As recent history shows, China has a vast and diver economic system, which contains a number of economic sub-systems, many of which have experienced growth in the last 36 months. In the media, headlines portray China to be an economic powerhou, with expansion plans that have far reaching implications for the domains, including electronic trading in Financial Services.
One area that has en much
attention from western companies in the financial ctor over the last two years is that of the Qualified Domestic Institutional Investors (QDIIs). More and more of the QDIIs, are gradually being granted authorisation by the Chine government to trade global offshore curities in the stock, bonds and other curities. QDII programs are ud in places where the capital markets are not yet completely open to all investors. For example, any institutional investor in China that obtains approval to be a QDII may invest up to 50% of net asts into allowable foreign curities, so long as not more than 5% is invested in any one curity.
Background on some recent changes to the QDII programme According , the China Securities Regulatory Commission (CSRC) has confirmed it had signed Memorandum of Understandings (MOUs) with four jurisdictions, namely Australia, Germany, Korea and Luxembourg, in
addition to Hong Kong, United Kingdom, Singapore, Japan and USA over the past year. This means for commercial banks, QDII investment products issued by commercial banks may invest in listed stocks and mutual funds supervid by the relevant regulatory bodies in the jurisdictions. Also, in the ca of Chine fund management companies (FMCs); in 2009 the FMCs were permitted to extend their ast management rvices to multiple-client
accounts, following single-client gregated account rvices,
CHINA
By Alan Dean, Global Head of Cross Ast FIX Connectivity, HSBC Electronic trading
offshore global markets
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FIX Global | Vol 3 • Issue 2 • Jun 2010
market place, brings about a new client ba that can be mined.b. New source of cross-ast revenue ; the QDII’s will be eking to implement investment strategies that enable them to trade equities, futures and fixed income; most of which will have the risk of currency fluctuations, which means foreign exchange (FX) hedging as well. According to Z-Ben Advisors, total industry Ast Under Management (AUM) growth is projected to be Rmb6.9tr (USD1.0tr) by 2014, rising to Rmb15tr (USD2.2tr) or more by 2020.
c. Imbedded value creatingdelete怎么读
stickiness ; for tho organisations who have their own technology Intellectual Property (IP) or busin
ess solutions that can be leveraged by the QDII’s as part of their operations, whether it be front, middle or back office, this can be an advantage over competitors.
3. Technology Vendors
a. New customer ba to ll into ; the QDII funds will be in the need of technologies and business solutions that will enable them to process and manage their orders / trades aimed at the global markets arena.
b. Leading by example ; any
vendors contemplating going into China to ll their wares need to be in it for the long-haul and should ideally be demonstrably tenacious and patient, since the sales cycle can in some cas prove to last many years. So for tho organisations who are familiar with long sales cycles, they can take advantage of the hunger for information and being a leader in your sphere of business, demonstrated by the Funds Advanced T echnologies the order of the day ; vendors will find that if they have the most up to date technologies that leverage the latest version of FIX,
which were launched during 2008.Whereas now, FMCs may
oldland
expand their managed account ast management rvices to include investments in offshore markets and mutual funds as well as offering QDII funds. T o be able to invest offshore, FMCs need to apply for a new QDII investment quota or u any balance of their existing QDII investment quota (originally granted for the launch of QDII funds), provided an approval is obtained from State Administration of Foreign Exchange (SAFE).Trading offshore – Global Markets Global Markets may be a new experience that some of the Chine Funds’ find they have insufficient understanding or
experience to adequately deal with.This perceived shortfall of global markets trading experience manifests itlf in both an
opportunity and a threat, each with their own risks, neither of which can, nor should be ignored. Prudence and patience should be employed when prioritising the financial rvices opportunities in China; with their exceptionally high savings rate and positive trade balance providing an abundance of capital, some of which is targeted at foreign investment – Qualified Domestic Institutional Investors (QDIIs), this is a fledgling ctor and is transitioning very slowly.What is important for western companies to consider is that a lot of leg work will be necessary, whilst it may feel like a fruitless exerci, it is important to stick at it and be sure that your value proposition is appropriately reviewed in the right forum.The financial rvices arena in China, is no stranger to electronic trading,
this can be en with their domestic solutions, which demonstrate a good deal more Straight Through Processing (STP) than most western organisations.
