The prospect of a Shenzhen-Hong Kong Stock Connect hung over the HKEX Hosting Services Ecosystem Forum. While the market waits for the regulators and the authorities to finalize that plan, traders, technologists and solution providers gathered to discuss new exchange initiatives, trading technology and regulatory updates.
New platforms, data
Equities turnover originating from hosting services averaged 45% of total turnover in March 2016, with 49.5% of derivatives trading taking place via HKEX’s data center, reported Jonathan Leung, Senior Vice President and Head of Hosting Services, HKEX. 125 Exchange Participants are using hosting services currently, with the number of Category-C, or small, brokers rising, Jonathan Leung shared in his opening remarks.
After consolidating three legacy data centers into the only exchange-owned tier-4 data center in Asia Pacific, HKEX has continued with its 100% market availability track record. Furthermore, the exchange opened up to three telecom carriers to provide SDNet/2 service, Richard Leung, Managing Director and Co-Head of IT, HKEX explained. SDNet/2 is the network infrastructure supporting HKEX’s trading, clearing and settlement, and market data services and providing reliable and cost effective network services to all exchange participants, clearing participants and information vendors alike.
A new cash trading platform, currently planned to be available for testing in 2017 and open for production around the end of that year, will reduce latency substantially, Richard Leung said.
The new Nasdaq Genium platform has increased capacity that allows the exchange to introduce new derivative products this year. The derivatives clearing system was also upgraded to shorten the day-end maintenance window, enabling trading hours on futures platform to extend to 11:45pm, and further, if needed, Richard Leung told attendees.
The Orion Market Data system for Cash and Derivatives markets offers low latency data service directly via the data center or information vendors as well as providing the market data of multi-asset classes, according to Winnie Leung, Vice President, Market Data Licensing, HKEX. With more and more exchange participants and buy-side firms pursuing low latency market data, HKEX introduced the OMD Free Trial Programme for Premium and Fulltick Datafeeds and Historical Full Book in November 2015 to allow this group of market data end-user to experience the OMD low-latency datafeeds for 3 months free of charge. “We have recorded a healthy increase in the subscription of our OMD premium datafeeds since then.”
The Shanghai-Hong Kong Stock Connect is seeing increased diversification, reported Christopher Hui, Managing Director, Project Management, HKEX. Southbound trading, which initially lagged northbound, is picking up while the stocks traded are gradually shifting away from A-H share arbitrage as investor preferences continue to develop, Hui noted.
Hui believes the Stock Connect plan will continue to thrive for four reasons: the redeployment of mainland wealth into capital markets from banking and insurance; rising mainland outbound capital markets investment; increased international participation in mainland markets; and Hong Kong’s unique position as mutual price discovery venue and offshore RMB risk management center.