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Asian Stock Market Battles For More Business Take Another Twist
The battle by Asia’s stock exchanges to win key market share took another turn this week with the announcement that Singapore Exchange and Taiwan Stock Exchange are looking to create a direct link for investors to trade stocks on each other’s markets.
The battle by Asia’s stock exchanges to win key market share took another turn this week with the announcement that Singapore Exchange and Taiwan Stock Exchange are looking to create a direct link for investors to trade stocks on each other’s markets.
“Recent investment flows between regional markets have been increasing, despite the differences in investor composition in each market. This demonstrates that it is both necessary and efficient to simplify the trading and settlement process, as well as reduce trading costs, in order to increase investment allocations to both markets,” the Taiwan Stock Exchange said in a statement on its website.
Earlier in the summer, the Hong Kong and Shanghai exchanges said they intended to create a link, or “through train”. Recently, it was reported that Hong Kong’s small stock brokerages may shrink as a market access link with Shanghai increases costs and winds up competition with Chinese firms. China intends to link up the two stock exchanges as early as October this year.
In their joint statement, the Taiwan and Singapore exchanges said: “TWSE and SGX earlier reached a preliminary agreement to facilitate cross-border order routing, post-trade settlement and custodian activities for investors and brokers, in line with the principle of ‘simplifying the trading process and reducing transaction costs,’ while ‘maintaining the existing trading rules and regulations of each market”.
The statement said that “under the principle of ‘simplifying the trading process and reducing transaction costs” and “maintaining the existing trading rules and regulations of each market”, the exchanges will create a special purpose vehicle in their local markets to connect and route orders between both exchanges and transfer payment and settlement instructions to clearing and settlement institutions in each market.
