The connectivity infrastructure market has seen a boom over the past ten years. From high-frequency trading to cross-connects between major exchanges, the space has been a highly competitive one. With increasing regulatory pressure in developed markets, the trading industry is looking out to diversify its business as the Asian market heats up.
BSO is one of the connectivity infrastructure companies that has recently expanded its regional presence. The company maintains an Ethernet network and is also a cloud and hosting provider. The firm is headquartered in Dublin, with a network that reaches every continent and spans over 23 countries with 103 data center locations.
The firm recently expanded its Asia presence with a new Hong Kong office to accommodate rising demand. Former Telstra and BT Radianz exec Matthew Lempriere joined BSO a couple of months ago to oversee the company’s expansion into the region. A gap in the market has been identified by the team in building up connectivity infrastructure in remote areas like Dubai, Shanghai, and India.
Singapore’s Friendliness Towards Business
What’s driving growth in Asia at the moment is real growth in FX markets in Tokyo, Singapore and to a lesser extent, Hong Kong. Cyclically the financial markets state is also in a healthy phase as the period of the introduction of new regulations and paying fines is now about over. The latest MiFID II and GDPR regulations have been set in place, and the focus is shifting onto how to get growing again.
Elaborating to Finance Magnates BSO’s new regional head, Lempriere said: “Asia is the place to go when it comes to growth and this is where the market is most vibrant, particularly after the cryptocurrency boom in the region.”
BSO’s entry into the Asian market has been dictated by conditions that are creating a perfect storm of opportunities for companies that facilitate the growth of high-performance networks throughout Asia. Lempriere also shared that Tokyo is a huge growth area as well and the company is looking to expand its presence in Japan in the near future.
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He explained that Singapore’s regulator has been very proactive and the government has made the country a key venue to operate from in the region. Undoubtedly, the healthy rivalry between different financial centers in the region has driven the momentum higher.
“I think financial services in Asia are much more exciting for both the local institutions and those in the US and Europe. We have seen interest from the American trading community, high-frequency traders in particular, to gain access to more markets beyond Hong Kong, Singapore and Tokyo,” Lempriere explained.
Beyond Traditional Financial Centers
While the focus of the majority of network infrastructure providers has been on the region’s major centers, some peripheral opportunities are ripe to drive much more growth in the coming years. One country which has frequently been overlooked, is India.
“The Indian regulations are changing at the moment, resulting in more co-location with the exchanges. This step will allow more HFTs to operate and third-party vendors such are ourselves will be able to offer much more services,” Lempriere elaborated.
HFTs Storming into Asia
With the rise of HFTs, connectivity infrastructure providers are looking towards unconventional technologies. Microwave connections have been used in the US for years, and this is where BSO recently acquired a company with such capabilities. With microwave network capabilities between New York and New Jersey and in the Chicago area, the firm sees potential to deploy such networks in Asia.
Lempriere explains: “HFTs have been particularly interested in trading between Singapore and Hong Kong. This route has been the focus for US trading venues along with the route between the Shanghai Futures Exchange and the CME. There are many more Chinese firms that are interested to trade in the US and vice versa.”
“Another area which is seeing a growing interest is the MSCI emerging markets index which has taken on a number of Chinese blue chip stocks. People that track this index have to trade those stocks and interest has spiked through the roof. Changes in the market drive more infrastructure needs and obviously infrastructure is what we provide.”