Reposted from Financial Times By Jeremy Grant
The Stock Exchange of Thailand has signed an agreement with the Korea Exchange (KRX) to upgrade its clearing and settlement system in the latest example of Asian exchanges moving to cope with increasing demand for automated trading and regulatory pressure for more use of clearing.
Separately, the Tokyo Commodities Exchange (Tocom) on Monday extended until 2019 an existing contract with Nasdaq OMX, under which the US exchange operator will continue to operate and support Tocom’s trading and clearing platform for commodity derivatives. Tocom said it had also upgraded its platform to allow faster trading.
The move by the Thai exchange is a sign of KRX’s ambitions to expand ties with exchanges in Asia, especially in the broader Mekong region where KRX already provides trading systems to exchanges in Cambodia and Laos.
A similar agreement with the Ho Chi Minh Exchange in Vietnam is due within weeks, according to a person familiar with KRX’s plans.
The Thai bourse said its use of the Korean exchange’s technology was part of a five-year “master plan”, developed by consultancy Oliver Wyman and launched earlier this year, to modernise the Bangkok bourse.
Exchanges globally are updating their clearing systems in response to the rise of rapid, automated trading and greater demands for risk management as a result of regulators’ demands for wider use of clearing in the wake of the 2008 financial crisis.
In Asia, the latest sign of that came a year ago when Hong Kong Exchanges & Clearing embarked on an overhaul of its clearing systems after admitting that risk management and financial resources at its clearing house were not up to international standards.
The Thai exchange said the KRX had been chosen “to create a more efficient clearing system” for equities, derivatives, and bonds – changes that “will boost [the exchange’s] capacities to be comparable to global leading clearing houses”.
The master plan covers trading operations, depository, registrar and clearing and settlement services, and would enable the Thai bourse to “reduce overall risk levels and lower costs across key functions,” it said.
The plan would also increase revenue potential through the launch of new products and businesses and help towards “possible collaboration with other stock exchanges globally”.
Last week the Thai exchange made changes to the way stocks trade immediately after initial public offerings, widening a trading band to bring it into line with major global stock exchanges.
In June the exchange completed its first roadshow in the US in a bid to attract more trading and investor interest from outside Thailand.
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