London – DATE 2021: Demand for trading on markets in extended hours trading sessions is growing fastest in Asia, a study by Acuiti has found.
For the report The Growing Internationalization of Derivatives Trading, which is released today and was commissioned by Montréal Exchange Inc (MX), the derivatives arm of TMX Group, Acuiti surveyed over 100 senior executives from proprietary trading firms, hedge funds, asset managers and the sell-side about demand and trends in trading in extended hours sessions.
The study found that demand to trade on international markets with trading hours outside the local core daytime hours was strongest among asset managers and hedge funds in Asia. In total, of the firms in Asia not currently trading on extended hours, 26% reported significant demand to do so.
“As we continue to push the evolution of our markets and address the increasing global demand for Canadian derivatives, launching Extended Hours in Asia was the next phase of MX’s globalization strategy,” said Luc Fortin, President and Chief Executive Officer of MX and Global Head of Trading, TMX Group. “In keeping with the trend of global capital flows, pension funds in Asia have significantly increased their international exposure and we are encouraged by the strong engagement we have seen from investors and participants in the region to date. Canada offers a compelling value proposition for investors and around the world: access to highly-liquid, world-class markets and a leading global economy. As we move forward, extended trading hours better aligns MX with our global peers, increases international visibility and connects us to more clients.”
The survey found myriad drivers for firms to want to trade in extended hours and the motivations vary by company types. Asset managers are driven more by the requirement to hedge exposures while hedge funds and proprietary trading firms were found to be looking to optimise strategies.
Overall, for firms that are trading extended hours, the drivers of demand were broadly split across capturing specific opportunities, the requirements of their trading strategies, the ability to react to events throughout the day and hedging.
For firms that are not yet trading during extended hours, the desire to capture opportunities specific to extended trading hours sessions was by far the biggest driver of demand.
“Canadian markets have long been a go-to for asset managers, whether they’re looking to diversify or to manage their risk. We are pleased to see how quick adoption has been by regional proprietary trading desks since launching in the region,” said Tony Tse, Executive Managing Director, Asia, TMX Group. “We look for even greater uptake by the real money and bank trading desks, as they utilize bond derivatives to facilitate more of their client flows.”
The survey also covered the challenges firms face when trading in extended hours sessions, the impact on firms that don’t trade in these sessions and the patterns of adoption across different company types.
“The world is becoming smaller in terms of firms’ ability to trade globally and the launch of extended hours trading sessions is a key development in facilitating that trend,” says Will Mitting, founder and managing director at Acuiti. “The appetite from firms based in Asia to increase the scope of their trading activities is striking and reflects the ever-increasing sophistication and ambition of firms across the continent.”
The report is available to download from https://www.acuiti.io/trading-after-hours/
For more information, contact Will Mitting at Acuiti
Tel.: +44 (0) 203 998 9190
Acuiti is a management intelligence platform designed to provide Senior Industry Professionals in the Derivatives Industry with high-value insight into industry-wide performance and business operations. Acuiti provides a platform through which our exclusive network of Senior Industry Executives can share and source information on day-to-day operational challenges, providing them and their management teams with increased transparency and in-depth analysis to make more informed decisions and benchmark company performance. Financial Institutions benefiting from our services include Banks, Non-bank FCMs, Brokers, Proprietary Trading Firms, Hedge Funds and Asset Managers.