Thursday, 19 September 2019 08:37 GMT

Turkey courts high-speed traders amid competition

(MENAFN - Gulf Times) Turkey's stock exchange will rev up its trading engine this year with Nasdaq OMX Group's help, seeking to court the latest generation of computerised strategies.

The upgrade of the core trading software at Borsa Istanbul's equities market using Nasdaq technology will go live on September 21, according to chief executive officer Ibrahim Turhan. The exchange is offering co-location, which lets high-frequency trading firms react faster to price fluctuations.

"All market operations will take place on that infrastructure," Borsa Istanbul's CEO said during an interview in London on Tuesday. "We are going to start co-location services, and, as an extension to that, high-frequency trading and quantitative trading."

The project comes as foreign market operators armed with the most advanced technology, Bats Global Markets and London Stock Exchange Group, seek to enter the $266bn Turkish stock market. As computerised trading techniques have become enmeshed with the global financial system, market operators have been forced to evolve with them, upgrading to faster platforms and providing services.

After enhancing its equity market, Borsa Istanbul plans a second phase of the project: shifting its derivatives, fixed-income and commodities markets over to the new technology in 2016, Turhan said.

Nasdaq bought a 5% stake in Borsa Istanbul as part of the agreement, which was announced a year ago. Nasdaq has similar arrangements with markets around the world. This week, it revealed a project to upgrade a Japanese derivatives market.

Under co-location agreements, traders put their computers in the same building as the exchange's servers, shaving off fractions of a second between trades and enabling speedier strategies. The service is a hallmark of modern trading. While Borsa Istanbul is currently the only market for Turkish securities, that probably won't last.

"It will be inevitable that competition will come," said Steve Grob, global director of group strategy at Fidessa Group. "They're going to have to compete with more contemporary venues, which will be an opportunity and a threat for them."
Bats Chi-X Europe and London Stock Exchange Group's Turquoise both hope to enter Turkey. Both have established themselves as pan-European rivals to more traditional exchanges.

Turkey courts high-speed traders amid competition


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