[ A D V E R T O R I A L ]
The winds of change
in Asia-Pacific: How
are brokers reacting to
technological evolution?
The world is watching as market infrastructures in Asia-Pacific are evolving, with some
opting for radically new technologies to update their post-trade systems. The result
could be a significant change to how market participants operate in the region.
W
hen it comes to market infra-
structure innovation, exchanges
in Asia-Pacific are leading the charge.
A handful of markets in the region are
implementing significant changes to their
post-trade infrastructures in ways that
have turned heads around the world. The
Australian Securities Exchange (ASX), for
example, is attracting attention as the first
market infrastructure to replace its equity
clearing and settlement platform, CHESS,
with blockchain technology developed by
Digital Asset.
In addition, Digital Asset has partnered
with the Hong Kong Exchange (HKEx) to
develop a blockchain platform designed
to complete post-trade allocations and
processing for Northbound trades under
Stock Connect within a tighter settle-
ment window. It is also undertaking a
comprehensive upgrade of its post-trade
infrastructure, across all processes and
systems through a multi-year programme
called NextGen.
Meanwhile, the Singapore Exchange
(SGX) has launched a new securities
settlement and depository framework and
system to enable the country’s transition
to a T+2 settlement cycle.
Despite the fact these changes are
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Global Custodian
Spring 2019
taking place simultaneously, they are oc-
curring within a region that is tradition-
ally fragmented and the approach being
taken looks somewhat different. The
result could mean significant changes for
brokers connected to those markets, and
while there may be efficiencies on offer,
they may have to incur increased costs de-
pending upon the approach they take to
stay connected to the individual markets.
To discuss this, market participants
across the region gathered at a Global
Custodian roundtable event in Singapore,
sponsored by BNP Paribas Securities
Services, to discuss why the region is so
primed for post-trade change, and how
blockchain is fast emerging as the technol-
ogy of choice for market infrastructures.
Making waves
The Asia-Pacific region is relatively
complex, with each market having its
own currency, time-zone, rules and
regulations, post-trade infrastructure and
securities settlement windows.
However, technological advancements
are helping to break down those differ-
ences, offering the possibility for ex-
changes across the region to harmonise
their infrastructure. For those venues that
have used the same operating model for
10-15 years, they are now coming to the
end of a technology cycle.
Exchanges in the region have confirmed
that there is a common goal to find
solutions that can not only remove those
bespoke models but promote a level of
harmonisation. Collaboration will be crit-
ical in achieving this goal, with global best
practices and other international models
being key.
What is clear is that the market infra-
structures do not want to build bespoke
systems any more. With the experience of
TARGET2 Securities (T2S) in Europe, as
well as the various stock exchange linkag-
es, market infrastructures are becoming
increasingly interconnected and will
have to adopt common standards. This
approach makes it easier to attract and
onboard more market participants.
Market participants agree that there
are significant opportunities with the
technologies on offer in terms of cost