Pan-Asia Equities Trading Romnesh Lamba Head of Market Development 7 April 2011.

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Presentation transcript:

Pan-Asia Equities Trading Romnesh Lamba Head of Market Development 7 April 2011

2 Asian exchanges Market Capitalisation Market Capitalisation of Listed Companies (in US$bn) (1) Source: (1)WFE, as of 31 December 2010 NYSE13,394 NASDAQ3,889 LSE Group3,613

3 Asian exchanges Average Daily Trading Volume (ADT) & Velocity 2010 ADT (in US$bn) & Velocity (1) Source: (1)WFE, as of 31 December % 110% 344% 176%62% 82% 135% 57% 53% 18% 94% 37% 32% 19% = 2010 Average Turnover Velocity

4 Global alliances – key trends Regional linkage Cross-listing (cash) Cross-listing (derivatives) Connectivity & order routing M&A +++

Regulators Currency Capital controls Compliance & Monitoring Regulators Currency Capital controls Compliance & Monitoring HarmonizedHarmonized 5 Regional platform – key considerations A true regional platform needs liquidity across markets Prerequisites: & Platform Technology Market structure Cost Platform Technology Market structure Cost HomogeneousHomogeneous

6 Regional platform – key potential drivers Holding company level  May not address political, currency and regulatory segregations M&A  Homogeneous  Separate platforms, different technology & market structure  Harmonized  Regulatory challenges  Currency + capital controls exist Alternative Platform (ECNs, Dark Pools) Synergies in derivatives  Cash market more challenging Cross Listing Beginning to happen, e.g. ASEAN Link  Provides order routing and market data, but not trading Connectivity Implications for a Pan-Asian Platform

Alternative platforms – Europe/US markets vs. Asia AsiaEurope/US Drivers Results Constraints Results Regulatory changes Participant demand  New type of investor strategies  Pricing and cost efficiencies  Reduced market impact Technology  Evolving buy-side and brokers’ requirements  Latency, capacity and functionality improvements Pros Execution efficiency More liquidity Lower fees Cons  Reduced transparency  Inefficient price discovery  Potential for “flash crash” events Regulatory protection Capital controls & multiple currencies Less advanced technology Relatively smaller market size Inconsistent market practices and trading structure Dark pools emerging ATS limited but will develop in the future Impacted markets  Japan  Australia  Singapore (Chi-East) 7