Exploring the Future of Markets: Part 1 – Data: More & Better
Jun 24, 2022
10 mins

Earlier this year HKEX announced its new vision, unveiling a blueprint to build the Marketplace of the Future. Predicting the journey ahead and that future is challenging, especially amid evolving market dynamics. But on the heels of HKEX’s 22nd anniversary in June 2022, we sat down with a dozen executives from across the HKEX business to reflect on the progress of our organisation over the past two decades, and explore the key drivers and trends impacting the global exchange landscape.

Four key themes emerged from these discussions: data, ESG, technology and clients. Over the coming weeks, we will share views from our Markets business, our Operations team, our Listing division and other parts of HKEX to paint a holistic view of what the future of markets could look like. The first wide-reaching development we see on the horizon is focused around data, and how it will become richer and better integrated into our markets, our business and that of our customers.

Sitting on a data mine

As a financial marketplace that brings buyers and sellers together, providing data on listed securities has always been central to the core function of most exchanges.  At HKEX, it is no different.  

Underlying everything we do at the exchange is data. People need to have visibility on the buy-price, the sell-price, the number of orders and so forth to be able to trade and we do that really well.
  Co-Head of Markets, Glenda So

On any given day, HKEX provides 200 gigabytes of data through its platforms for analysis and decision making.  That is just on market data alone – meaning real-time data on listed securities and derivatives as well as issuer news.

This data is generated and used by the many thousands of traders who come to HKEX’s platforms on a daily basis. Oversight of the markets with real-time access to trading patterns and transactions, alongside detailed information on individual securities, issuers and participants means that exchanges are uniquely placed. Collating this data, processing it and packaging it provides ever richer intelligence on capital markets to exchange customers. This, in turn, helps them drive their own business, making more informed decisions and better managing risk and resources.

And in a world where markets have become truly real-time – responding immediately to news and information – providing richer and more timely data is key to maintaining the attractiveness of any marketplace.  

We are seeing increasing activity by quants, who need more and more data and a greater flow of information for their complex, multi-asset strategies. We therefore need to find different ways to deliver that data, and provide access to information that goes beyond the market ticker.
  Head of Data & Analytics, Adam Wielowieyski

So what will that look like?

Data will be enriched.

Data has been at the top of HKEX's agenda for a long time. But the future landscape for exchanges is one where data will continue to be elevated further. Post-trade data, in particular, will see a big boost. It’s in our world and is already available through our website, but our customers want different cuts and different packages of data to help them drive their success.

“They want to see the minute-on-minute, hour-on-hour, day-on-day changes, and they want it distributed in a way that suits them,” adds Glenda. When it comes to asset servicing data in particular, such as information on income and corporate actions, there is an opportunity for exchanges to go up and down the data food-chain, working with custody councils for example to better deliver that data, in turn allowing customers to process securities more effectively.

Data will become more integrated.

Having richer and more useful data is great, but easy access is just as important.

Clients want super-easy, super-efficient access to data and have it fully integrated into their trading systems, allowing their trading strategies to benefit from higher precision and accuracy. This would also infuse the market with improved liquidity and vibrancy.
  Co-Chief Operating Officer & Co-Head of Markets, Wilfred Yiu

This applies to every point of the trade cycle, from inception to clearing.

This is where exchanges have the opportunity to add value compared with other data providers. Working in partnership with external parties to better integrate data can also add real value to customers. And the integration of data can be fundamentally enhanced by the application of new  technologies, such as open application programming interfaces (APIs), which allow companies to speak to one another and get the data they need, without needing to use each other’s technology. 

Think of it like an app store, where we make our infrastructure open architecture. Not all the applications have to be built by HKEX. They can be built by specialist providers as long as the architectural protocols are very well defined, both in the way you connect to them and the way you design them. And you can then drive innovation on that platform to meet the needs of the client, all based on very specialized capabilities.
  Co-Chief Operating Officer, John Buckley

Technology will be an enabler.

One of the biggest problems with data is that it is everywhere and it is seldom in a form that can be easily digested or joined together.

New technologies give us a better chance of deriving business intelligence out of the data we have.
  Group Chief Technology Officer, Richard Leung  

ESG is an example of one such area where new data gathering and validation technologies have the potential to make a huge difference. “If you are able to use the internet of things (IoT) to monitor and reduce carbon emissions, the data can be trusted because it’s validated. Similarly, if you use GPS images to track a deforestation project, as an investor you will have proof that what you’re participating in is having real impact. We expect green tech to be one of the key areas to benefit from the power of data – and that’s good as it will help us all move towards a more sustainable world,” adds Glenda.

Where does this all lead us? Ultimately enhancements to the way data is generated and distributed will help lower barriers to entry for financial market participants. “As markets have become much more information driven, the data we produce will make it easier for participants to execute ever more sophisticated transactions. So in a sense, having access to information, in the right way and at the right time democratises finance because it changes the way that the market operates, offering access in the cheapest and fastest way possible. And that benefits us all, because the markets will become bigger, more liquid, more transparent, more open and more efficient,” concludes Adam.