Indian Electronic Equities Trading - Opportunities or Challenges?

I spoke to a number international of experts about the opportunities they see in India and what challenges they have encountered in trading the domestic market. I wanted to know how India differed from other regional markets in Asia and why should both domestic and international buy and sell sides be focusing on India for opportunities.

“India continues to be a “growth” story” Says Robert Laible, Managing Director, Electronic Trading Services, Asia Pacific, for Nomura.  “India represents an investment opportunity that is a combination of continued top line growth through consumer demand and maturing businesses expanding their customer bases. From a practical implementation trading perspective, we are starting to see a more consistent application of trading rules. A stable platform lends confidence to those that want to invest. The opening up of the FII process has helped” Laible said.

While Kent Rossiter, Head of Regional Asia Pacific Trading for RCM Asia Pacific believes the market is ripe for buy side opportunities, “India's one of the largest countries by population and with the expected growth in the economy, the markets are going to continue to be very exciting”. Lastly, Sanjay Awasthi, Director, Equity Dealing & Derivatives for Prudential Asset Management, said he likes India as it is “an emerging market with great growth potential”. As a class emerging markets (including India) equities are seeing increased allocation of funds.
 

Algo Trading and other technologies are reshaping the trading in India and this presents one of the major opportunities for traders and brokers alike. “The buy side are committed to trading India more efficiently. They want more control of their order and better confidentiality. They want a similar experience that they enjoy in other markets. Those brokers that can deliver a good product in terms of ease of use, good performance (i.e. Algos), and great service should thrive”, said Nomura’s Rob Laible.

While Prudential’s Sanyay Awasthi believes “there is a large scope to improve the surrounding infrastructure by which i mean automated trading systems (viz. order management, algo's etc)”.

However, there are challenges in India as there are in all markets, but poor infrastructure and the resulting low latency are still a problem as are the multiple exchanges and multiple exchange listings.  A recent Buy Side only round table discussion in Hong Kong hosted by TradeTech illustrated some of the frustrations the buy side have in trading India.

According to RCM’s Kent Rossiter “Being able to effectively execute between the two primary exchanges is a challenge the industry is faced with, so finding the right technology to handle it is important”. While Awasthi believes “Multiple exchange (NSE & BSE) and multiple listing is one of the major challenges”. While lastly, from the Sell Side’s Laible commented “Information leakage continues to be an issue an India. Perception is reality. The concept of “one touch” is not a practical solution.

These 3 leading international experts will be speaking at the 2^nd Annual TradeTech India on June 1^st in Mumbai. Part of the leading global series running in more then 10 international cities and 5 regional trading hubs of Asia, TradeTech India will address these challenges and more in order to promote international best practices and ensure asset managers can realize the full potential of India.

According to Rossiter, “Conferences like TradeTech help keep me up to date on the latest trends in trading; they provide a great venue to network and share ideas with many of my industry peers in one place”.

While Rob Laible believes that the 1 day senior level conference is important for all sectors of the industry and there are a multitude of pertinent reasons for people to attend the event in Mumbai. “I have been in Electronic Trading since its infancy. People need to understand that this is a fluent, global marketplace. Innovation is taking place all the time. You need an environment where the exchange of ideas can take place openly and freely. Regulators need to be educated in the practical way business is done. Exchanges need to be competitive (not monopolistic). Brokers need to listen to their clients” he said.

In conclusion Awasthi believes the reason for him and others to attend conferences such as TradeTech India, is “To get a sense of international best practices and to understand how automation makes trading more effective and efficient”.

More information on TradeTech India 2010 can be found at: http://www.wbresearch.com/tradetechindia