The New Zealand Stock Exchange’s plans to replace its settlement and clearing system, FASTER, may not cost brokers as much as they expect.
Wellington software developer SecuritEase, a provider of stock-broking systems, has made the decision to offer the upgrade to the new system for free to its customers.
The company did the same when NZX introduced the GlobalVision trading system, provided by Trayport, in July last year, says Bill Tonkin, SecuritEase’s director. GlobalVision allows for the real-time electronic processing of all buy and sell orders into a central system for matching and transaction processing.
The NZX’s new system, provided by Tata Consulting Services in India, is a newer version of the Dubai International Financial Exchange (DIFX) clearing, custody, and settlement system. The replacement project means brokers will be required to adapt their back-office systems.
SecuritEase already offers a system with multi-currency, multi-company and multi-market capabilities, so the leap to be able to support the new NZX system was manageable, says Tonkin.
“We cater for different protocols and different settlement methods in the same product, right now,” he says.
For example, the product works for both the New Zealand and Australian market. Therefore, the company will be able to accommodate the new method of settling and new interfaces within the one program, says Tonkin. “So, there won’t be a change of box, or a duplicate box [for brokers],” he says.
The new technology will give NZX the ability to clear and settle a whole new range of products that it couldn’t do before, for example carbon trading, Stuart Turner, NZX’s head of strategy and projects, told Computerworld last week. It also allows NZX to use a clearing and settlement methodology which is more common in the rest of the world, he said.
However, being able to support the NZX’s new system doesn’t necessarily give local developers an in-road to the Middle Eastern market, says Tonkin. Dubai has two stock markets — the local retail Dubai Financial Market (DFM) and the wholesale DIFX.
The DIFX, which uses the same TCS system as the NZX will, is only a small part of the market, he says.
The Abu Dhabi and Doha stock markets, and the DFM, all use a common system, provided by Sweden-based OMX, says Tonkin.
Tonkin recently visited the Gulf region together with the Securities & Derivatives Industry Association (SDIA) in Australia and the Australian Trade Commission. For SecuritEase’s part, the aim of the trip was to gather as much information as possible about doing business in the Gulf region.
Having technological compatibility is only one part of the equation — companies need to know a lot more about the culture and how business is done in this region, in order to be successful, says Tonkin.
Tonkin had meetings with market regulators and operators in the United Arab Emirates and Qatar, as well as local lawyers. Tonkin says there are opportunities for Kiwi software developers in the region, but he believes partnering with local partners is the best path to take.