Developing the Trading Architecture

Differences between the US, Europe & Asia

The greatest opportunity for growth for many large and medium trading firms lies in emerging markets. If your firm has a successful trading model enabled by robust trading architecture, then it is only wise to seek to export that model into new markets. The current trend is for firms in the more traditional markets in the US and Europe to set up new opportunities in Asia. This is not surprising since seven of the top ten financial centres are in Asia according to the latest GFCI report. There are important differences that exist between the US, Europe and Asia, though, that traders need to consider in developing the trading architecture to operate effectively in each market.

The trading architecture scene in Europe

In Europe, a firm can connect to three data centres and have access to as much as 80% of European volume. The number of providers of network and hosting capability is large, resulting in an almost commoditised trading architecture market when it comes to network provision. Setting up and getting an operation running becomes a relatively straightforward affair.

The US perspective

In the US, many firms will have developed highly sophisticated models that rely on huge amounts of data and ultra-low latency. Firms are, however, subject to stringent reporting and compliance requirements. Larger and mid-sized firms will have in-house teams for dealing with these, and firms of all sizes have a resource to a vendor community that is well-versed in U.S. regulatory matters.

Developing trading architecture in Asia

But Asia is a different scenario entirely, with varying requirements in each country. For instance, if a firm were trading in South Korea, it would need to have a physical entity there, and all of its physical infrastructure would need to be based there. If one were to trade China, it would need to go through one of the Tier One banks. Even Australia, which is considered the region’s most western-style market, presents challenges due to its long distance from the next closest centre. 

In the case of Asia, connectivity, in particular, can be an eye-opening step because of the sheer geographical spread of Asia’s markets. That makes it important to work with established network operators when setting up a trading architecture so that a firm’s entrance to a new market represents only an incremental cost to the provider.

BSO, as a specialist networking firm, understands financial markets and we design our routes with these issues in mind. So if you are seeking to export your trading model into emerging markets such as Asia we are the network of choice. 

To learn more about how you can access the potential of emerging markets read our latest report “Trading without Borders: How can financial firms breakdown barriers and tackle new markets?” click here.