Trading across APAC means dealing with different exchanges, data formats and regulators in every market. In an interview with Karry Lai, Senior Editor at FOW, Tim Spragg, Regional Director APAC at BroadPeak Partners, explains why adding point-to-point connections no longer works, and how a single integration layer gives firms a consistent view of their positions across the region.
This article first appeared on FOW.
BroadPeak Partners’ APAC regional director examined the sources of fragmentation for
energy and commodity trading firms in the region. Tim Spragg said that fragmentation is a
key infrastructure challenge for market participants trading across the APAC region.
“A firm active across the region might be trading Chinese exchanges, SGX, Bursa Malaysia and the
Japanese exchanges, alongside global venues such as ICE and CME,” said Spragg. “The
commodities and market structures change country to country, but the infrastructure problems
look remarkably similar everywhere: different data feeds, brokers, energy/commodity trading and
risk management systems (E/CTRMs), formats and regulatory requirements layered on top.”
The default response has been to add another point-to-point connection each time a new venue
or broker comes into scope.
“That scales badly,” he said. “Every new connection is another format to normalise and another
failure point to monitor, and when volatility rises, as it has repeatedly across APAC commodity
markets, those cracks show fast: trade capture lags, reconciliation breaks pile up, and risk and
compliance teams end up firefighting instead of monitoring exposure.”
Spragg observes a shift towards a consolidated integration layer, a single place where exchange,
broker and E/CTRM connectivity is normalised and governed centrally rather than rebuilt project
by project. This gives firms a consistent, reconciled view of positions regardless of origin, and
turns onboarding a new venue or broker into a configuration exercise rather than a bespoke build.
Another benefit with this approach is that it breaks the dependency trap many large firms have.
“Most bought a monolithic E/CTRM system, an Endur or an Allegro, years ago, and built multiple
point-to-point connections directly into it,” said Spragg. “That makes switching vendors or even
challenging whether the incumbent system is still the right fit, feel far riskier than it should.”
The sunk cost of those connections pushes firms towards funding another expensive upgrade of the existing system rather than evaluating a better one.
“A common integration layer removes that trap,” explained Spragg. “Connectivity sits
independently of the E/CTRM, so the choice of which E/CTRM to run becomes a decision made on
its own merits, rather than one shaped by how much has been spent on the existing connections.”
This is the problem BroadPeak was built to solve for energy and commodity trading firms
specifically.
“For energy and commodity firms trading across APAC’s fragmented venue landscape, that means
one integration point to maintain, with our Atlas reference data engine ensuring a contract means
the same thing whether the trade came from SGX or ICE,” said Spragg.
Compared to Europe or North America, APAC is unique as there is no single APAC rulebook and
no common market structure to design around.
China, Japan, Singapore, Malaysia and Australia each have distinct exchange infrastructure,
clearing arrangements, data formats and reporting regimes.
“A firm can build largely to MiFID II and EMIR and cover most of Europe; there is no equivalent shortcut here.”
“A regional book might need to satisfy China Securities Regulatory Commission aligned requirements in China, Japan Financial Services Agency obligations in Japan, Monetary Authority of Singapore (MAS) rules in Singapore and Australian Securities & Investments Commission (ASIC) rules in Australia, each with its own fields, timing and formats, each changing independently.”
The challenge is architectural, noted Spragg, as a single global template will not work locally, but
separate infrastructure market by market recreates the fragmentation problem and blocks a
consistent regional view.
Spragg said that the firms managing this well build an integration layer that absorbs local variation
at the point data enters the system, while still delivering normalised, consistent data to risk,
compliance and the E/CTRM downstream.
Regulatory reporting is a good example: a firm reporting under both MAS and ASIC requirements
is working with different data models, identifiers and timing from the same underlying trade.
“This is the design principle behind our Regulatory Reporting solution: the trade is captured once, then reshaped to meet each regime's requirements, rather than run through parallel processes."
