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Asian exchanges - Exchanges take stock of change

Author: Peter Lee

Asian stock and derivatives exchanges sense growing competition from electronic trading and internet-based networks that might supersede them. Their response has been to demutualize, decide to run themselves as commercial businesses rather than private clubs, list publicly, merge, embrace new technology, and allow traders remote-access. In Singapore, the stock exchange is bracing itself for the effects on its member broking firms of deregulation of commissions, and futures exchange Simex, according to its president, Ang Swee Tian, is increasingly mindful of competition from non-exchanges. The two are merging. Ang says he is particularly impressed with the stock exchange's IT teams, which he hopes may work with Simex members on improving settlement and back-office procedures.

Ultimately, Ang expects: "The integration of cash and futures will reduce the cost of capital required in using these markets." He adds: "We hope that with stock exchange futures contracts, users can post shares they've purchased in the cash market as collateral against futures positions."

Remote access is another issue. Already 80% of Simex end customers are outside Singapore and though market-makers are needed to provide liquidity, Ang reckons there should be no problem with trading from Hong Kong, Tokyo or London.