ANALYSIS: Data, liquidity, 24/7 trading top of mind for exchanges – FIA Asia

Exchange leaders at the FIA Asia conference in Singapore on Wednesday shared their views on how they are adapting as they improve on the use of data against the backdrop of 24/7 trading pressures while increasing market liquidity.

Intercontinental Exchange (ICE) offers a tiered access model, core market data is available for transparency while premium data is also offered to support with trading strategy. For Maria Levanti, president and chief operating officer at ICE Futures Singapore and ICE Clear Singapore, data is a key revenue driver as it plays an integral role in risk management and price discovery.

“AI has supercharged data, both from a commercialisation and fair markets perspective,” she said.

Data also improves surveillance to get better so that the exchange is in a “much better position to identify market manipulation and spoofing”.

Julie Winkler (pictured), chief commercial officer at CME Group, said that “data has gone from a byproduct and morphed into critical input and differentiator for exchanges”.

Through its options analytics scheme launched in September, for instance, the goal is to provide market participants with enhanced tools to analyse options market data so they can better manage risk and trading strategies.

In terms of improving liquidity, Winkler highlighted the opportunities for collaboration to enable better client services as exchanges go after the retail customer base.

Whether it’s technology, data analytics or financial literacy, there isn’t a single entity that owns these components for success, which is why building partnerships is key.

Through the exchange’s joint venture with online gaming company Fanduel, for example, it’s about building trust with relationships.

“Competition is here to stay so we need to look at how collaboration can propel the industry forward and capture the hearts and minds of retail customers,” said Winkler.

Robbert Booij, chief executive at Eurex, added that he expects to see more collaboration between exchanges as well as between exchanges and clearing houses as new ways of connectivity emerge.

On 24/7 trading, which has been a key point of discussion for the industry, Winkler noted how CME has been exploring pilot projects with futures commission merchants.

“It challenges how experiments come together and create interoperability to support seamless 24/7 trading,” said Winkler. “We still have a little ways to go in terms of ramping up and scaling and the regulatory environment also needs to catch up.”

Booij noted that with the push towards 24/7 trading, an important aspect is to improve efficiency with collateral on digitalised ledgers.

“In Europe, the problem has been the fragmentation in collateral locations,” he noted.

For Eurex, the next step is to use stablecoins for margin management, which the exchange is expected to launch next year.

In July, Eurex Clearing made the inaugural trade in its new distributed ledger technology collateral service, with pilot clearing member JP Morgan executing a transfer on behalf of Dutch pension fund specialist PGGM.

In October, CME pledged to start trading its cryptocurrency futures 24 hours a day, seven days a week, the first time a traditional exchange has committed to non-stop trading.