The Rise of the Asian ATS Market: The Waiting Game
Report Summary
The Rise of the Asian ATS Market: The Waiting Game
Despite numerous hurdles, Aite Group expects to see the adoption of ATSs in the Asia-Pacific region reach close to 20% by the end of 2012.
Boston, MA, June 22, 2009 – A new report from Aite Group, LLC explores the major financial markets in the Asia-Pacific region and highlights some of the key challenges and opportunities for ATSs. In addition, the report profiles and examines alternative trading systems (ATSs, or PTSs in Japan) and broker/dealers looking to expand their presence in Asia.
While the emergence of ATSs over the last decade has fundamentally changed the market structure within the U.S. equities market (and, to a lesser extent, the European and Canadian equities markets), ATSs have had a difficult time penetrating the Asian markets. Unlike in other markets, the pan-Asian region does not have regulation and standardized market practices that facilitate the growth of alternative execution venues. Instead, the region is occupied by many major financial centers, each with their own unique set of regulations and market practices. In most cases, the countries that make up the region also tend to have a single, monopolistic exchange with close ties to their respective regulators and clearing organizations.
Today, brokers and aspiring ATSs are already laying ground to build a strong ATS presence in Asia. Ongoing conversations among exchanges, ATSs, brokers and buy-side firms seek to create a competitive environment from which all of the major market participants can benefit. With anticipated regulatory and infrastructure changes across most of the major Asian financial centers over the next 12 to 18 months, Aite Group expects to see the adoption of ATSs reach close to 20% by the end of 2012.
"ATSs still face many hurdles, including regulations that are separate and unique to each market in the Asia-Pacific region," says Sang Lee, managing partner with Aite Group and co-author of this report. "Aspiring ATSs are taking a coopetition approach in Asia, working closely with both regulators and exchanges to create a new market environment conducive for the adoption of ATSs."
"The concept of ATSs and their role in the overall market structure is still a relatively novel idea in the Asia-Pacific markets, adds James Kang, analyst with Aite Group and co-author of this report. "The introduction and adoption of ATSs is currently being driven by global brokers and the foreign investment community. The future success of ATSs cannot be rooted in foreign order flow alone; for long-term sustainability and growth, ATSs must succeed in capturing flow from local clients."
The report profiles ATSs and broker/dealers that are active in the Asia-Pacific markets, including the following: AXE ECN, Barclays Capital, BlocSec, Chi-X, Credit Suisse, Goldman Sachs, Instinet, ITG, kabu.comPTS, Liquidnet, Macquarie Securities, Merrill Lynch, Monex Nighter, Morgan Stanley, SBI Japannext, Tora and UBS Investment Bank.
This 54-page Impact Report contains 19 figures and 13 tables. Clients of Aite Group's Institutional Securities & Investments service can download the report.