Hong Kong Exchanges and Clearing (HKEX) has opened a new office for The Stock Exchange of Hong Kong (SEHK) in Singapore in a bid to expand its presence in Asia.

It is the first office based overseas for SEHK and HKEX, aiming to help both exchange operators serve clients in Singapore and the South-East Asia region.

“We want to work with partners in our region to make the pie bigger for everyone.  Asia has the world’s most dynamic economy now so there’s great potential for us to succeed together,” said HKEX’s chief executive Charles Li. 

He explained the new office is also another step in the exchange’s plans to develop its markets as a platform for cross-border access for both international and Chinese investors.

“For investors interested in Mainland China’s equity and fixed income markets, we offer easy, direct access through our Stock and Bond Connect programmes,” Li added.

HKEX said regional trade and the region’s geographical proximity with China makes South-East Asia a “perfect place” for further promotion of RMB internationalisation.

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Citi has teamed up with Clearstream to provide international market participants with access to China’s fixed income market through the Bond Connect scheme.

From 20 November, Clearstream’s clients will gain quota-free access to the $10 trillion Chinese bonds market traded in the China Interbank Bond Market (CIBM) through the launch of its new service.

The service replicates the firm’s Stock Connect tool for China A-shares, where Citi also acts as Clearstream’s local sub-custodian.

Bond Connect is a trading and settlement scheme allowing institutional investors from Mainland China and overseas to trade in each other’s bond markets via a connection between related Mainland and Hong Kong institutions.

In July, just as the first phase of Bond Connect was launched, Citi was selected as an official Bond Connect trading dealer by the People’s Bank of China and received the Type-A bond settlement agent license in February.

Cindy Chen, head of securities services at Citi Hong Kong, explained the partnership with Clearstream will provide further ease of access to financial institutional looking to connect with the local China bond market.

Philip Brown, co-CEO of Clearstream Banking, described the Bond Connect scheme as a major breakthrough in the opening of Chinese capital markets.

“Our cooperation with Citi allows foreign investors to profit from this development, making access to the CIBM as easy and efficient as possible,” he added.

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Instinet has appointed a new CEO of its business in Asia Pacific, following the current CEO’s decision to take up a new role at parent company Nomura. 

Stuart Knowling has been COO of Instinet Asia Pacific for seven years and throughout his time in the role worked closely with former CEO Tetsuhiro Nishi and the front office team.

Prior to joining Instinet, Knowling worked as Deutsche Bank firstly as an operations manager and then as a global SmartSource executive, managing vendor relationships between equity operations globally and the bank’s outsourced partners.

Group CEO at Instinet, Jonathan Kellner, explained Knowling has been instrumental in driving Instinet’s growth in the region.

“Under his leadership, our Asian operations have continuously expanded their coverage and operational capabilities while delivering the highest standards of execution to Instinet’s global client base,” he said.

Nishi will take up a new role at Nomura as the head of execution services for Asia excluding Japan and will be based in Hong Kong.

Commenting on his new position, Nishi said: “As the industry landscape continues to change, it is critical that we effectively meet the evolving needs of our clients.

“By partnering with Instinet, we will further develop our execution services products to ensure they remain relevant to our clients.”

His appointment is subject to regulatory approval. 

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Tradeweb has confirmed it will be the first firm to offer an offshore trading platform following the launch of Bond Connect in Asia.

It will connect with the China Foreign Exchange Trade System (CFETS) and become the main trading interface for offshore investors to access the trading link.

First announced in March, Bond Connect will allow overseas funds to buy onshore bonds through Hong Kong in a bid to boost the economy and the city’s status as a global financial centre.

Lee Olesky, CEO at Tradeweb, described the liberalisation of the Chinese bond market as a ‘landmark event’.

“We are pleased to be the first trading platform to link to Bond Connect, an offering leveraging the familiar practices already used by foreign investors through Tradeweb across other market places.

“Given the strength of our investor network of over 2,000 clients globally, we are well positioned to help the evolution of this market,” he said.

Institutional investors will be able to trade directly with Mainland Chinese liquidity providers in the CFETS market using Tradeweb’s trading platform.

Once trades are executed through Tradeweb, investors can then use global custodians for the settlement process due to a holding arrangement by HKMA’s Central Moneymarkets Unit.

Charles Li, chief executive at Hong Kong Exchanges and Clearing (HKEX), explained the addition of Tradeweb will help China’s financial market connect with the world.

“Tradeweb’s deep fixed income experience and global client network are key to helping meet the Bond Connect objectives,” he said.

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Singapore Exchange (SGX) has been given 24 months to improve its recovery processes after the disruption caused by a trading halt in July last year.

The Monetary Authority of Singapore (MAS) has ordered SGX to implement new measures after it failed to restore functioning of its systems within four hours as required by the regulator.

The Industry Working Group (IWG) - comprised of SGX and industry stake holders - is working with the exchange on the improvements and the venue is to contribute SGD$1.5 million to fund the costs incurred by brokerage firms throughout the process.

Trading on SGX ground to a halt on SGX in July 2016 as duplicate trade confirmations were being generated by its systems.

Originally, SGX had suggested that trading would recommence at 2:00pm that day and then 4:00pm, but the exchange did not manage to reopen until the following trading day.

Ong Chong Tee, deputy managing director of financial supervision at MAS, explained the authority takes a serious view of trading disruptions.

