Common technology platforms enable efficient markets, but buying systems from potential competitors has raised concerns about conflicts of interest, writes Dan Barnes.
The international nature of derivatives trading challenges
the ability of smaller, local markets to build liquidity, as
the firms hungry for their derivative products may have no
local presence. Being international can also set any two
national exchanges apart as rivals. To set up the market
requires a trading platform that will deliver the right
flexibility around products and the resilience to support
firms’ faith in a fledging market.
Building a platform is labour intensive and risky, without
buying in the expertise from an established developer. There is
a challenge for smaller markets when they are looking to buy an
existing platform, in that the majority are for sale by rival
"Over the years we’ve seen the demise of a
number of automated matching platforms," says Peter Jessup,
senior vice president for Global Technology at exchange and
technology provider, Nasdaq OMX. "Some of this is just the
normal evolution of all technology, with some lines dying off
based on their inability to adapt to e.g. technological
changes, but I think some of the extinction was due to
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