Global Foreign Exchange Market: Asia'S Position Is Gradually Improving

"In 2013, foreign exchange pactions in Asia accounted for 20-25% of the entire foreign exchange market, the third largest foreign exchange market outside the US and Europe.

The United States and Europe account for more than 60% of the total market share, but by 2020, Asia will probably increase to nearly 40%. "

In an exclusive interview with the twenty-first Century economic report, David Mercer, chief executive of LMAX exchange, MTF, said.

The LMAX exchange is the first and only foreign exchange MTF exchange in Europe. It is authorized and supervised by the UK financial market behavior authority.

Over the past period, the LMAX exchange has expanded rapidly outside the UK, set up a new match engine in Tokyo, settled in Hongkong, and extended to Singapore, Chicago and New York.

"In the fourth quarter of last year, 15-20% of our trading volume came from Asia, although there were no official branches yet."

Mercer frankly, in the long run, the Asian population and a large number of investment institutions will promote the development of the foreign exchange market inside and outside the region. It is expected to develop into the world's leading foreign exchange market within 10 years from 2020 to 2030.

According to the report of the International Bank of liquidation, the average daily trading volume in the global foreign exchange market rose to $5 trillion and 300 billion in April 2013. Britain, the United States, Singapore, Japan and Hongkong are the most concentrated areas of foreign exchange pactions in the world. The trading volume of the five major trading centers has increased from 71% in 2010 to 75%.

The highest proportion of Asia's three regions, though not more than 6%, has developed rapidly.

In 2010, Hongkong had not yet squeezed into five major trading centers. In three years, Hongkong's ranking increased, and Singapore's trading volume also increased by 44%, which surpassed Japan as the third largest foreign exchange trading center in the world.

"In Asia, we see that many small investors have the opportunity to enter the foreign exchange market through brokers, and there are many new brokers."

Mercer said that wealthy families / individuals will naturally increase their foreign exchange pactions as a result of the globalization of asset allocation, or join their portfolios as an asset class.

In addition, the internationalization of RMB is also a theme.

The report of the International Bank of liquidation showed that the importance of currencies in emerging market countries increased significantly in the foreign exchange market from 2010 to 2013, while Mexico pesos and Renminbi increased the largest share in emerging market currencies.

In the 3 years, driven by offshore RMB trading, the volume of RMB pactions increased from US $34 billion to US $120 billion, becoming the ninth largest active exchange currency, accounting for 2.2% of the total volume of foreign exchange pactions worldwide.

"RMB internationalization provides a long-term opportunity. In the next 10 years, there is no reason why the renminbi will not become a major currency, which is good for the region, but it needs time to develop."

Mercer thinks.

Asian trading growth also pushed LMAX out of the UK.

In January 13th this year, LMAX Limited Hong Kong Company (hereinafter referred to as "LMAX Hongkong") was set up in Hongkong, providing a platform for foreign exchange trading in the mobile pool of limited price quotas for Hongkong local institutions and professional investors for the Hongkong Securities Regulatory Commission licensed broker.

The Tokyo matchmaking engine will enable its customers in the Asia Pacific region to match low latency pactions with an average time of less than 4 milliseconds.

"Asian traders want better, more pparent execution, faster matching time and more smooth connections."

Mercer believes that LMAX will meet its needs through a more pparent trading platform. The establishment of LMAX Hongkong on the one hand provides overnight trading support to the European and American markets, and also increases its distribution in the Asian region.

Electronic and pparent

And others

Like trading, technological change also affects the world.

Development.

At present, nearly 70% of the world's foreign exchange pactions are completed through electronic trading channels. "In the next 10 years, we may see nearly 100% of electronic pactions."

Mercer frankly speaking.

In the current foreign exchange market, LMAX is still a game changer.

Compared with stock and futures markets, a significant difference in OTC trading foreign exchange market is that its pparency is lower.

In a bilateral trading environment, the final paction price of each investor / trader may be different from others.

LMAX like MTF provides a more pparent trading environment.

"Many customers have more interest in the exchange mode. It is very simple. We provide open orders with stable liquidity. Regardless of the size or volume of pactions, the same paction price can be seen. All orders are arranged through price / time and not at the time of final execution.

Especially in Asia, many customers are interested in the trading mode, which seems to us that although the model is still very fresh in foreign exchange market, it is the most pparent, fair and effective means of foreign exchange pactions.

Mercer said that the exchange model is very unique in foreign exchange pactions, but for other asset classes, it has long been used to investors.

There are other similar trading platforms before LMAX.

"This is a highly competitive market, technology innovation, which means smaller competitors have narrower profit margins, so business models must be efficient and require better technology to ensure operational efficiency. Ultimately, more industry consolidation will be seen and larger scale exchange platforms can survive and continue to develop."

Mercer bluntly, diversification and global layout are the key to success, and investment in technology is also very important.

"In 2015, we aim to provide a pparent, neutral and fair competition environment for all market participants in the region and become the leading foreign exchange quotations and liquidator in the Asia Pacific region."

Mercer says.