What are the opportunities and who would be the beneficiaries thereof?1. Chine Funds
a. T apping the Global Markets trading experience ; obviously, there is an abundance of highly motivated experienced resources available in the offshore global market place that can help the QDII Funds with their transition into trading global markets.
b. Avoiding the trap of legacy ; the advantage the funds will have over western funds is that they will be able to acquire and implement the latest “best in class” solutions and thus not be steeped in legacy systems to hold them back.
piledriverc. Leaping ahead of western Funds ; the advantage of hindsight is always uful and often can only be utilid anecdotally, as the moment has probably already pas
d. In the ca of the QDII market inside China, they have this advantage and if leveraged appropriately, the Chine Funds can tup bespoke highly focud operations designed to succeed with their challenges of electronic trading of the offshore global markets.d. By leveraging the more m
odern technologies ; typically built around the Financial Information eXchange (FIX) Protocol, the QDII Fund operations could go straight to the top of the class, without suffering the pain or risks associated with the last 20 years the west has endured as part of our learning curv
existential
< Spoilt for Choice; the QDII Funds will not have any shortage of organisations putting their
hands out to assist them with their transition in trading offshore global markets – their challenge would be to ek out the most uful.
2. Offshore Banks and Brokers a. New Customer ba ; the
opening of the Qualified Domestic Institutional Investors (QDIIs)
ASIA | 51
Vol 3 • Issue 2 • Jun 2010 | FIX Global
or employ the latest in algorithm technologies, they will find the QDII Funds only interested in the latest technologies that will help them to succeed with their mission. What are some of the possible threats?
1. Chine Funds
a.Under estimating the challenges; for tho QDII’s who have not yet explored trading in this new market dimension; it probably looks daunting. If the QDII allows inexperience to rule the decisions of what technologies or process to employ as part of their operation, it would probably prove to be very costly in many ways in the medium term.
The key here would be to ek assistance from consultants or consultancy organisations that
are not aligned to any particular technology suite, but have a
track record of implementing successful operations.
b. Analysis Paralysis; the very thought of venturing out into the offshore global markets may em impossible for a mainland China entity and being able to forestall any commitments to technology decisions is one
way of avoiding the inevitable. Thus, the organisation could
take an inordinate amount of
time tooling up for the operation,
in the hope of the problem becoming easier as time goes by. The key here would be to ek assistance from banking / brokerage organisations that
are not aligned to any particular technology suite, but have a track record of working successfully with client operations.
c. Square peg in a round hole; there is always a tendency for organisations that have a fear of the unknown to try to stay with what they know, esntially remaining in their comfort zone. This may translate into QDII forcing their local Chine technology vendors into modifying their technology, even though it probably rvices
the domestic market more than
adequately, into an offshore
global market trading suite. This
move would probably prove to
be too slow at getting to market
and would be prone to falling
foul of the same costly or painful
mistakes that the offshore vendors
endured over the last 20 years.
The smart thing would be to
have the local vendor co-exist
with an offshore cross ast
solution provider / vendor who
are both specialists in the offshore
markets and are en to be the
少儿国学
“best in class” in the market.
2. Offshore Banks and Brokers
a. Source of knowledge only; for
tho banks or brokerages who
are keen to tap into the QDII
opportunity, there is a price to pay.
Competition is steep; there are
a lot of suitors who are chasing
this finite revenue pot, so the
QDII’s are in a fortuitous position
of being able to pick and choo.
Thus a “cost-of-sale” investment
in time, assistance and capability
may prove to be quite costly
over a protracted period of time
and fruitless, simply becau
the QDIIs are spoilt for choice.
In addition to the “cost-of-sale”
investment, the key for success
here is to create a value proposition
that is differentiated from your
competitors’ offerings; otherwi
you could find yourlf being
leveraged only as a knowledgeba.
3. Technology Vendors
Pilots and more pilots:
For tho vendors who are keen
to tap into the QDII opportunity,
there is a price to pay. Competition
is steep, and there are a lot of
western companies who are
prepared to give away a lot of time
and technology by way of doing
1 65用英语怎么读6级报名
pilots. Whilst this is a very good
way to have one’s technology
reviewed in the appropriate forum,
it is also fraught with risks.
Be sure to structure any pilot with
a Broker or Bank as part of the
trading process so that a full
end to end trade life cycle can
be tested. The good thing is
that your technology is already
FIX enabled and thus the
interface into the global markets
arena is probably the most
trivial element of any pilot.
According to Z-Ben Advisors,
there are 6 key focus in China’s
QDII market this year:-
Market Sizing:
It is projected that the total industry
Asts under Management (AUM)
of Rmb6.9tr (USD1.0tr) by 2014,
rising to Rmb15tr (USD2.2tr) or more
by 2020. Z-Ben Advisors expects
AUM growth to be supported
by two additional factors,
a) First of which is capital
appreciation of the industry’s
invested asts, especially
equities.
b) Second variable underpinning
AUM growth is an expansion in
both the number of new FMCs
entering the marketplace
(totalling 77 firms by end-2014)
as well as greater regulatory
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FIX Global | Vol 3 • Issue 2 • Jun 2010
ea in launching new products. QDII funds will ri in size to USD120bn by 2014, accounting for 13% of industry AUM.More Reform, More Opening Up : Significant long-term support for stock and bond market growth are now in evidence.Demand Dynamics :
Mutual funds will be the key
beneficiaries of growth in China’s GDP and incomes over the next ten years.
