Integrated financial house PhillipCapital has announced Asia’s very first trade-matching platform that allows institutional investors here to trade US equities without staying up all night. Through the platform, investors will be able to trade over 100 US-listed stocks between 9am and 5pm Singapore time.

With support from Japan’s SBI Group, PhillipCapital’s Vietnam-based system development company CQ TDT Asia is developing the matching engine, named Pi-X, which is expected to be fully operational by 1Q2023.

While the platform will be opened to overseas retail and institutional investors as well as liquidity providers, only institutional investors will be allowed to participate in Singapore.

A new JV company will be created here in 2Q2022, with PhillipCapital Group owning 70% and SBI Group the remaining 30%. The JV will start with an initial capital of US$1 million ($1.36 million), which will grow to US$6 million upon full operations.

Key personnel will be transferred from both entities. Hitoshi Shimoyama, Phillip Securities’ executive director in charge of this project, is expected to be appointed CEO of the JV. “We are targeting the biggest market in the world to buy [shares in] the biggest market in the world,” says Shimoyama to The Edge Singapore. “Of course, we might say that China may be bigger, but China is not as open as the US.”

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For Shimoyama, the idea came to him some three years ago in Japan where there exists a similar private exchange that allows off-hours trading but only of Japanese stocks. It was his spouse who pushed him to explore the concept further. “My wife, several months ago, wanted to buy US stocks. But she was obliged to wait until almost midnight, and she does this again the next day. It’s frustrating for her to stay up and put in new orders without having any sense about the opening price.”

Shimoyama, who moved here last September, sees an increasing number of traders doing the same in the region. “We are seeing more and more people earning enough money to invest in financial products. They start by buying a bicycle or car, then a house, then after having a property and education, they are investing in the financial markets.”

With Asia’s surge in retail trading, Shimoyama expects trading volume to exceed US$100 million per day in the first year. “This is not some dream or wishful thinking; this is nothing more than the amount that a single brokerage is seeing in a single day.”

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Shimoyama points to strong demand for US stocks. He estimates that more than half of the trades executed by brokerages today involve companies listed in the US.

But US stocks are notorious for their volatility. Could drastic price changes after trading hours hurt the platform? Shimoyama admits this is a complex issue. “This is a good question; we don’t know yet what to do.”

What Pi-X has in mind, however, is a combination of trade surveillance and ample liquidity to prevent price manipulation. In addition, Shimoyama stresses that Pi-X is a matching engine and the platform does not deal with clearing. “That is done by the buyer and seller directly in the US and the clearing house.”

While trading fees are not yet announced, Shimoyama says it will be fair for every participant.

Yoshitaka Kitao, SBI Holdings’ representative director, president and CEO, says: “It is crucial for us to provide Japanese investors with the opportunity to trade US-listed equities in the daytime. We expect this new platform will enhance our customer experience and expand our securities business.”

Photos: Albert Chua/The Edge Singapore

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