The HFT Growth Story Presented by Brian R Brown Shogi Capital Group.

The HFT

GrowthStory

Presented by Brian R BrownShogi Capital Group

Trading turnover in China could increase to more than $350 billion per day in a decade from the current $47 billion, Goldman Sachs estimates

Source: Bloomberg

Hong Kong$5.5 B

China$28.1 B

Japan$14.5 B

India$4.0 B

ASEAN$1.5 B

Korea$6.0 B

Australia$4.0 B

Taiwan$3.3 B

Average Equity Trades per Day

+266% volume growth since 2005

The Asia 'Micro' Story

2000 20102002 20082004 2006

Ave

rag

e D

aily

Vo

lum

e

Taiwan – Average Daily Volume

0

1

2

3

4

5

6

7

The Old Economy

Billions USD

Hedge Funds12%

Long Only87%

Retail1%

1998

Market Ecology

Hedge Funds12%

Long Only87%

Retail1%

1998 2008

Statistical Arbitrage

10%

Market-Neutral10%

Algorithms10%

Long Only20%

Hedge Funds20%

Retail2%

Automated Market Makers

15%

Market Ecology

Impact of Toronto Stock Exchanges (TSE) Electronic Liquidity Provider in Fall 2008

Source: Investment Technology Group (ITG), Sept 2009

Case Study:

• Bid-Ask Spreads decline -7.7%

• Tick Volatility declines by -11.2%

• Avg Quote Depth increases by 120%

• Vwap Performance quality increases by 1.2 bps

The Economic Impact

Source: NYSE Euronext

Predatory Trading

of all orders are cancelled97%

Asia Industry Outlook

• Infancy of a new industry of intermediaries – the Wal-Mart of finance

• Asia Marketplace evolving along a unique path

• Speed & Pace of today’s marketplace, influences perception of real economy

Thank You

Brian R. [email protected]

ShogiCapital Group