Tue, Jan 17, 2012 - Page 12 News List

TWSE to speed up trading system

20 TIMES FASTER:The fastest stock exchange in the world is the London Stock Exchange, which can process a trade in 120 microseconds, just a millionth of a second

Bloomberg

Taiwan Stock Exchange Corp (TWSE, 台灣證交所) is upgrading its trading platform to make it 20 times faster, chairman Schive Chi (薛琦) said in an interview yesterday.

The new system will reduce the amount of time it takes to complete a transaction to 5 milliseconds from 100 milliseconds, he said. A millisecond is one-thousandth of a second. The platform will be able to handle 30,000 orders a second, 10 times more than it does currently.

“These initiatives aim to attract more investors to the Taiwan market,” Schive said.

Exchanges globally have been investing in high-speed infrastructure to attract investors and listings. The fastest platforms in the world are the London Stock Exchange, which can process a trade in 120 microseconds, and the Singapore Exchange Ltd, which does the same in 90 microseconds. A microsecond is one-millionth of a second.

Officials are trying to bolster interest in the TWSE as trading volume has fallen. In the past month, the Taiwanese bourse had an average daily volume of 2.9 billion shares.

This was 47 percent less than the same period last year when there was an average of 5.5 billion shares bought or sold daily, according to data compiled by Bloomberg.

Taiwan is the Asia-Pacific region’s seventh-largest exchange by market capitalization, with companies listed on TWSE having a total value of US$716 billion. The nation falls behind South Korea on the list and ahead of Singapore, according to data compiled by Bloomberg.

Other exchanges in the region have also been working to catch up with the faster global exchanges. Hong Kong Exchanges & Clearing Ltd began using a platform last month that allows it to process a trade in 2 milliseconds, down from 130 milliseconds. South Korea has also announced plans to revamp its system and bring trading times down to 60 microseconds from 20 milliseconds.

Meanwhile, TWSE and a Shanghai peer are in talks to sign a memorandum of understanding (MOU) on collaboration, Schive said, without saying when the agreement would be signed.

“The MOU will be for collaboration, including authorization to compile indices based on each other’s market data,” he said.

Those indices can be used to issue financial products, he added.

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