The changing landscape of electronic trading in the APAC region

October 9, 2023

Electronic trading is on the rise in markets across the Asia-Pacific region. Increasing volume is dealt via low-touch workflows and algorithmic trading. This trend is driven by several factors, primarily the ongoing process of economic growth across the region. APAC economies are increasingly sophisticated and integrated, and this is reflected in the capital markets.

For broker-dealer firms, several further factors are driving the development of electronic trading. Most importantly, there is increasing demand from the buy side. Investors have more complex execution requirements and seek access to more markets. Exchanges also present increasingly sophisticated offerings, including low latency connectivity and support for algos. In this context, brokers face a range of new challenges and seek support from vendors to address them.

Requirements for counterparties

For sell-side firms in APAC high-growth markets, the development of electronic trading drives a wide range of different requirements:

  • Market access and connectivity: Firms require access to multiple regional and global venues to deliver a comprehensive trading service to their clients. They also need to connect directly to those clients to receive order flow. Depending on their business model, they may also have more advanced requirements, for example, low-latency exchange connectivity. Connectivity requirements can change rapidly, and firms must respond agilely, so the ability to self-provision new connections or user accounts is essential.
  • Market data: Access to market data is as important as exchange connectivity since it enables effective monitoring and analytics of algorithmic orders. Firms cannot assess order performance properly without a comprehensive market data solution.
  • Native algos: APAC exchanges offer support for a wide range of algo models, but the ability to provide specific algorithms natively is an important advantage for brokers. It allows them to offer a consistent service to their clients across multiple venues, regardless of what models each exchange can support.
  • White labeling: Native algo support also allows reselling algo trading services to other counterparties, adding extra revenue streams.
  • Automated tools for trading and execution: A wide range of other tools can allow traders to do more business and achieve better execution outcomes. These include smart order routing, basket trading and direct market access. As with algos, native support for these services is key. Being able to normalize client order flows within a native platform, and apply the same tools across multiple markets, allows brokers to offer a consistently powerful service to their customers.
  • Risk Management: Brokers operating across multiple APAC markets must maintain a range of risk profiles and consider variable regulatory environments. At the same time, having a centralized view of your overall real-time risk position (ideally integrated into the wider electronic trading platform) is crucial to doing business effectively.

What can vendors offer?

Software vendors respond to these requirements in various ways:

  • Integration: A single integrated platform that includes a range of solutions (for example, connectivity, market data, or algos) removes the burden of integrating different components from multiple vendors. Including normalized market data within the core platform can deliver cost savings and help make other platform components more effective (for example, by enabling richer order analytics). Similarly, integrated risk management can enable more effective risk monitoring across all the firm’s trading activities. By offering these comprehensive solutions, vendors can save their customers the time and resources required to integrate third-party tools and data, and deliver competitive advantages.
  • Features: Increased market complexity drives the demand for a wider range of algo models (such as benchmark, or tactical order types). These allow brokers to fulfill more customer use cases.
  • Connectivity: Access to venues across the region and worldwide (including comprehensive market data) is increasingly a minimum requirement for APAC broker firms.
  • Compliance: The decentralized APAC regulatory environment requires a regularly upgraded platform to account for regulatory and exchange-mandatory changes. Global platforms have an advantage, as they are designed to meet the global standards of the most challenging regulator.
  • Reliability: Reliability is a crucial concern for broker firms, so much so that some have invested in redundant backup platforms. Ideally, this should not be necessary, and vendors should be able to provide consistent service and comprehensive support.
  • Extensibility: Electronic trading platforms should support additional modular functionality to allow customers to support future requirements and respond to new client requirements.
  • Investment: Vendors must commit to continuous investment in their platform to deliver mandatory changes and new features that will support the continued development of the capital markets.


APAC broker firms are operating in an increasingly complex and demanding environment. Many are looking for new electronic trading solutions to take advantage of the opportunities this presents. When selecting new tools, firms must not only consider the upfront decision; they also need to bear in mind what else a vendor can add in terms of ongoing investment and whether they are able to support future growth and strategic plans.

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If you’re navigating the changing landscape of the APAC capital markets, contact ION today to discuss how we can help.