Market view | Emerging markets
futures/options and that is why Russian markets are particularly attractive. Warsaw is also coming up a great deal as interesting; people are writing strategies to these markets. In each market we put in a whole co-location slot infrastructure to offer direct market access, and need to provide a focus on low latency data and order routing.” At BT, Pickles says that the real competitive scramble today is for the derivatives markets. “If you’re running an exchange operation you are trying to expand derivatives into other countries. Each of the majors is trying to build out its community and emerging markets are recognising the importance of both derivatives and foreign exchange as the exchange markets become more transparent in the face of regulation.” TMX Atrium, a provider of infrastructure solutions for the financial community, announced in August new low latency connectivity into Moscow from Stockholm, providing access to key data centres to enable participants to trade the rapidly growing Russian market. The data centres in Moscow and the greater liquidity in London is a combination that is currently providing interesting opportunities for arbitrage. Emmanuel Carjat, TMX Atrium’s MD, says: “Our venue-neutral platform is designed to enhance and add supplementary routes as clients demand to provide access to multiple markets, regions and venues to trade the full range of asset classes. We
recognise that our client base wish to execute arbitrage
strategies between key data centres and in line with our expansion strategy, we will continue to refine our connectivity capabilities to meet these demands.”
Russia does though have its challenges, such as language and the state of technology, according to Carjat. English may be the lingua franca of finance, but it is worth remembering that in emerging markets it can also be short in supply. “In addition at the technical level, some of things we take for granted e.g. voltage levels will be different which requires specialised power adapters for your equipment,” he says. “You might be doing something routine but you can be sure it will not go smoothly.” Progress though is being made. For example, the Moscow exchange, MICEX-RTS, is expected to launch an initial public offering next year and the Russian government is pushing domestic companies to list at home in order to boost the liquidity of the local market. While market participants welcome the changes, the MICEX-RTS cannot be complacent as the winds of competition are blowing from the CEE, in particular Warsaw. Opportunities also abound on the latency front especially in Asia as asset managers and brokers trading the region’s equities want faster access to exchanges and market data. In response, the Asia Submarine-cable Express a new underwater cable costing $430m aimed at automated traders opened for business tracing a 7,800km route from Japan to Singapore and Malaysia. Hong Kong will soon be included in the loop which will shave three milliseconds off the speed offered by existing cables and providing the shortest link between the Tokyo and Singapore bourses. ■
“The equities market is very sluggish, so the real activity is in commodities and futures/options and that is why Russian markets are particularly attractive.” Tanuja Randery, MarketPrizm
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Best Execution | Autumn 2012
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