Shanghai Exchange Upgrades
Technological Overhaul Will Add
Power, Potential to Diversify
SHANGHAI, China -- Around this time next year, the Shanghai Stock Exchange is expected to unveil one of the world's most powerful trading systems, capable of handling an array of financial products like options, index futures and other derivatives.
Nevermind that regulators don't currently allow trading in these products in mainland China. But once in place, the new system, with its ability to accommodate more sophisticated products, would mean technological challenges no longer stand in the way of further liberalization of China's financial markets.
The new trading platform is the final -- and most significant -- part of a technological upgrade at the Shanghai Stock Exchange that has been under way for seven years, said Bai Shuo, assistant exchange president and chief technology officer. In late 2004, Bermuda-based consulting firm Accenture Ltd. won a contract then estimated in the tens of millions of dollars to manage development of the new trading system, which will use technology from Deutsche B?rse AG, the German exchange. The system is being built from the ground up and will allow China's biggest stock exchange to trade financial products that can't be supported by its current trading system.
Before this upgrade, new products introduced on the Shanghai exchange, such as bonds and warrants, required engineers to rewrite codes and otherwise jury-rig a trading system that has been in place since the market opened in 1990. The exchange is already largely electronic and considered a powerful and very fast system. But the new trading system will accommodate more products without requiring major overhauls.
"The target is to keep the performance of the current system, and at the same time enlarge the functionality, for the modern capital market," Mr. Bai said.
China is outgrowing basic stocks, underscoring the need by its exchanges to implement new technology. At the Shanghai exchange, only 40% of activity last year by value was stocks, nearly all of that in regular yuan-denominated Class A shares. Bond repurchase agreements -- ultra short-term debt instruments -- were its biggest product, while corporate bonds and investment funds accounted for the remainder of activity.
China's technology tuneup isn't limited to stock trading. The country's commodity markets, as well as its brokerage firms and banks, have been eager to modernize. The trend is unlocking big business opportunities for tech-focused companies. For example, International Business Machines Corp.'s biggest revenues in China are from the financial business, according to one of the firm's top China executives, Li Jiang. He says China's tech-spending boom reflects how banks and other firms need -- in addition to modern equipment -- sophisticated software applications to introduce new products, better track customers and improve risk management.
In January, the risks of neglecting technology became apparent at the Tokyo Stock Exchange, when a surge of activity overwhelmed its outdated computer systems and brought trading to a halt. Mr. Bai says a re-examination of Shanghai's new system in the wake of the Tokyo case concluded that, "we don't have their vulnerability."
Indeed, handling volume isn't a problem at the Shanghai exchange. Its current system is robust enough to handle 16,000 trades a second. That is even more than the 13,000 the New York Stock Exchange says its systems can handle over a sustained period, even after a more than tripling of capacity in the past three years. With the Shanghai Composite Index down 42% from its high of 2237.49 in June 2001 and amid a halt in initial public offerings while China works through overhauls on its nontradable, government-owned shares, the exchange easily handled last year's average daily transaction value of $257 million. Trading value in Shanghai was down 35% last year but remained about 1.5 times more than the country's other exchange in Shenzhen.
In addition to a new system to handle trades, the exchange has also built one of the world's biggest electronic vaults of trading information. In December, NCR Corp's Teradata division finished a project called a data-storage "warehouse." Packed with 14 terabites (one terabite is 1,000 gigabites) of capacity and every single trade ever done in Shanghai, the database gives the exchange capacity to run high-level simulations of how a new product might impact trading.
That is important comfort amid expectations China will introduce more complicated financial derivative products. The government has recently pledged financial derivatives will be traded in Shanghai, though it hasn't said where or specifically what products might be introduced. And already, before the warehouse officially inaugurated, the exchange did trading simulations of how warrants might impact underlying stock prices before they were introduced last year, Mr. Bai said.
The new trading system is also being built with specifications important in China, such as allowing authorities to ensure all trades meet regulatory requirements. For example, before the new system will allow a stock trade to be executed, it will scan the 30 million trading accounts registered at the Shanghai Stock Exchange for evidence of any impropriety, such as investor efforts to sell stock without owning it. The practice, known as short selling and common in most major markets in the world, is illegal in China.
Mr. Bai said those unusual specifications like the ability to check details of individual trading accounts, rather than rely on the honesty of brokers, are uncommon for a stock exchange. Building them into the system has been the most challenging part of the project and caused some clashes with the Accenture team, he said. Accenture directed all questions to Mr. Bai.
This year will be spent mostly in testing the new system and teaching outside brokers and exchange staff how to use it. Entire processes will need to be relearned at the exchange, Mr. Bai said, including how the exchange responds to a company's request that it halt trading in a stock before important news is released. For this reason, the existing stock-trading system will be phased out, rather than unplugged next year.
Mr. Bai said future technological challenges will be related to foreign markets. The Shanghai exchange could forge link-ups with exchanges overseas so that stock could be cross-listed between markets. He noted that the exchange will also own its new trading system and therefore may try to become a systems supplier itself.
"From a business point of view, our exchange is a mainly localized exchange, so globalization is the next step," Mr. Bai said.
