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Asia's fintech wave good for financial sector: Nasdaq

Exchange out to tap trend with new products and services

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Mr Franczyk says the Asia Pacific "is home to some of the world's most innovative fintech companies", adding that Nasdaq is keen to work with more of them to develop products for investors.

Singapore

NASDAQ'S Asia-Pacific unit is confident fintech-driven disruption in the region's financial services sector will fuel significant growth.

The US stock exchange aims to cash in on this by offering "innovative products and services". Over the past three years, Nasdaq Asia Pacific, which is headquartered in Hong Kong, has seen its data revenue triple.

Tomas Franczyk, Nasdaq's Apac MD for Information Services, told The Business Times that fintech startups in the region were trying to reach investors with innovative apps and products. "This is helping to drive innovation and this also means progress can be comparatively rapid as businesses can scale up quickly rather than having to first build out physical branches."

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A recent study by KPMG showed that the total fintech investment in Asia reached a new high of US$8.6 billion in 2016 despite a drop-off in deal activity to 181 from 196 in 2015.

Mr Franczyk categorises his own company as a fintech. He said: "Nasdaq is a diversified fintech company that provides technology, trading and information services to public and private companies... Today, our technology powers more than 85 marketplaces in 50 countries, including the Singapore Exchange." The firm has nearly 18,000 corporate clients, and has over 90 data products in Asia covering equities, commodities, options and futures. About 3,800 listed companies with a market value of about US$10 trillion trade on Nasdaq.

Mr Franczyk said the Asia Pacific "is home to some of the world's most innovative fintech companies", adding that Nasdaq is keen to work with more of them to develop products for investors.

"In many areas, investment firms are skipping the bricks-and-mortar stage ... and going straight online. This means they are easily accessible to a greater range of potential investors."

Nasdaq opened its Hong Kong office around 2004, and in 2007 it opened its Beijing representative office. Mr Franczyk relocated to Hong Kong in January last year "to be closer to our customers. He is responsible for the company's data products business under the Global Information Services (GIS) umbrella in Asia. GIS comprises Nasdaq's data and index business; the company provides market data to millions of financial professionals and retail investors globally.

The US company has signed up 15 new brokers and vendors in the Asia Pacific region last year amid the booming financial services and technology industry in the Asia Pacific in the past two-three years.

Nasdaq's focus has been China, whose integration into the world's financial system is opening doors for many investors to invest in the US stock market, says Mr Franczyk. "Our data offerings provide brokers, media outlets and other institutions with more information in a faster, more reliable, cost efficient manner. There is significant opportunity to help Asia Pacific investors unlock access to accurate quote and trade data from Nasdaq."

One of the Chinese brokers that Nasdaq has worked with is Futu Securities. The company, which was founded in 2012, "has become one of the fastest growing financial technology companies in Asia and has increased revenue by 500 per cent each year.

"Today, Futu Securities is one of the Chinese brokerages to offer retail trading in Hong Kong and US stocks."

Mr Franczyk attributes the growing interest of Chinese investors in US stocks to three main trends:

  • Investors want to diversify and are keen on companies they are familiar with, which is why they seek to invest in Chinese companies listed on US exchanges;
  • Several US brands carry significant international appeal for Chinese investors; and
  • It is easier than ever to travel to the US, where Chinese investors have the opportunity to discover and invest in US companies that pique their interest.

While China is the main focus, Mr Franczyk says Nasdaq is also "focused on continuing to apply our scalable business model" to replicate success across the Asia-Pacific region.

"We are particularly excited about Singapore, Beijing, Hong Kong, and Shenzhen, as they are emerging as key innovation hubs in Asia and are home to a rich array of fintech talent."

Mr Franczyk adds that Nasdaq is "focused on continuing to expand" beyond its core market data experiences through the development of new offerings using advanced analytics and machine intelligence.

"One exciting product - the first to launch out of our Innovation Lab - is Trading Insights and we hope to bring the product suite to Asia soon." Trading Insights launched in the US last November and is a suite that combines proprietary data with advanced analytics and machine learning to improve a firm's trading behaviour and performance on the Nasdaq Stock Market.

Mr Franczyk sees machine intelligence and advanced analytics as key drivers that will help shape future business and what "customers want the most is to make better, more insightful trading and investment decisions".

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