Infrastructure

10:27 AM
Arin Ray and and Sreekrishna Sankar
Arin Ray and and Sreekrishna Sankar
Commentary
50%
50%

Technology Adoption Brings Change to Indian Capital Markets

While foreign brokers have influenced the adoption of high-touch DMA and the FIX protocol in India, Celent analysts say fully automated DMA remains a distant pipe dream as regulators are skeptical.

FIX: The Basis for Technological Advancement

FIX protocol is essential for the adoption of DMA, algorithmic trading, and other technologically sophisticated techniques. Most of these services cannot be handled manually; automation is key. FIX protocol solves this fundamental issue by providing a protocol of communication on top of which all these other sophisticated techniques operate.

The story of FIX adoption in India is intricately tied to the foreign institutional investment (FII) flow into the country. As FII participation has grown over the years, it has indirectly affected the adoption of technologies like FIX in the marketplace. Many international investors have made significant investments in FIX networks and order management systems (OMS) and place their orders through them. Some Indian vendors have developed FIX-enabled order management systems and plan to launch FIX-enabled advanced electronic trading capabilities.

Another driver has been the introduction of DMA. DMA support means support for FIX, and demand from clients for DMA support has spurred FIX adoption. Currently, the FIX protocol has been actively implemented by international players in India for their global operations. Buy side firms that use FIX are typically large traders or part of a global franchise. Sell side firms implement it to meet client expectations and enhance their value. Other firms that trade exclusively in Indian markets do not really require this, unless volumes are high enough to justify the cost involved in using FIX.

—Arin Ray and Sreekrishna Sankarwith are analysts with Celent based in Bangalore, India. They are co-authors of the Celent report, “Indian Capital Markets: Trends and Prospects" For more information, visit Celent.

Previous
3 of 3
Next
Comment  | 
Print  | 
More Insights
More Commentary
Shared Reporting Services on the Horizon, Genpact Predicts
The financial services industry is starting to adopt shared services, resulting in reasonable impacts to the bottom line. Genpact expects a push for reporting efficiency will come next.
Don't Let the Cloud Rain on Your Operations Strategy Parade
Avoid migrating large applications all at once to minimize risk during a cloud project.
Could Intel Lose Data Center Market Share to ARM Chips?
ARM chips could be an alternative for certain purposes in the datacenter, but many questions have to be answered before they pose a threat to Intel's market dominance.
Cost to Trade: Hey, Banks, Itís Time to Face the Music
Why is calculating the cost to trade so difficult for banks? The answer is as complex as the calculations themselves.
M&A Activity Will Continue to Grow in 2015
Data shows that the M&A market continues to improve, and forecasts indicate deal making will be healthy in 2015.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - Elite 8, October 2014
The in-depth profiles of this year's Elite 8 honorees focus on leadership, talent recruitment, big data, analytics, mobile, and more.
Video
7 Unusual Behaviors That Indicate Security Breaches
7 Unusual Behaviors That Indicate Security Breaches
Breaches create outliers. Identifying anomalous activity can help keep firms in compliance and out of the headlines.