It has not gone unnoticed that algorithmic trading has taken a large portion of the market volumes in the U.S. and Europe, a development that is about to be mirrored in Asia. While quant trading, high frequency trading and algorithmic trading are in the end all quantitative, they are often talked about as the same thing. High frequency trading (HFT) is a subset of quantitative trading, and in fact many low frequency trading strategies are traded via algorithms, which distribute orders in slices. Even minimal execution timings aren't just loved by the HFT ambassadors, also low frequency traders may be interested in reducing their execution to 50 milliseconds or even less.
Most high frequency trading consists of market making and spreading and will therefore make market movements less extreme while at the same time providing liquidity and bringing trading and execution costs down. These strategies are being supported by exchanges in both Tokyo and Singapore which have recently recognized the relevance and positive benefits. Still, high frequency trading is scrutinized in Asia, where market regulators make it harder to advance these markets and technologies through short selling rules, market connection and access issues, restrictions for foreign investors or currencies. That means you can't take a strategy you are running in the U.S. or Europe and just migrate it into Asia. Asia is a much harder environment to deal with, but that challenge of course comes with a reward, because once these hurdles are overcome, the traders are part of a growing and very interesting market.
The 2012 Opalesque Hong Kong Roundtable offers additional fascinating insights about:
Business, regulatory and operational environment for hedge funds in Hong Kong
How regulators inspect high frequency trading firms
The human override: required or not? What is the regulators' view?
Clouds everywhere? The regulators' views what can go into the cloud and what not
Asian regulators confront managers on technology risk and business continuity planning
Is China educating armies of professional derivatives traders? Eurex' Trading Labs in Hong Kong, Shanghai and Taiwan
How Asian emerging hedge fund managers succeed: Know your cost base and capacity
Why counter-party risk is “staggering” at the moment, and why many fund managers ignore it
How hedge funds ended up being the banks' cheapest funding source
Why investors will lose out if the trend towards using swaps continues in Asia
The future of volatility trading: what investors are missing
The 2012 Opalesque Hong Kong Roundtable was sponsored by Eurex and SunGard and took place in early May with:
George Castrounis, Co-Founder Maple Leaf Capital
Paul Lo, Head of the Eurex Representative Office in Hong Kong
Tobias Hallin, Portfolio Manager, Seeker Advisors
Philippa Allen, Founder, ComplianceAsia
Arjen Gaasbeek, Head, Hong Kong office, Ingensoma Financial Group
Mark Wightman, Global Head Alternative Strategies, SunGard
The Opalesque Roundtable Series offers unparalleled intelligence on the most important global hedge fund jurisdictions and their players. The Roundtable Series is a free publication from Opalesque and is continually updated. Please scroll down to view the full selection of our Roundtables - covering the globe!