Mapping the Algo Trading Across Asia Pacific

The algorithmic trading strategies of Asia Pacific region is still in the phase of growth. Experts in the markets worldwide say that the Asia Pacific region is in the need of more consistency in their regulatory regimes. The markets of Asia Pacific have a great dynamics that shown the inconsistency of the market. This can only be controlled by the regulatory bodies. The promotion of best practices in the markets of APAC tosses the necessity of facilitating the standardization of algorithmic trading and having a control over it. The key features of the APAC markets on whole which gives way for better algo trading and also that affects the electronic medium are discussed below.

Higher Transaction Cost

Higher the transaction cost and the taxes are nothing but a barrier for the growth of the market. In case of a growing market like Asia, this will definitely have a bad impact on the competitiveness of the market with the world leaders. Even some of the well developed markets in the Asian region have the high transaction cost which is not good for any market that wishes to become a leader.

Challenges of the regulatory

Some of the rules followed by the regulatory bodies of Asian market in order to become the member of its exchanges actually stop many foreign investors to enter in to it. For example, some of the regulatory bodies of Asian market require the investor to locally present to become a member of their exchanges. This definitely would not allow some foreign investors who were not present here, to take part in the exchange activities. Instead of these rules, the regulatory bodies should go with routing the trades to investors through brokers which will be bringing

• Lack of transparency in the medium
• ‘operational inefficiencies
• Credit risks

Market access

China market was the pioneer in bringing the buy side and sell side market access which was followed by India to have the both side market access. Singapore, Malaysia and South Korea still stands prominent with the buy side and the Japan and Indonesia stands with the sell side market access.

Asset classes

Below listed are the three key points to be noted in case of the asset classes in algo trading.

• Algo trading active on buy side will accept exchange traded funds, cash equities, commodity derivatives, single stock futures and index futures.
• Algo trading active on sell side will accept FX futures, spot FX, fixed income derivatives and warrants.
• No marketer will trade on over the counter (OTC) derivatives in the algo trading.

Bottom line

Most of the marketers around the world suggest that the Asia Pacific market should have the regulatory bodies with more strict regimes that would bring the consistency in the market. Enhanced competition in the market and among the market is must to bring positive effects in the APAC exchanges. Both the sell side and the buy side insist on points like moving away from some of the blunt tools which includes the minimum resisting period. They also insist on increased competitiveness and liquidity in the market. Many algo trading academies now offer some best courses in algo trading which will be useful for the young marketers to better understand the market flow and also to find a good algo trading job.