The NZ Stock Exchange has lodged an application for an Australian market licence as a further step in its plans to set up an electronic communications network (ECN) to process Australian share trades.
NZX has awarded the contract to build the network to Trayport, a London-based company specialising in sharemarket trading technology.
The Trayport technology has the advantage of having been developed more recently than similar systems from Australian providers, says the NZX’s head of market technology, Martyn Bain.
Some Australian rivals have legacy systems that have had their more modern facilities bolted-on, which means the NZX system is likely to be more efficient, he says.
“The key [element of ECN] is the core trading-engine, known as the Cameron Universal Server,” says Bain. This generates messages to the FIXA global standard for equity markets.
The hardware base for ECN comprises Hewlett-Packard Stratus “fail-safe” servers.
Initially, a limited class of trades will be tracked. The first application handled by the ECN will be keeping records of “crossings” — trades where the same broker handles the deal on behalf of both buyer and seller. But there are clear opportunities for expansion into other transactions in due course.
NZX is creating ECN with help from five Australian brokers, who will also be its first customers. It will be up and running some time in the first half of this year, Bain says, declining to give a more specific time-frame.
“There are a lot of legal hoops we have to jump through,” he says. And this process, rather than technology development, will dictate the lead-time. “Technology development is well on target.”
Meanwhile, ECN has a new chief executive, Greg Yanco. He has more than 20 years’ experience in financial markets and has spent half this time in regulatory roles with the Australian Stock Exchange.
“Mr Yanco’s extensive markets experience, his knowledge of the regulatory environment and his commitment to the development of Australian capital markets make him ideally placed to lead the ECN,” says NZX chief executive Mark Weldon, who is a director of the ECN.
The NZX has been without a CIO since Chris Corke resigned in September 2005 and the post was disestablished. Stuart Turner, former head of market operations at the Dubai Stock Exchange, has been appointed head of market operations. He and Bain will between them discharge the CIO’s responsibilities.