Infrastructure

11:09 AM
Justin Grant
Justin Grant
Commentary
Connect Directly
Google+
Twitter
RSS
E-Mail
50%
50%

U.S. High-Frequency Trading Firms Look Eastward

The new gold rush is taking place in the Far East. Plagued with depressed trading volumes, brutal competition and stunted growth, high-frequency trading firms are setting their sights on the Asia-Pacific region as the U.S. and European markets stagnate.

The new gold rush is taking place in the Far East. Plagued with depressed trading volumes, brutal competition and stunted growth, high-frequency trading firms are setting their sights on the Asia-Pacific region as the U.S. and European markets stagnate.

According to a Financial News report, a number of U.S. firms - including Citadel, Getco, Jane Street Capital and Optiver - are among the firms that have tired of the technology arms race in the U.S. and Europe and are setting up shop in Asia.

From Financial News:

Tokyo is currently the leading hub for high-frequency trading firms in Asia-Pacific, where the trading practice now accounts for about 45% of trading volumes, according to Credit Suisse.

In a bid to bolster liquidity and increase high-frequency trading volumes, the Tokyo Stock Exchange launched its Arrowhead trading platform in January last year. The Tokyo Stock Exchange is under increasing competition from Chi-X Japan, the Tokyo-based alternative trading facility, which has created arbitrage opportunities for high-frequency trading firms.

Hiroshi Matsubara, a director at Fidessa in Japan, a trading technology firm, says further structural changes are afoot. A suggested tie-up between the Tokyo Stock Exchange and Osaka Securities Exchange would "create quite good microsecond arbitrage opportunities" as high-frequency trading firms would obtain access to multi-asset class trading opportunities on a single platform.

Singapore currently stands behind Japan as a leading high-frequency trading hub in the region. Getco has set up operations in the country and makes markets on the exchange, which is migrating to a new platform provided by Nasdaq OMX. The upgrade will make Singapore one of the fastest markets in the world.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
SEC Examinations: What to Expect When the SEC Is on Its Way
Theodore Eichenlaub highlights trends in SEC expectations and how to approach a risk assessment of your compliance program.
The Value of Predictive Analytics in Financial Services
Risk management and customer data are two key areas where data analytics is being applied in financial services.
Moving the Trader Closer to the Investment Process
The sell side can demonstrate more value by applying analytics to pre- and post-trading, and by educating buy-side clients about broker segmentation, trading behavior and algorithm shortcomings, and more.
Wirehouses May See More Independent BDs as Retention Packages Expire
Retention bonuses are expiring, leaving brokerages vulnerable to attrition. Is access to technology making it easier for brokers to go independent?
SCI: A Whale of a Regulation
The SEC's Reg SCI weights in at a whopping 742 pages. Here is what you need to know about the oversized regulation.
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.