructure. Along those lines, HKEx recently become a member of FPL and is assessing the pros and cons of adopting FIX Protocol for their cash market.

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