China commodity options drive demand for global platform - Itiviti

International interest in the Chinese commodities options market and introduction of global products are driving demand for global trading platforms in the region, according to the head of Itiviti APAC.

“There is definitely an explosion of chatter around the new commodities options products that have been trading. We are seeing more and more market makers and brokers going into this space and demand for trading talents,” Ofir Gefen, president of trading software provider Itiviti APAC, told FOW.

Brokers and traders wanting to access those markets tend to use a global platform “so that they can easily set up”, he added, referring specifically to the global platform that Itiviti' brought to the region. 

Although the Chinese commodity options market is relatively new - with the Dalian Commodity Exchange having launched the first exchange-traded commodity option on soymeal in March last year - Gefen notes that the soybean, sugar markets have already been successful and will be followed by corn, copper and others. 

“One of the challenges is there are lots of markets, so we need to support our mainland Chinese clients in developing interfaces to the exchanges according to what they want access, and what they want to trade,” Gefen explained.

This could become difficult and more costly given that at present there is yet to be a convergence on one protocol for connectivity between the many exchanges in China.

Unlike the FIX protocol - which has become the industry standard for connectivity between execution platforms in other regions - there are still a number of proprietary protocols on different exchanges in China.

“We are seeing Chinese traders use the FIX outside China but less so when in China,” Gefen explained.

Nevertheless as more global financial products are introduced in China, and now that it is included in the MSCI, global trading platforms which are tried and tested are increasingly in demand.

“The more of this type of development, the more you see an interest in being able to provide a trading platform that is able to provide more than the local needs,” he said.

Despite additional challenges in the APAC region - such as diversity in markets with regards to convergence around market access, requirements and needs - Itiviti has focused on the market making space, connectivity and low touch on the agency side throughout the year.

The firm has “managed to penetrate the most difficult countries”, according to Gefen, having established a client base in China and Japan, as well as Australia, Singapore and Hong Kong.

“We are starting to look at other emerging markets in the region like Indonesia, Thailand and starting projects with large banks about extending this platform in the region – so geographical expansion is a focus for us,” Gefen said.

Last year, Itiviti, merged with cash equity and derivatives trading tech firm Ullink, hoping to take advantage of the shifting trends and support the full order cycle across all asset classes.