As market volumes and participation grow, it will be increasingly important for capital markets firms to adopt more sophisticated risk management practices and tools.
This article first appeared as TECH TUESDAY on Traders Magazine, a Markets Media Group publication. Produced in collaboration with Nasdaq, TECH TUESDAY is a weekly content series covering all aspects of capital markets technology.
In the latest adoption of sophisticated, world-class technology by emerging markets financial services firms, Thai brokerage Kiatnakin Phatra Securities (KKPS) has signed an agreement to use Nasdaq Risk Platform for real-time risk monitoring and control.
Established in 1997, KKPS is the largest institutional broker in Thailand, with licenses to operate eight types of securities businesses: brokerage, dealer, underwriter, securities borrowing and lending, investment advisory, private fund management, mutual fund management, and venture capital. The total stock-market capitalization of Thailand was $559 billion as of July 2023, according to CEIC Data, and The Stock Exchange of Thailand is the world’s 24th-largest exchange and the 10th largest in Asia, according to WFE data.
In the highly competitive APAC region, which includes global financial centers Hong Kong and Singapore in addition to Japan, China and Australia, nations such as Thailand are driven to elevate their local market infrastructures, not only to provide more opportunities for clients to trade but also to keep pace with industry modernization that is increasingly based on cloud and Software-as-a-Service (SaaS) technologies.
The KKPS-Nasdaq deal will serve as a launchpad to offer the product across Asia, enabling banks and broker-dealers across the region to access a live view of risk across proprietary and client trading portfolios, with detailed analytics to support real-time decision-making.
“Institutional grade technology is a critical enabler of well-functioning markets, which ultimately help drive inclusive growth and prosperity across the wider economy,” Magnus Haglind, SVP and Head of Marketplace Technology at Nasdaq, said in a Feb. 12 press release. “A key component of that is having a risk platform capable of navigating increasingly complex markets, which also serves as a great competitive advantage, unlocking overnight liquidity, improving capital efficiency, and protecting underlying clients.”
Last year, The Stock Exchange of Thailand modernized its own market infrastructure by launching a new exchange trading system, alongside market data distribution and market surveillance systems that are based on Nasdaq technology.
As market volumes and participation grows, it will be increasingly important for capital markets firms to adopt more sophisticated risk management practices and tools. The International Monetary Fund projects GDP in emerging and developing Asia will increase 4.8% in 2024, compared with 1.4% GDP growth in advanced economies.
In addition to expanded market participation and trading volumes, industry trends are also boosting demand for real-time risk monitoring and control. Specifically, the evolution in automated trading and more usage of algorithms in local equity and derivative markets have prompted brokers to reassess the capabilities of their systems and whether they need industry-best risk platforms to complement upgraded front-end execution systems.
“EMs have been adopting new technologies in the pursuit of development,” Franklin Templeton stated in a July 2023 blog post. “These new technologies solve existing challenges, raise productivity and reflect changing consumption patterns.” Examples of this technological adoption include “digitalization strategies within financial institutions to achieve cost and operational efficiencies,” the FT blog noted.
The detailed analytics and risk management tools provided by Nasdaq Risk Platform offer a real-time view that enable both KKPS and its clients to increase market participation, and also aid in the development of new products and services while benefitting from industry best practices.
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