ASX Ltd (ASX:ASX)
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5 Years : From Apr 2012 to Apr 2017
The Australian Securities Exchange Ltd. (ASX.AU) is developing a high-speed trading connection designed to pull in more business from Chicago's futures trading community.
The ASX is expanding its presence within the Chicago-based data center operated by Equinix Inc. (EQIX), a move that will allow electronic traders in the facility to directly access markets operated by ASX's Sydney Futures Exchange.
"Obviously, Australia is on the other side of the world, and distance is an issue" for electronic traders seeking speed, said David Mitchell, regional manager of North America for ASX. "We thought we'd have a better solution if we basically brought that back here to the States."
Chicago is the turf of CME Group Inc. (CME), the dominant U.S. futures exchange operator. CME is home to nearly all trade in futures contracts tied to key interest rates, including the Federal Reserve's fed funds rate.
By deploying its futures trading platform, gateways and routers in the Chicago Equinix data center, the ASX is laying a path for traders based in the facility to hook into the Sydney futures markets, which are heavily geared toward Australian interest rates and open up just after the Chicago markets close.
"That's when most of our liquidity comes online," said Mitchell. "A lot of guys finish trading down at the Chicago Board of Trade or the Merc, and are looking for the next market that has volume."
Potential shifts in key interest rates set by central banks around the world have come under intense focus over the last year, as investors seek to hedge against any fluctuations and gauge the progress of economic growth.
Trading in the Sydney Futures Exchange's 30-day interbank cash rate futures -- the Australian equivalent of U.S. fed funds futures -- saw trading activity in May rise 400% over a year ago to about 741,000 contracts, following on a series of rate hikes in recent months. Trade in contracts linked to Australian Treasurys also climbed.
Resource-rich Australia has been bouyed by rising demand for commodities, putting the Reserve Bank of Australia on the leading edge of central banks lifting benchmark rates as the global economy pursues a shaky recovery.
Mitchell said that the ASX's move to set up a so-called "hosted solution" in Chicago was aimed at brokers, asset managers, hedge funds and proprietary trading firms that previously had to set up their own individual connections to the Sydney markets.
The Chicago link, expected to go live by the end of June, is meant to harness growing international interest in the Australian market. The ASX also operates trading hubs in Singapore, Hong Kong, London and New York.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; firstname.lastname@example.org