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Kinks in the wire: Asean integration

Published in Automated Trader Magazine Issue 34 Q3 2014

Asean integration approaches next year, but a fully linked-up financial system will be several years in the making. Sophie Lewisohn hears about new initiatives between exchanges and what still needs to happen for trading to take off.

Kinks in the wire: Asean integration

Expert Insight - The Rise of the Asian Superbroker

As the global banks grapple with tides of regulation, fines and a myriad of other post-crisis issues, local Asian institutions are tooling up and stepping in to fill the gaps. The "Asian superbroker" is emerging and catching up with the big guys.

Global banks have had a tough time in the past five years. Asia is proving challenging ground, and the need to be 'local' in every market can be a stretch. This is fertile ground for local banks and brokers. Big deals have already been done and ASEAN banks generally are increasing their investment in services for international clients wanting access to Asian markets - from Singapore and Hong Kong to Mongolia and Myanmar. Indeed some are reaching out past the Asian border too. Could these Davids of the broking world really be starting to snap at the heels of the Goliaths?

Click here to read the remainder of this article Fidessa

While Europe works through the after-effects of integrating many unequal economic parts, the south-east Asian nations are nearing the creation of their own economic community in 2015.

The similarity between their charters is striking. The goals of euro architects Francois Mitterrand, Jacques Delors and Helmut Kohl rise again in Asean's Charter, whose aim is "a stable, prosperous and highly competitive Asean Economic Region in which there is a free flow of goods, services and investments, a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparity."

But the similarities end there. It is tempting to view Asean as the next EU, but the groups of countries are markedly different, with different goals and different challenges.

A loose economic team since 1967 when Indonesia, Malaysia, the Philippines, Singapore and Thailand teamed up, Asean has doubled its membership to include Brunei, Cambodia, Laos, Myanmar and Vietnam. The list includes one of the world's richest countries (Singapore) and one of the poorest (Myanmar), and every political system from state-run Vietnam and Cambodia to military Myanmar and Thailand and democratic India.

The challenges in uniting such a group are clear, but there is a sense, on a tense political stage, of strength in numbers. Asean's combined GDP weighs in at $2.3tr, and is forecast by the Economist Intelligence Unit to outsize Germany's by 2018.

While a single currency is off the menu, Asean trade delegates regularly pay homage to the benefits of closer ties through the region. Tariffs between countries are being lowered with the goal of free trade throughout the region, while the financial system is planning a parallel integration.

But there are doubts about the speed with which the latter can be achieved. "There has been talk about a common trading network for as long as I've been working in Asia," said Steffen Gemuenden, CEO of RTS Realtime Systems. Recently acquired by Bloomberg, the firm has operated in the region since the 1990s. "We are still at the very beginning."

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