HKEx Ecosystem Forum: Technology And Market Integrity
The 20th of March saw HKEx host their annual Ecosystem Forum conference. This event brings together the exchange and the industry to talk about the latest developments in technology and services in Hong Kong.
The conference altered its normal format slightly this year, while including a range of presentations and speeches from HKEx senior staff, there were also two panel discussions, which focused on regulation and changing electronic trading patterns in Hong Kong and the wider region.
The event opened with remarks by Jonathan Leung, Senior Vice President and Head of Hosting Services at HKEx, with an update on the latest technology being employed at the exchange. The day was mostly focused around the continuing rollout of the Orion suite of technologies being employed by the exchange.
The Orion Central Gateway is one of these flagship technologies, which was elaborated upon throughout the day, including its support for FIX and precisely how it will function and be rolled out. The other central technology was the Orion Market Data initiative, and its move into derivatives data. These updates are coupled with the new push for the Orion Trading Platform, which HKEx hopes will update the trading platforms used on the exchange with greater functionality and the latest technology.
The first panel of the day focused on changing regulation throughout Hong Kong and Asia, taking a broad view of the drivers of regulation, be it retail, specific market incidents, or just the stability and integrity of the market as a whole. As a result though is the changing answer to the questions of “who is responsible when something goes wrong?” – as we have seen from the SFC’s algorithmic regulation that came into force January 1st, responsibility is being shifted much more definitely towards the buy-side and electronic trading vendors, but there was still a call for the exchange to shoulder burdens as well. The precise balance of what checks sit where is a matter for continued debate, but generally the exchange’s later comments regarding circuit breakers and reinstating a closing auction in Hong Kong were well received as being the right steps in this direction.
On the Orion Market Data platforms specifically the drive is towards the customisation of the exchange’s products to specific segments of the market, breaking out products to meet specific needs of users. Latency is also being improved through faster feeds and a new messaging protocol.
One of the most widely attended sessions during the day was looking at market integrity. HKEx said in the session that they were closely examining the reintroduction of the closing auction in Hong Kong, and looked at the various reasons why a closing auction should be brought back, and the potential form that the auction might take. By way of international comparison, Hong Kong is the only exchange in the 23-member MSCI developed markets list without a closing auction. The exchange is expected to begin consultation in 2014.