Japan Exchange merger attracts algo trading specialists
As Asian markets continue to lure international investors, participants on Japan’s new Exchange will now be able to get market access and algorithmic trading tools from data and analytics company S&P Capital IQ, which has chosen to locate itself at KVH’s datacentre in Tokyo.
The Japan Exchange was created from a merger between the Tokyo and Osaka exchanges last month. Its arrival represents a significant development for Japan’s securities markets; by bringing together the derivatives-focused Osaka Securities Exchange and the equities-focused Tokyo Stock Exchange, it was hoped that the new ‘mega-bourse’ would generate more cross-asset trading opportunities and boost liquidity.
Meanwhile, S&P Capital IQ acquired algorithmic trading specialist firm QuantHouse in April. The company is looking to expand into Asia via Japan; KVH is a cloud data centre network. The idea is that QuantHouse will capitalise on demand for advanced trading technologies such as algorithms that can exploit the new opportunities presented by Japan Exchange.
“The growing ecosystem community and the many potential customers that it encompasses, presents QuantHouse with an opportunity to develop our business significantly,” said Pierre Feligioni, head of global real time products at S&P Capital IQ. “With this in mind, we plan to use KVH’s low-latency network and infrastructure services to gain access into all major Asian markets.”
International capital markets and trading technology companies have been keen to bolster their presence in Asia Pacific in recent months. In November, RTS Realtime Systems announced that it would permanently move its chief executive, Steffen Gemuenden, to Singapore to focus on opportunities in the region, including opening a new data centre in Shanghai, as well as its first office in China and a new data centre in Tokyo. Meanwhile in January, HKEx improved its connectivity to the outside world through a deal with low-latency specialist Telstra Global at its new data centre at Tseung Kwan O.
Besides the Japan Exchange, the KVH facility in Tokyo also provides access to Tokyo Commodity Exchange, Tokyo Financial Exchange, SBI Japannext and Chi-X Japan. It also holds connections to other Asia Pacific markets including Hong Kong Exchanges and Clearing, the Singapore Exchange, the Korea Exchange and the Australian Securities Exchange.
In Japan, many market observers believe that the merger between the TSE and OSE was in part a response to the arrival of competitor platforms such as Chi-X Japan and SBI Japannext, which have gradually eaten away at the primary exchanges’ market share in recent years. The original merger agreement between the TSE and OSE was announced in November 2011.