Excerpt from TheTrade Asia discussing impending changes in the Australian securities market and quoting Dennis Baillon, Charles River’s sales executive in Melbourne
Long-anticipated reforms in Australia's securities market have won applause from market participants. How is the Buy-Side Trading Advisory Board responding to changes? Efforts to create a more efficient, competitive trading environment in Australia have regained following an easing of the financial crisis. In focus is the impending launch of Chi-X Australia's equity trading platform, slated for early Q4 once regulatory oversight is handed to the Australian Securities and Investments Commission (ASIC) from the Australian Stock Exchange (ASX).
As a source of liquidity, Chi-X Global will be the first to compete directly with the ASX, whose own low-latency platforms will be launched on a new matching engine, ASX Trade that in November will replace its existing ITS system, cutting latency to 250 microseconds from 2-3 milliseconds currently and boosting capacity five-fold. Chi-X has made no announcement about its likely trading speeds in Australia, but Chi-X Europe offers an average internal latency of 350 microseconds. Market participants say Chi-X's entry holds immense significance not just for Australia but the region as a whole.
The adoption of advanced electronic trading techniques has also been boosted by the increasingly outward-looking mindsets of Australian fund managers.
More competition seems likely, but Australia’s buy-side traders must exercise greater control to take advantage of the potential benefits, says Dennis Baillon, Sales Executive, Charles River Development. “Execution costs will come down due to competition, and while volumes increase, trade sizes will likely become smaller. All of this generally means that buy-side traders will have more responsibility in managing their orders and will also need more efficient workflows.”