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CONFIDENTIAL- 2 -
Asia – The Retail Market
Change the rules
Gambling = Exploring fortune
CONFIDENTIAL- 3 -
Algo Trading - “To Infinity and beyond”
o Electronic Trading – Global and Asia market
o Asia Market Challenges
o Algorithmic trading
o Technology challenges
CONFIDENTIAL- 4 -
Electronic Trading – Global and Asia Market
Asia market : Fragmentation low
CONFIDENTIAL- 5 -
Electronic Trading – Global and Asia Market
Adoption of advance execution slow
Source: Celent
CONFIDENTIAL- 6 -
Electronic Trading – Global and Asia Market
HFT adoption is slow, Cost of execution is high
Source: Credit Suisse
Cost of execution
CONFIDENTIAL- 7 -
o Electronic Trading – Global and Asia market
o Asia Market Challenges
o Algorithmic trading
o Technology challenges
Algo Trading - “To Infinity and beyond”
Trigger
CONFIDENTIAL- 8 -
Asia Market - Challenges
Low liquidity, tighter spread
Source: Credit Suisse
CONFIDENTIAL- 9 -
Asia Market - Challenges
o Exchange driven markets, low fragmentation (Fear of flash crash)
o Retail participation, need for institutional market (ATS, Dark pool)
o Multi-asset, multi-market trading platforms
o Pan-Asia market connectivity?
o Best execution regulation (MiFID, NMS)
o Pre-trade risk controls
ASEAN Market Trading Link
CONFIDENTIAL- 10 -
Algo Trading - “To Infinity and beyond”
o Electronic Trading – Global and Asia market
o Asia Market Challenges
o Algorithmic trading
o Technology challenges
CONFIDENTIAL- 11 -
Algorithmic Trading – positive momentum
o Algo trading on rise
o Execution algos - reducing market impact
o Situational algos – dynamic conditions
o Hedging algos
Asian Buyside Reasons for using Algorithms
Costs28%
Anonymity28%
Trader Productivity
23% Speed13%
Price Improvement
8%
“We are told to do more, do it better, and do it with fewer people…”
CONFIDENTIAL- 12 -
o Pre-trade, post-trade, execution integration
o Low latency – decider for profit or loss ?
o Back testing with tick by tick history data
Algorithmic Trading
MarketData
Analyzing data from different venues
Order Generation
What to buy and sell - when
ExecutionStrategy
How to buy and sell - where
Direct Access
Getting to theright venue
Matching
Matching buyers & sellers
TradeCost
Analysis
Did you made the right decision?
Quant Models Algorithmic Trading DMA
Pre Trade Analytics Post Trade AnalyticsTrade Monitoring
0
10
20
30
40
50
60
70
80
90
Delay Trade Impact Missed Trades Commissions
Costs
in B
asis
Poin
ts (
bp)
49%
22% 18%11%
CONFIDENTIAL- 13 -
o Buy side control – DMA, DSA
o Pre-trade risk controls
o Multiple sell side connectivity
o Which algo to use for executing order?
o White box and black box approach
o Multi-asset
Algorithmic Trading
CONFIDENTIAL- 14 -
Algo Trading - “To Infinity and beyond”
o Electronic Trading – Global and Asia market
o Asia Market Challenges
o Algorithmic trading
o Technology challenges
CONFIDENTIAL- 15 -
Technology Challenges
o Low latency for HFT, Algo trading (Internal)o Market data latency, standards, Quality, Sizeo Co-location – multiple exchangeso Exchange approval process
CONFIDENTIAL- 16 -
Technology Challenges
o Algo with news intelligence, fundamental data
o Trader “Gut feel” – Interaction during Algo execution
o Retail investor protection, Extending trading power to Retail?
o High performance – Firmware, Super computer, Giga bit switches
o Pre-trade risk control – Algo performance
o Algo on Algo
o Algo White box/Black box – Work bench
CONFIDENTIAL- 17 -
Summary
o Exchange/Regulator controlled markets (HFT, Dark pool will be slow track)
o Algorithmic trading will rise – need for end to end low latency
o Focus required on Market infrastructure improvement (Latency)
o Pre-trade risk controls, Stock level Circuit breakers
o Pan-Asia clearing, Regulation to be in place before trading connectivity
o Algo workbench based solution – White box/Blackbox
CONFIDENTIAL- 18 -
Banking | Capital Markets | Insurance
Device & SimulateDevice & Simulate
Predefined AlgorithmsPredefined Algorithms
Build New Algos
Build New Algos
Trading Destinations
Trading Destinations
ExchangeExchange
MTFs, ECNsMTFs, ECNs
Dark PoolsDark Pools
Crossing NetworksCrossing
Networks
Pre-Trade AnalyticsPre-Trade Analytics
Overall Risk & Compliance
Overall Risk & Compliance
Order Mgmt System
Order Mgmt System
Master Data Master Data Reporting & MIS
Reporting & MIS
Market Data Market Data
ALGO EXECUTION
Dashboard MonitoringDashboard Monitoring
Simulate & Back Test
Simulate & Back Test
Customize Algo Parameters
Customize Algo Parameters
Customize DashboardsCustomize
Dashboards
ALGO WORKBENCH
Algo Orders over FIX
Algo Orders over FIX
ExchangeExchange
Commercial Vendors
Commercial Vendors
Other Data Sources
Other Data Sources
Data Feeds
Market DataMarket Data
Algo Trading Solution
