Hong Kong Exchanges and Clearing Limited (HKEx) announced on Friday last week that it has established a framework to support Application Service Providers (ASPs). ASPs play a vital role in HKEx’s market ecosystem by providing services to Exchange Participants (EPs) and connecting investors to HKEx’s markets through EPs.
The new framework allows ASPs to contract directly with HKEx Hosting Services to establish an HKEx Service Network (HSN) link to HKEx’s trading, clearing and market data systems that can be shared by their EP customers through individual HSN Virtual Ports (HSNVPs). EPs may be able to lower their operating costs and increase their efficiency by having an HSNVP and accessing HKEx products directly through an ASP.
Greater accessibility to and from Asia’s most important electronic trading centers has been increasing dramatically recently, with Singapore’s interbank FX sector having expanded its connectivity in order that international trading desks can access executing venues situated there with minimal latency.
HKEx is well placed to do battle with Russia’s rapidly developing Moscow Exchange which has spent the last year vying for market share in global order flow as demand for ruble liquidity has increased. Rather similarly to HKEx’s adoption of ASPs, Moscow Exchange achieved a similar objective by opting for point to point connectivity provided by Canadian venue-neutral technology provider TMX Atrium, starting early last year with direct connections between Moscow and London, and Frankfurt and London. Given that Asian markets are beginning to become closely intertwined with Russia, the ability for Western trading desks to conduct ultra-low latency trade execution at Asian exchanges is most certainly critical.
So far, the following firms have confirmed they will sign up with HKEx Hosting Services to provide ASP connectivity service at HKEx’s Tseung Kwan O data centre in Hong Kong:
2GoTrade Limited
Ayers Solutions Limited
iAsia Online Systems Limited
SunGard
In terms of market data, the new framework allows ASPs to enter into a licence agreement that permits them to connect directly to HKEx’s market data platform and redistribute data from HKEx’s markets to their clients that are HKEx-licensed information vendors or licensed end-users. ASPs with such an agreement can avoid the collection and reporting obligations of information vendors by acting as a licensed feed provider for HKEx market data.
For the original press release, click here.