For any international market participant, there is arguably no more important task than to be able to access the right counterparties at the right time – easily, quickly, reliably and cost-efficiently. Any impediments to liquidity threaten not only bottom lines but also entire business models.
Of course, depending on which market segments a firm is targeting, there may be a number of viable liquidity strategies that satisfy business requirements. But developing a liquidity strategy is never straightforward because liquidity is constantly shifting and the changes are driven by diverse factors. Global trading trends, regional developments, regulatory changes, demand for different types of market products and technology all may play a role.
At BSO, we recognise the degree to which changing liquidity factors can impact market participants and how much they rely on working with their partners to navigate a landscape that is always in flux. We plan to discuss this changing liquidity environment at the upcoming Solarflare Next Generation Networking conference in Shanghai, but I’ll touch briefly here on a few of the ways these trends are affecting participants.
One of the most talked-about shifts of late has been the way that FX and derivative volumes have been increasing in Asia. We won’t know the extent of the growth until September, when the Bank for International Settlements (BIS) releases preliminary data from its recently launched triennial survey. But anecdotal evidence from banks and industry leaders suggests the region is continuing to outpace other parts of the world in terms of volume growth.
Meanwhile, crypto asset trading is constantly in the news. While the segment remains small compared with established markets, it is attracting increased interest, with volumes surging as new products come on stream. Most importantly, institutional investors are showing much more comfort with the sector.
Regulatory changes around the world are another factor affecting liquidity. Every market participant in the world is aware of the heavy stream of regulatory measures that have been introduced in recent years. So important is this factor that the BIS recently set up a database to help market participants understand the different macroeconomic impacts that various regulatory measures were having around the world.
Finally, there is technology. Artificial intelligence, automation, and blockchain are among some of the myriad ways that disruptive technology is changing the way financial services firms operate. That invariably has a knock-on effect on liquidity by shaping the strategies of sell-side firms and other participants.
All of these developments put pressure on network suppliers to deliver infrastructure and service that respond to trends and can move with the times. It’s as much a challenge for a company like BSO as it is for our clients and our partners, whether they are venues or technological suppliers.
Thankfully, we have 14 years of experience in low-latency networking, with more than 100 data and exchange locations, hundreds of customers around the world, and a large crew of engineers to serve them. So, we’re confident that we can meet the challenge and help our customers meet it too.
The company was founded in 2004 and serves the world’s largest financial institutions. BSO is a global pioneering infrastructure and connectivity provider, helping over 600 data-intensive businesses across diverse markets, including financial services, technology, energy, e-commerce, media and others. BSO owns and provides mission-critical infrastructure, including network connectivity, cloud solutions, managed services and hosting, that are specific and dedicated to each customer served.
The company’s network comprises 240+ PoPs across 33 markets, 40+ cloud on-ramps, is integrated with all major public cloud providers and connects to 75+ on-net internet exchanges and 30+ stock exchanges. The team of experts works closely with customers in order to create solutions that meet the detailed and specific needs of their business, providing the latency, resilience and security they need regardless of location.
BSO is headquartered in Ireland, and has 11 offices across the globe, including London, New York, Paris, Dubai, Hong Kong and Singapore. Access our website and find out more information: www.bso.co
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