上海证交所构建新一代交易系统
上海证券交易所(Shanghai Stock Exchange)在明年这个时候将拥有世界上功能最强大的交易系统之一，该系统可以处理包括期权、指数期货以及其他衍生工具等一系列金融产品。
监管机构目前还不允许中国大陆进行此类交易，不过可处理复杂金融产品的新系统一旦到位，技术问题将不再是中国进一步开放金融市场的障碍。
上海证交所总经理助理、总工程师白硕表示，新的交易平台是上海证交所7年技术升级过程中最后、也是最重要的一项升级。2004年下半年，咨询公司埃森哲(Accenture Ltd.)赢得了一个价值数千万美元的合同：利用德国证券交易所(Deutsche Borse AG)的技术为上海证交所建立新的交易系统。这个新系统是从零开始建造的。建成后，中国最大的证交所──上海证交所将可以进行现有交易系统无法完成的金融产品交易。
在系统升级前，如果上海证交所推出债券和认股权证等新产品，工程师们需要重新编制代码，否则交易系统就会出现问题──现有系统是在1990年上海证交所建所时确立的。上海证交所已经在很大程度上实现了电子交易，也是一个强大、运行速度很快的交易平台。不过新的交易系统无需进行大规模改造就可以容纳更多种类的金融产品。
白硕说，“我们的目标是保持现有系统的运行水平，同时为了适应现代资本市场扩大服务领域。”
基本的股票交易已经难以满足中国市场的需求，这意味著证交所有必要采用新的技术。以价值计算，去年上海证交所只有40%的活动与股票有关，这些活动基本集中在以人民币计价的A股市场。超短期债务工具──债券回购协议是上海证交所最主要的金融产品，其余则是公司债和投资基金。
中国的技术换代不仅仅局限在股票交易领域。中国的商品市场、经纪行和银行也在积极实现技术的现代化。这股潮流为科技公司提供了巨大的商业机会。国际商业机器公司(International Business Machines)中国高层管理人士黎江表示，公司在中国最重要的收入来源就是金融业务。他说，中国科技相关开支的增长反映出银行和其他公司除了现代化的设备外，还需要先进的软件系统来推出新产品、更好地追踪消费者及提高风险管理水平。
今年1月，东京证券交易所(Tokyo Stock Exchange)因忽视技术革新发生事故，当时交易量的突然增多导致陈旧的计算机系统瘫痪，交易不得不暂时终止。白硕表示，东京证交所事故发生后，他们重新检查了上海证交所的新系统，得出的结论是，“我们的系统不会那么脆弱。”
上海证交所的处理能力确实无庸置疑。现有系统每秒足以处理16,000笔交易。而纽约证券交易所(New York Stock Exchange)经过3年努力，将系统处理能力提高3倍以上之后，在持续期间内可处理的交易也只有13,000笔。另外，从上证综合指数由2001年6月的高点2237.49点下挫42%、且股权分置改革过程中首次公开募股暂停的情况来看，上海证交所可以轻松处理去年2.57亿美元的平均日交易额。2005年，上海证交所的交易额下降了35%，不过仍然比中国另一个证交所──深圳证券交易所的交易额多了1.5倍。
除了新系统外，上海证交所还建立了一个世界最大的电子数据库。2005年12月，NCR Corp旗下的Teradata完成了数据“仓库”项目。该数据库的系统容量为14TB（1TB相当于1,000GB），涵盖了上海证交所建所以来的所有历史数据，数据库还为证交所模拟分析新产品对交易的影响提供了技术支持。
近来人们普遍预期中国将推出更复杂的金融衍生产品，上交所的技术升级也为此提供了重要的佐证。中国政府最近宣布金融衍生工具将在上海交易，不过地点及具体产品都没有说明。白硕表示，在数据仓库正式建成前、认股权证还未推出时，上海证交所已对认股权证对股价产生何种影响进行了交易模拟。
新的交易系统还将依照中国一些具体规定作出相应调整，比如允许监管当局确保所有交易符合管理规定。举例来说，在股票交易前，新系统将扫描上海证交所3,000万笔交易记录，查找交易者是否有行为不当的纪录，包括试图卖出未买进的股票。这种被称为“卖空”的交易在世界其他主要金融市场很常见，但在中国是违法的。
白硕表示，这类不同寻常的具体规定──比如可以核对个人交易的详细记录，而非依靠交易者的诚实自觉──对于证交所来讲并不常见。他说，将这些规定并入系统最具挑战性，他们也因此和埃森哲团队发生了一些冲突。埃森哲向白硕报告所有问题。
白硕说，今年的大部分时间将用于新系统测试，以及教授场外经纪商和证交所工作人员如何操作系统。整个过程需要重新学习，包括公司要求在发布重要消息前暂停交易时，证交所该如何处理等。为此，现有的股票交易系统将逐渐退出，而不会在明年突然停止使用。
白硕表示，未来技术方面的挑战将来自外国市场。为了实现股票的交叉上市，上海证交所可能将与海外证交所建立联系。他还表示上海证交所将拥有新的交易系统，因此可能会成为系统供应商。
白硕说，“从商业角度来看，我们主要是一家地方性证交所，因此全球化是我们的下一个目标。”