“Technology system-related breakdowns can never be zero-probability occurrences and this is why SGX should strengthen its recovery process,” he said.

SGX must complete the implementation of these recommendations within two years and MAS added: “The implementation of these recommendations will involve changes to the systems and processes of both SGX and the brokerage firms.”

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Chinese officials will move forward with plans to establish a bond trading link between Mainland China and Hong Kong this year, according to Premier Li Keqiang.

Known as Bond Connect, the link would allow overseas funds to buy onshore bonds through Hong Kong to boost the economy and the city’s status as a global financial centre. 

Li told a press conference this week: “This year, we are considering for the first time establishing a bond market connect between Hong Kong and the mainland, allowing foreign capital to buy mainland bonds from overseas, and Hong Kong will be the first to benefit from such an arrangement.”

Li added the Bond Connect is “what the country needs” and it would “provide Hong Kong residents [with] more investment channels.”

Hong Kong Exchanges and Clearing (HKEX) replied to Li’s comments and said Bond Connect “represents a major breakthrough in the development of capital markets and further strengthens the role of Hong Kong as a gateway between the Mainland and international markets.”

Plans for Bond Connect echo the recently launched Shenzhen-Hong Kong Stock Connect which linked up the equities markets in both regions. 

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Credit Suisse has been fined $170,000 for not having any filters in place to determine limit prices over a five-year period.

The Markets Disciplinary Panel (MDP) in Australia found a client of Credit Suisse mistakenly entered options transaction orders via a system that referenced incorrect limit prices.  

The transactions that took place were 96% below the extreme trade range reference price for those products, although were cancelled soon after entry.

MDP explained the orders were allowed to go through to the market because Credit Suisse failed to have the correct filters in place to determine limit prices for options contracts.

“Credit Suisse failed to have such filters in place for a period of more than five years, during which time approximately 9,800 orders for option market contracts were entered through its AOP system,” MDP said.

The incident for which the fine was levied took place in April 2016, but MDP added, “underlying deficiencies had existed for an unacceptable period of tine.”

The authority warned Credit Suisse a repeat of the misconduct would result in a higher penalty in future.  

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Two former managing directors at JP Morgan in Asia-Pacific could be banned from working in the banking industry following anti-bribery violations.

Fang Fang and Timothy Fletcher allegedly offered internships and other employment opportunities between 2008 and 2013 to individuals referred by clients, prospective clients and foreign officials.

The Federal Reserve Board said the internships were offered to “obtain improper business advantages” in violation of US anti-bribery laws.

Fang was a managing director and head of china investment banking at JP Morgan, while Fletcher headed up recruitment and staffing for the firm.

An overview of the referral scheme explained both individuals prioritise referred candidates based on the importance of the client.

Despite the hires generally not being subject to the workload as non-referred candidates, were given the same salaries.

A report said Fang told Fletcher and other colleagues: “you all know I have always been a big believer of the sons and daughters program – it almost has a linear relationship with mandates, at least in China.

“We lost a deal to [a competitor] today because they got chairman’s daughter work for them this summer. I am supportive to have our own program.”

The Board is seeking to impose a $1 million fine against Fang and a $500,000 fine against Fletcher, as well as a permanent ban from working in banking.

In November 2016, the Board fined JP Morgan $61.9 million for similar offences and control deficiencies to the firm’s hiring practices. 

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The Singapore Exchange (SGX) will explore the use of blockchain technology for fixed income trading.

The Monetary Authority of Singapore (MAS) explained SGX will lead the way in focusing on making the trading and settlement of fixed income cycle more efficient with blockchain. 

MAS has now partnered with R3 to explore how blockchain technology can be applied to securities settlement and cross-border payments.

It successfully completed its proof-of-concept project for inter-bank payments and automated collateral management in March. The consortium - comprising of MAS, R3 and a group of financial institutions - has commissioned Deloitte to produce a report on the specific aspects of blockchain that are most suited to settlement systems.

MAS is also in conversation to link Singapore with other countries to use blockchain and allow cross-border payments to settle directly using central bank accounts.

Sopnendu Mohanty, chief FinTech officer at MAS, explained the project as a whole reflects the authority’s commitment to “co-create concrete use-cases for technologies like blockchain.”

Tim Grant, CEO of R3’s lab and research centre, who is also a member of MAS’ international technology advisory panel, added the true progress in advancing the implementation of blockchain would be achieved by bringing central banks and technology partners together in an open setting.

He added the project has proved it can “yield demonstrable results and we hope that the progressive stance of all the participants in this project, and especially that of MAS, will inspire similar work in other jurisdictions going forward.”

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Dalton Street Capital in Sydney has upgraded its futures, equities and FX trading through implementing FlexTrade’s EMS system.

FlexTrade’s multi-asset EMS - FlexTRADER EMS - has been combined with its automation services and API interface to allow the investment management firm to hedge its FX exposure and manage cross-asset risk.

Dan Enstedt, vice president of business development for FlexTrade’s Sydney-based operations, explained it’s vital firms handle their global multi-asset flow through one execution platform.

“With FlexTRADER’s seamless API integration capabilities, Dalton Street Capital can streamline their quantitative investment approach, providing the ability to trade quickly and efficiently across global markets ensuring best execution,” he said.

Alan Sheen, co-founder and director at Dalton Street Capital, added: “one of our primary concerns was finding a firm that would be there for us as our trading requirements increase… FlexTrade fit the bill.”

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