Saturday September 22, 2012
Making Asean trade more accessible
THE establishment of the Asean Trading Link plays quite a large role in facilitating and increasing the accessibility of inter-Asean trade.
The link provides the connection on a single platform for seven different exchanges in six different countries to create more investment alternatives for investors.
Bursa Malaysia, Hanoi Stock Exchange, Hochiminh Stock Exchange, Indonesia Stock Exchange, The Philippine Stock Exchange, Singapore Stock Exchange and the Stock Exchange of Thailand had decided to collaborated under Asean Exchanges to drive Asean investment opportunities to other countries and to build Asean to have a world benchmarked asset class.
However, the connected exchanges would not be able to function well if not for a technologically advanced platform that would enable the connection in the first place.
Software and technology company SunGard, took on the onus of creating a trading platform for the purposes of the link. In June, the company announced that it had been selected for the task.
Now, SunGard in Singapore supplies the infrastructure for the link via its trading solution suite Valdi.
Investors are now able to route orders to the two exchanges that have joined the link, namely the Singapore and Malaysia exchanges, and receive market data from each via the central point of connection.
Account director for South-East Asia and India for SunGard's capital markets business Mathias Bellancourt tells StarBizWeek that the link would enable larger brokerage firms to have access to multiple trading platforms but this may require a significant investment from the brokerages to have ease of facilitating trades.
“The Asean Trading Link enables access through existing infrastructure to the respective exchanges, thus allowing brokers to focus on business and building key relationships, reducing the need to focus on connectivity,” he says.
He adds that the smaller brokerages that tend to focus on domestic markets are now able to immediately broaden their products and services to their clients.
The trading link provides Asean exchanges, which are currently the Malaysian, Singaporean and soon-to-join Thailand exchanges with the ability to electronically facilitate cross-border trades.
Bellancourt says the system has been designed to match the standard of the exchanges. Should a higher capacity be required in future, the link can easily be upgraded.
“It has been through rigorous testing to ensure that it is on par with the standards set by the exchanges and compliant with local regulatory requirements,” he says.
He adds that the measure of the infrastructure's complexity is relative to the different geographical areas, in view that the link connects exchanges and multiple brokers in different Asean countries.
“The link has been designed to be an “out-of-the-box” solution where an institutional investor already connected to one of the participating exchanges, can start accessing the link using their existing setup (with the necessary commercial arrangements with the exchanges in place),” he says.
With trading solutions that have been used worldwide by brokers, investors need not worry as much, and have peace of mind in terms of the security and effectiveness of the link. Participants of the exchange will have to wait-it-out to see if the system proves to be sufficient and effective enough.
In a statement that was released earlier in June, SunGard president of global trading business Raj Mahajan says: “SunGard's strategy is to help broker-dealers generate new revenue by helping them navigate the global trading environment cost-effectively.”
It is worth noting that the link will also be connected to the SunGard Global Network, so that brokers and investors alike can send orders to other participating Asean members.
SunGard via its trade automation and activity solution system SunGard Global Network, and its trading solutions suite Valdi has supported accessibility into the Asean markets for many years.
“We will now work with the Asean exchanges to tailor these technologies to their requirements,” Mahajan says.
The suite will provide global, multi-asset class order management, market access, liquidity and compliance management, as well as hosted services.
“The challenges would relate more to managing the growth of our business with larger client bases in an efficient manner, which is a “good problem” to have, if anything,” Mercury's Chew says.
The trading link is promoting the Asean Stars, which feature a total of 180 blue-chip stocks representing 30 companies from each Asean country. These 30 companies are ranked by their investability in terms of market capitalisation and liquidity.
“With the promotion of the Asean Stars from the exchanges now available through a single platform, it is also an important first step in introducing new investment opportunities to local investors,” Bellancourt says.