Product Development :
More than 500 new product
launches will be required to meet demand by 2014.
QDII :
A flood of new quota will transform the QDII program by 2014, with as many as 50 Chine fund managers competing to offer offshore investing, primarily through equity funds.
Global Ambitions :
Hong Kong is rapidly becoming a staging area to launch a global assault by well-funded and ambitious Chine fund management companies.
The scale of the ambitions is, perhaps, unmatched by any other nation’s fund management companies, and we are forced to the conclusion that Chine FMCs will soon have both the weight and will to acquire almost any foreign rival that can expand their territorial reach.
A minimum of four of the Chine FMCs are projected to rank among the ten largest global ast managers by market capitalisation in 2014. Clearly, the QDII initiative reprents a significant opportunity for many organisations, both inside mainland China and offshore.What does this mean for the FIX Protocol?
From a technical and electronic trading standpoint, it is the FIX
Protocol that is making this transition easier to achieve for tho banks or brokerage operations that are looking to rvice the requirements of QDIIs.
Back in September 2008, it became apparent that the technology vendors in mainland China were already using variants of the FIX Protocol or the Chine equivalent “Step”, which is considered to b
e entirely compatible with the FIX Protocol from version 4.0 onwards. Due to the advancements and inroads made by the FIX Protocol, the QDII opportunity is there for both banks and brokerages outside of China to capitali on and rvice, not withstanding the other business challenges, compliance, credit facilities, know your customers (KYC) etc. they need to deal with.
Sources for rearch material utilid for this article:solution是什么意思
/ /漫游动漫
Any thoughts about this or other articles?
Plea nd any comments direct to:
***********************
“Hong Kong is rapidly becoming a staging area to launch a global assault by well-funded and ambitious Chine fund
management companies.”
ASIA | 53
Vol 3 • Issue 2 • Jun 2010 | FIX Global
By Alan Dean, Global Head of Cross Ast FIX Connectivity, HSBC 电子交易境外
全球市场
中国从近期的发展情况可见，中国拥有一个庞大和多元的经济体系，当中包括多个经济子体系，其中不少在过去36个月经历了增长。媒体的新闻标题把中国塑造成经济强国，而扩张计划对这些领域带来深远的影响，包括金融服务业的电子交易。
在过去两年，合格境内机构投资者计划
备受西方金融公司的注视。现时，获得中国政府核准的合格境内机构投资者逐渐增加，可以进行全球境外证券交易，包括股票、债券和其他证券。 合格境内机构投资者计划适用于尚未完全开放予所有投资者的资本市场。举例来说：获准成为合格境内机构投资者的中国机构投资者，最多可以把资产净值candysoft
的50%投资于已获批准的外国证券，但任何单一证券的投资额不得高于资产净值的5%。
合格境内机构投资者计划的近期变动：背景
根据的近律师行的资料，中国证券监督管理委员会证实经已与澳大利亚、德国、韩国和卢森堡四个司法管辖区签署谅解备忘录，并在过去一年与香港、英国、新加坡、日本和美国签署相关的谅解备忘录。
这意味着商业银行所提供的合格境内机构投资者计划产品，可以投资于由以上司法管辖区相关监管机构所规管的上市股票和共同基金。 此外，对中国基金管理公司而言，继2008年推出单一客户独立账户服务后，翌年便获批准把资产管理服务扩大至多重客户账户。
现至今日，中国基金管理公司可以扩大管理账户的资产管理服务范围，延伸至境外市场投资和共同基金，并可以发行合格境内机构投资者计划基金。 若有意进行境外投资，中国基金管理公司必需申请全新的合格境内机构投资者计划的投资额度，或在获得国家外汇管理局的批准后，利用现有合格境内机构投资者计划的投资额度余额（原先用于推出合格境内机构投资者计划基金）。
境外交易 － 全球市场
对部份中国基金公司而言，投资全球市场是崭新的体验，它们可能自觉对全球市场的认知不足或缺乏足够经验。这种对全球市场交易经验不足的认知，可以同时带来机遇和威胁，并且各自附带不能和不容忽视的风险。
在区分中国金融服务业机遇的优先次序时，我们必需抱持审慎和耐性。中国储蓄率和贸易盈余都处于偏高水平，可以提供充裕的资金，而当中部份以外国投资 － 合格境内机构投资者计划 － 作为目标。这是一个刚起步的产业，而且过渡步伐非常缓慢。
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