Australia’s capital markets in 2007 January 21, 2007
Posted by James Webster in : finance , trackback2007 will be an innovative year in Australia’s financial sector. The ASX is set to launch exchange-traded Contracts for Difference. Since CFDs were introduced to the Australian market a few years ago the growth in the volume of contracts traded has been astonishing, no doubt at least partly due to the current bull market. This growth has also resulted in a significant increase in trading volumes of the underlying shares listed on the ASX, as the CFD providers hedge their exposures. So while the ASX has no doubt done well out of increased fees from trading, they obviously want to get a piece of the action for themselves. It will be interesting to see how their offering compares to the current leading CFD providers and how these providers will adapt to the new competition. I wonder if it will introduce opportunities for arbitrage? It also looks like the ASX will be one of the first exchanges to have listed CFDs, the only other that I have been able to find is the London Stock Exchange.
Whilst the ASX looks to innovate through new products, a consortium of sell-side banks and brokers led by the New Zealand Stock Exchange will be establishing an Australian ECN (to be headed by Greg Yanco, a former ASX exec), an alternative trading venue for ASX-listed shares.
From a technology perspective this will mean an increasing focus on the FIX protocol and I expect algorithmic trading will also increase rapidly in Australia. I wonder if AMQP might also play a role in the network’s implementation?
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