Australia joins the global fragmentation movement
First Published Sunday, 31st July 2011 08:17 am from Fidessa : Steve Grob
The opinions expressed by this blogger and those providing comments are theirs alone, this does not reflect the opinion of Automated Trader or any employee thereof. Automated Trader is not responsible for the accuracy of any of the information supplied by this article.
I was a guest last week to mark the opening of the
Australian Liquidity Centre which is not, as you might think, the
latest trendy Sydney nightspot. Instead it's the name chosen by
target="_blank">ASX for its impressive new
co-location facility and represents the exchange's
latest move to meet the imminent opening up of equities trading
Down Under. The transfer of market supervision from the title="ASX" href="http://www.asx.com.au/"
href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC paved the way for alternative
href="http://www.chi-x.com/apac/au/"
target="_blank">Chi-X to open its doors in the
fourth quarter of 2011. Since that time the
target="_blank">ASX's response has been
href="http://www.asx.com.au/trading_services/new_market_services.htm#volumematch"
target="_blank">VolumeMatch, a new dark pool, and
will shortly be adding the low-latency venue title="PureMatch"
href="http://www.asx.com.au/documents/trading_services/purematch_factsheet.pdf"
target="_blank">PureMatch into the mix. On top of
this it has also announced a new smart trading workstation ( title="ASX Best"
href="http://www.asxgroup.com.au/media/PDFs/110713mr_asx_best_and_fidessa.pdf"
target="_blank">ASX Best) and adjusted its
fees.
So how will this latest version of the
great regulation/technology experiment play out? Will title="Chi-X" href="http://www.chi-x.com/apac/au/"
target="_blank">Chi-X succeed in the way that it has
in Europe and Canada? More important will the end investor (both
retail and institutional) get a better - or even a more
transparent - deal out of all this? In its favour,
target="_blank">Chi-X looks like being the only lit
alternative in the region for the time being and so will not have
href="http://www.tradeturquoise.com/"
target="_blank">Turquoise chasing the same
liquidity. On top of this, its clearing arrangement with the
target="_blank">ASX simplifies the whole post-trade
environment and so, ironically, makes it easier for market
participants to trade away from the
href="http://www.asx.com.au/" target="_blank">ASX.
href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC has made sure that Australia
won't go through the same nonsense that we've
had in Europe over tick sizes and opening times, both of which
were impediments to effective competition.
On
href="http://www.asx.com.au/" target="_blank">ASX
has the advantage of going last in this game and has been able to
see the impact that denial and/or complacency has had on the
market shares of other national stock exchanges. But, whatever
happens, equities trading in Australia is now on a path of no
return and it will be fascinating to see how it develops. In
particular, the changing shape of off-exchange trading will be
vital, whether it's buy-side crossing networks, broker dark
pools, bi-lateral executions or dark aggregation services. Let's
hope that Australia learns the lessons from Europe and makes it
easy for everyone to "see in the dark" and
understand what is really going on.
