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What are examples of new innovations or innovation strategies stock exchanges around the world are introducing to the stock market, especially NASDAQ as the innovation leader?
Hello! Thanks for your question about examples of new innovations or innovation strategies in stock exchanges around the world. I've provided details on what the following five stock exchanges are doing in terms of innovation: London, Irish, Australian, Tel Aviv, and Shenzhen. You'll find a deep dive of my research below.
METHODOLOGY
To respond to your request, I began by looking at the previous response you received from my colleague to make sure I wasn't repeating any information. Then, I searched through industry reports, corporate websites, government databases, trusted media sites, and other sources to find the requested information. I included only details on stock exchanges outside of the U.S. I selected five international stock exchanges to supplement the details you already received in your previous response, and go into depth about each below.
LONDON STOCK EXCHANGE
This stock exchange has had several innovations recently. First, the exchange is the first of its kind to use a directly connected wireless communication link between two of its data centers, one in London and one in Slough. With 1 gigabit per second of bandwidth, this system solved some of the problems caused by the previously-used microwave technology. According to this report, " tests indicated the expected latency savings versus traditional fibre-optic were as much as 40 per cent."
Another innovation from London Stock Exchange is X2M, a collaborative ecosystem where different financial industry participants, including ISVs, brokers, and information providers, can work together. "Innovation is essential given that X2M's business is based on providing bespoke managed service solutions." X2M offers customized solutions to all of its customers, approaching each customer's needs as a new opportunity.
Innovation in the London Stock Exchange also focuses on hosting. They're striving to enhance the co-location service they provide to clients and to increase connectivity. Moreover, " London Stock Exchange is looking at ways to enhance some of the mechanisms by which clients can connect into the Group's markets, which can then reduce the latency and the ‘jitter’, which is the distribution of latency."
IRISH STOCK EXCHANGE
The Irish Stock Exchange recently commenced a four-year innovation strategy, starting with inspiring creativity and innovation among its staff. The group said, “Innovation is core to developing and growing our business and has been part of our success story for over 200 years. It has enabled the ISE to develop a fund and debt listing business from a zero base 20 years ago to where we are today – a global leader with over 4,000 issuers from 80 countries around the world listed on our markets. This exciting new programme aims to provide the ISE with a framework for fostering innovation and equip staff at all levels in the organisation with the skills necessary to think creatively as part of their day-to-day roles.”
One of the exchange's innovations is to expand its web-based information portal that targets certain investors, known as ISEFundHub. Over 50 investment managers host their fund data on the portal, and it's used by over 500 professionals. This service increases the transparency of investment funds and improves the reputation of investment managers. Pat Lardner, CEO of the Irish Funds Industry Association said, " ISEFundHub is a very important innovation for the Irish funds industry as it is the first time that one central location is being offered to professional investors to access and compare a range of data on Irish funds, both listed and unlisted."
AUSTRALIAN STOCK EXCHANGE
The Australian Stock Exchange recently launched a blockchain initiative to see if the technology would be a viable alternative to the exchange's current platform, Clearing House Electronic Subregister System. The initiative is on track, and the exchange expects to reach a final decision this year. They've completed a prototype and now need to build an industrial-strength solution. The idea is that this new system could significantly improve the efficiency of clearing and settlement. Moreover, it would make security across IoT devices more efficient and cost effective. The CEO of ASX said that implementing this new system would strengthen the exchange's global competitiveness; "We believe the potential of the technology to improve post-trade efficiency and reduce costs is genuine. Our market is a complex organism, and there is a terrific opportunity for us to simplify how it works. In doing so, we can unlock a new era of collaboration and innovation."
TEL AVIV STOCK EXCHANGE
The Tel Aviv Stock Exchange has been working on three key initiatives to increase the number of global investors and the volume of equity traded.
1. Demutualization: The current proposal would reduce the Israel bank's holdings of the TASE from 71% to 35% and remove special privileges and tax treatment to shareholders with more than a 5% holding. The goal is to improve the exchange's financial performance, size and liquidity by diversifying the stockholder base, incentivizing innovation, and opening cross-listing opportunities at foreign exchanges.
2. Remove barriers of entry for SMBs: Initiatives include creating Business Development Companies, funds that support small businesses. The goal here is to inject more equity into the TASE and encourage Israel's tech sector.
3. Increase foreign exposure: This would include creating Exchange Traded Funds, which are a conduit for new sources of investment capital. The goal here is to expand foreign exposure and open the gateway for new investment capital.
SHENZHEN STOCK EXCHANGE
To support innovative investment strategies, the IT services subsidiary of the Shenzhen Stock Exchange, Shenzhen Securities Communication Co., created its own cloud platform for the stock exchange. This article explains it best: the deployment "supports market data and fund management workloads for small and mid-sized financial firms. With access to these systems, fund managers are able to reduce market data workload costs by 30 percent and shrink application response times by 90 percent. By running fund management solutions on SSCC’s OpenStack financial cloud rather than in-house, investment companies are able to lower IT capital and operating costs, and focus their resources on investment performance. Further, with these cloud based solutions, financial firms have experienced application response times commensurate with on premise systems."
The Shenzhen Stock Exchange also created a capital platform focused on enterprises and innovation known as ChiNext. The exchange has listed 580 companies. "The launch of ChiNext marks an important milestone for the nation’s independent innovation strategy based on the approach of scientific development. ChiNext is also of remarkable significance for promoting small and mid-sized enterprises (SMEs) and creating sound interactions among independent innovators, venture capital and capital market."
CONCLUSION
To wrap up, I've provided case studies of what five different stock exchanges around the world are doing in terms of innovation and innovation strategy. I hope this information is helpful to you! Thanks for using Wonder, and let us know if we can help you with anything else.