From algorithmic trading in Indonesia to the fastest trading engine in the world in Singapore, Asian exchanges are moving to embrace the era of automated trading.
These are the major developments in Asian markets and assessments of whether high frequency trading (HFT) can get off the ground.
Japan
The leading Asian market for high frequency trading, Tokyo Stock Exchange unveiled its Arrowhead system in January 2010 in a bid to lower latency and expand trading volumes. This has helped push the proportion of high frequency trades in the Japanese market to around 30 percent.
With more alternative trading platforms coming into the market such as Chi-X Japan, owned by Nomura launched in July last year, experts expect HFT to grow further as arbitrage opportunities to trade the same securities on different venues continues to grow.
Australia
Australia has made a modestly successful foray into HFT, with major ASX Ltd participants placing around 10% of their trades using these super-fast techniques.
However the Australian government's decision to allow alternative trading platforms to compete with the ASX is expected to boost HFT significantly.
Chi-X has just received a licence to set up an alternative trading venue which is expected to go live toward the end of 2011.
That new competition has prompted the ASX to increase its co-location facilities and launch a new trading facility, PureMatch, which will provide arbitrage opportunities for HFT when it launches later this year.
Singapore
Singapore Exchange is set to launch SGX Reach in August, which it says will be the world's fastest trading engine.
It has also announced a new co-location service for its customers to host their own "black box" trading systems with the exchange's new data centre.
SGX already sees around 30% of derivatives listed on the exchange traded by high frequency techniques. However experts say that while the exchange has all the technology in place, it may struggle to attract significant volumes of high frequency trading in its equity market until it manages to deepen liquidity in the market.
Hong Kong
Hong Kong Exchanges and Clearing is in the process of building a new co-location facility to support growth in HFT, due to be completed in 2012.
However, experts are doubtful that high frequency trading in equities can take off in any major way while there is the stamp duty of 0.1% imposed on each transaction.
India
The Bombay Stock Exchange and National Stock Exchange have both installed new co-location centres in a bid to attract more HFT players. Regulators have also allowed the introduction of "smart order routing" allowing investors' trades to be automatically sent to the exchange offering the best price
Barriers to HFT in India include the fact that only around 50 of the major stocks are traded regularly enough to facilitate the type of trading techniques favoured by high frequency traders. The Securities Transaction Tax levied on most equity transactions and some derivatives is also limiting HFT.
This means that while algorithmic trading now makes up around 80% of the trading flow from some of the top brokers in India, only around 6-8% of the equities market is high frequency.
Southeast Asia
Several of Southeast Asia's exchanges, including those in Thailand, Malaysia and Indonesia, now allow brokers direct access to the market, boosting the proportion of algorithmic trading.
This could increase when the ASEAN Trading Link - a plan to connect exchanges in Thailand, Malaysia, Philippines, Singapore, Vietnam and Indonesia - launches later this year.
The plan is to allow intra-ASEAN cross border trading, which should make it cheaper for brokers to access all of those markets. Whether HFT will take-off at the same time depends on whether the initiative boosts liquidity in the markets.
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