Asia’s recovery is moving at a much slower pace than those in the US and Europe, say vendors in the region. And while cost is no longer the top priority for many market data managers in the US and Europe, it remains the most important concern in Asia.
There are signs of activity, starting with the region’s exchanges, which have seen a pickup in market data sales in the first half of 2004. The Hong Kong Exchange Clearing, for example, saw revenues from market data sales increase by 25 percent to HK$159 million in the first half of the year, compared to HK$126 million for the same period in 2003. The exchange attributes this to greater demand for information in line with the increased activity in the cash and derivatives markets.
In addition, some vendors are seeing increased interest as clients undergo cost-cutting projects. Donovan Ransome, marketing manager, enterprise information solutions for Reuters in London, says that many clients who plan to move from Reuters’ older market data distribution systems to RMDS expect to begin with implementations in Asia.
Ransome says there are two reasons for this. First, many clients want to consolidate multiple sites for market data distribution into a central hub in Singapore, Hong Kong or Tokyo. That is driving the implementation of RMDS, which allows them to do that. “We’re seeing a lot of consolidation happening in Asia and that is driving a lot of these initial migrations,” he says.
There is also growth around electronic or algorithmic trading. “Algorithmic trading is becoming very much talked about and getting a lot of funding at our customers,” Ransome says. “They’re investing a lot of money in algorithmic trading in order to compete effectively.”
Others note that the client base is expanding. More financial institutions, asset managers and hedge funds are looking to set up offices in Hong Kong and Singapore, thereby boosting demand for market data services. Stephan Stadelmann, managing partner at Singapore-based data and content management company Finetik Partners, says that larger vendors in particular will benefit as traders, private banks and asset managers look for simple solutions in the real-time data space.
But given the idiosyncrasies of Asia’s local markets, firms continue to be interested in smaller vendors, and therefore the market remains fragmented. For example, Stadelman says that US-based institutions that want to enter the region have inquired about Finetik’s Asian Data Content Service.
Meanwhile, all eyes are on China. “A lot of emerging customers are coming out of China. We’re talking to quite a few up and coming banks who have money to spend,” says Ransome.
Source: Waters - Financial Technology Inteligence, December 2004 www.watersonline.com
