Baisse des volumes, arrivée des traders hautes fréquence, fragmentation des marchés… comment les brokers se sont-ils adaptés à cette nouvelle donne ?

While volume and execution speeds continue to increase, financial institutions, clearing houses and exchanges are under pressure to deliver a more timely, transparent and operationally efficient post-trade landscape for derivatives. At SunGard’s recent Clearing Panel in London, Challenges in post-trade processes and operations, attendees heard about the difficulties in achieving true end-to-end STP for derivatives.

Europe’s multi-venue environment is placing considerable pressure on trading firms’ middle and back offices. Automation provides the key to meeting increasingly sophisticated client demands while keeping control of costs.

In Japan, by 2008, the majority of trading was already through electronic channels. There is also a trend, within that flow, for more algorithmic execution and less ‘point-and-click’ DMA.
In Hong Kong around 28% of institutional flow was electronic with two-thirds of it DMA. However, this data is a more than a year and we would expect to find a greater share for algorithmic solutions today. Singapore, Korea and Taiwan show similar figures and trends: around 25% being electronic and a slow trend within that flow for more algorithmic trading at the expense of DMA.

Index Futures and Equity Swaps (also known as CFDs) are products that give similar exposure to ETFs. While ETFs are not yet as widely used as the other two products, around a third of the larger firms are using them today with a significant increase in adoption over the last two years. Equity swaps can be used for purposes of hedging protection, access, “equitisation” and leverage; that most ETFs are useful only for access and “equitisation” may be limiting their adoption. However, in the US, ETFs are traded at fine spreads and can enable a better appreciation of transaction costs which may be attractive to asset managers.

The cost of operating in the post-MiFID marketplace has become prohibitive for all but the largest brokers. There is, however, a new operating model that tackles these cost barriers head-on and makes it possible for regional and specialist brokers with a strong client service proposition to compete fully with larger firms.

SunGard’s approach is to offer our clients and their FIX counterparts Rules Of Engagement that are in line with FIX best practices, whether it is about collecting a plain-vanilla equity order, a derivative order, a client allocation, or broadcasting market data.

Increasing efficiency has been a constant theme in the history of financial markets. The fallout from the subprime crisis has increased the need to keep a tight lid on costs, but not at the expense of business expansion

Competition at the front end has not, so far, been matched in the post-trade arena, and that is hampering many firms’ abilities to actually trade on the venues they may wish to.

Two trends will continue develop in South East Asia in 2010: more cross-asset and more cross-border trading. Watch Hui Yew Ping, managing director of OCBC Securities -one of the largest stock broking firms in Singapore- describe the trends impacting South East Asia, the company’s focus and its experience working with SunGard Global Trading.