Fidessa group has announced that five Hong Kong-based brokers, including, ICBC International Securities, and Standard Chartered Securities (HK), will be using Fidessa for the upcoming Shanghai-Hong Kong Stock Connect (China Connect) link when it goes live in mid-October.
The China Connect program will provide access to mainland China by allowing offshore investors to trade Shanghai listed shares through the Hong Kong market. It will also let mainland China-based investors trade in Hong Kong listed shares via the Shanghai market.
David Jenkins, head of Product Marketing, Fidessa, Asia Pacific said that launching this link successfully involves additional technology infrastructure, "as well as new tools and processes right across the front, middle and back office."
So far, international access to the Chinese market has been strictly controlled via quotas and was limited to a small number of large institutional investment firms under China's QFII program. China Connect aims to change this with new quotas for trading in Shanghai listed A-Shares being made available to a wider community of retail and institutional offshore investors, and by allowing them to clear through the local Hong Kong clearing infrastructure.
"Fidessa recognised the potential for this early on", says David Jenkins, Head of Product Marketing at Fidessa in Asia Pacific. "But implementing this link successfully involves additional technology infrastructure, as well as new tools and processes right across the front, middle and back office, in order to take full advantage of the Shanghai market."
Fidessa has spent a lot of time working closely with both exchanges and key customers to develop a solution that addresses the complexities that brokers wanting to use China Connect face. This included designing the right algorithms to cater for the wider spreads, transient liquidity and volatility associated with trading the Shanghai market.
"The ability to balance retail and institutional positions was crucial for many of our customers also", continues Jenkins. "As was providing the ability to manage positions across both QFII and China Connect to allow firms to utilise their quotas effectively."
