Trading in Asia – How to Capitalise on the “Un-tapped” Market

When trying to escape the fierce competition of the European and US markets, while also searching for opportunities to tap into new liquidity pools and increase revenues, HFT firms are increasingly looking to Asia – the so-called “untapped” market. KVH, a Fidelity Investments company, and MarketPrizm, a wholly-owned Colt company, have been expanding their capabilities in the Asian markets to provide market access services, data, order routing, managed hosting and low latency networking across a number of Asian exchanges.

However, with the opportunity of this US$1.58 trillion/month trading market, come challenges associated with its unique market microstructures, cultural and language barriers, different tax systems and colocation rules, and higher IT infrastructure costs.

Some of the areas to consider when European and US companies start looking at the Asian market are:

» English is not an official language in most of Asia: How would you handle notifications from market operators in a language you can’t read, or a technical issue that needs to be conveyed to an engineer that doesn’t speak your language? In these cases, a multilingual service provider is critical to act as your liaison with brokers, exchanges, and other financial players. Ideally, they’ll have multilingual capabilities internally as well to provide service and operation services in your language.

» Like Europe, Asia is not one market, but many: Depending on the country, government, and exchange you are dealing with, the rules and regulations related to trading, infrastructure assets, taxes, and more will most likely differ significantly. Seek expert advice on each of these issues to ensure you’re operating in an optimal trading environment for that market.

» This market won’t be “un-tapped” for long: The booming economies of China and India are making headlines worldwide, while Japan, Singapore, and Hong Kong each have a market size and strength that cannot be ignored. Meanwhile, rapidly evolving markets like Korea, Thailand, Malaysia, and Taiwan are quickly establishing an economic presence on the global stage. It won’t be long before HFT firms are looking for the next market to target while escaping the fierce competition in Asia. Strike while the iron’s hot.

Click here for the full whitepaper developed by trading experts from KVH (Colt’s sister company headquartered in Tokyo, Japan) on how European and US-based HFT firms can smoothly and successfully enter the Asian trading market: Trading in Asia – The Key Challenges for International HFT Firms and How to Overcome Them.