Regulatory challenges of trading Asian equities and the growth of the Swaps market

When trading equities around the world, most investors understand the developed markets of Europe and North America. However, when it comes to Asian markets, the local nuance of each exchange and country often daunts investors and encourages many to head back to more familiar developed markets.

In recent years, Asia has become firmly entrenched as the engine room of the industrial world, with world leading microchip makers in Taiwan and vast mobile and entertainment conglomerates in Korea.

To better understand some of the issues that present themselves when trading in Asia, let’s break down the problems that many face. Firstly, many of the markets in Asia require a trading ID to participate. This, in turn, requires pre-finance and authorization from the regulator in question.

The second challenge is the government controls that restrict ownership of assets and monies that can be invested. To add to the above, lot size constraints and other trading differences make investing and trading in Asia a complex business.

The growing demand for investors to access emerging market exposure has led to the growth of Swaps and P-Notes accordingly, as these investment products allow easy trading and no pre-financing. This trend is continuing with even non-bulge bracket firms starting to offer their clients access to Asian markets via synthetic products.

Over recent years, Fidessa has enhanced its trading platform to provide support for Swaps to its customer base. This allows Fidessa’s clients to position themselves strategically and allows access to their growing balance sheets via greater product diversity. This seamless integration with Fidessa’s OMS trading capability for both high-touch and low-touch trading flow is now complemented with these new swap offerings.

For more information on how ION’s Swap product support can help your business, please contact us.