SRP China Awards 2020: Horizon in Hong Kong SAR and the Mainland China.
Horizon Software has won the Best Technology Provider and Best Technological Solution accolades at SRP’s China Awards 2020 for its development in Hong Kong SAR and the Mainland China.
The French fintech is planning to go live with its first automated request for quote (RFQ) system next month after running countless tests throughout 2020. The product aims to fully automate the workflow of RFQ’s and email processing on structured products, and has been tailormade for one of largest bank in China.
The RFQ system focuses on listed products in Hong Kong, in the first phase before widening its scope to more complex instruments, such as accumulators, decumulators, range accrual notes, fixed coupon notes and equity-linked notes.
“Low latency is a key requirement, ” she tells SRP, adding that the system runs independently without connecting to the core banking system of the subsidiary of Bank of China.
Lin is optimistic about the space of automated RFQ systems in Hong Kong SAR as it remains less crowded compared to market making and order management systems where Horizon has more experience.
The French company has a larger client base in Hong Kong SAR where it opened the first Asian office in 2006 than in the Mainland China across securities, futures, delta one and structured products.
“We’re trying to offer the customized RFQ systems to some targeted clients while promoting other products through the internal reference from existing customers,” says Lin.
As the market for listed structured products in the Mainland China is not yet developed, the RFQ system is not employed in the country. However, Horizon has prepared and tested the system demo for Chinese investors, which is expected to be available in the first quarter of 2021, given the system’s flexibility in payoffs and asset classes.
Market making solution (MMS)
“As trading volumes go up, clients are likely to deploy more complex strategies like percent of volumes, iceberg and snipper,” says Lin.
Beyond the addition of new trading gateways, Horizon has added more exchanges to the MMS in China – it currently supports the Shanghai and Shenzhen Stock Exchanges and the Zhengzhou, Dalian, Shenzhen Futures Exchanges
“The mainland market is highly competitive,” says Lin. “The biggest challenge for us is the fierce price competition. The market makers usually prefer local suppliers with a smaller scale if they have a small trading volume and low budget for the system.
“At present, our main customers in the mainland are relatively large market makers, some of which also have presence in Hong Kong” says Lin.
“We can provide systems that solely connect to domestic markets, but as a global supplier, the development and maintenance cost is inevitably higher than our local peers,” she says