A TAKE ON AUSTRALIA’S CAPITAL MARKETS: HIGH PACE OF CHANGE

As sponsors of the recent Australia FIX conference, which gathered over 300 delegates from sell-side and buy-side firms in Sydney, we participated to some lively discussions around recent and upcoming changes in financial markets:

1. The launch of Chi-X Australia’s alternative equities trading exchange: With the go-live of Chi-X Australia on October 31st, there was much talk about the introduction of competition to the Australian market, and how it will impact trading in the coming months, and of present and future Smart Order Routing (SOR) technology to help Australian market participants seize liquidity fragmentation opportunities. SunGard passed vendor certification testing with Chi-X Australia on September 20th, and was ready to operate on October 31st with smart routing between the ASX and Chi-X markets.
2. New technology: Wider automated and algorithmic trading trends were another important theme in the discussions. It is widely believed that these technologies will bring serious disruption to the current way of doing business in the next two or three years, one of the key impacts being that manual order entry through screens would essentially become marginal for both buy-side and sell-side firms.
3. High Frequency Trading: The role of High Frequency Trading (HFT) and possible regulatory reactions were also discussed. Different views emerged on HFT’s role in the industry, but a consensus emerged: the evidence indicates that the majority of HFT actors are efficient liquidity providers and do not contribute to additional volatility. There was a view that the regulator should play a larger role in defining the rules for HFT, but also a fear that the regulator might go too far and propose some theoretical measures that are not backed by real-life data, which could be counterproductive.

The FIX Australia event confirmed the current high pace of change in Australian capital markets, and the many concerns over new technology, regulation and market conditions. SunGard looks forward to helping buy-side and sell-side customers capitalize on these changes and strengthen their local and international positions.

Read the related press release: SunGard’s Valdi Smart Order Router to Help Australian Broker-dealers Seize Liquidity Fragmentation Opportunities