BNP Paribas Quits Hong Kong Private Trading Platform

BNP Paribas (EPA:BNP) is shutting down a private Trading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real Read this Term in Hong Kong, according to a note sent by the French bank to its clients. The platform was what’s called a dark pool – a place where institutional investors can engage in private securities trades.

December Will See Tougher Legislation, Higher Costs

The move by BNP is believed to be a result of tougher financial market regulation in Hong Kong, which should come into effect from December and will substantially increase the costs and risks associated with running dark pools, as the local regulator, like its counterparts across the world, strive for greater transparency in the industry.

BNP is studying alternative solutions for its clients

In the note to clients, obtained by Bloomberg, the French lender explained: "In view of the changing client needs and the evolving regulatory environment, BNP Paribas Securities (Asia) Ltd. in Hong Kong decided to stop running the internal dark Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term pool trading services, BNP Internal Exchange (BIX), from December 2015.” It added that it is considering alternative solutions for its dark pool clients but all current orders will be transferred to the Hong Kong exchange, it said in the note.

It seems that the new regulation is the final blow to BNP’s dark pool in Hong Kong, after the bank was fined almost $2 million by the local regulator, the Securities and Futures Commission, in August for failing to comply with dark pool operating rules. The violation consisted of BNP assigning equal priority to all orders processed in the pool over the three years between 2009 and 2011, when operations were suspended.

Watchdog Wants Transparency

The new Hong Kong regulation has stipulated a ban on retail orders in dark pools, a requirement that will see dark pool operators treat priority client trades over proprietary orders, plus a host administrative regulatory and administrative controls aimed to cast some light on these non-transparent platforms. As a result, such businesses are likely to become uneconomical.

There are 16 dark pool operators in Hong Kong at the moment, accounting for 2 percent of the market, according to Reuters. In comparison, in Europe and the US, these platforms account for around 10 percent of trade turnover.