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Opinion | As Hong Kong looks to regain financial crown, HKEX can win big with data

  • From Nasdaq to the LSE, data is no longer a business by-product but an asset that can power the next generation of global capital markets

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Data is the new oil and HKEX has to grasp this opportunity. Photo: Jonathan Wong
Stock exchanges traditionally derive much of their value from initial public offerings (IPOs) and market trading activities. Hong Kong’s, the third largest stock market in Asia and a superconnector between the East and the West, is no different.
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Under its operator, Hong Kong Exchanges and Clearing (HKEX), the stock market has a capitalisation of nearly US$4 trillion and last year, HKEX reported a revenue of over US$2 billion.

By all standards, HKEX is a world-class exchange operator. Looking more internationally, however, is there greater value to be created? Is there a bigger opportunity? Looking at other global exchanges’ revenue streams, the answer would appear to be a resounding yes.

The opportunity for all exchange operators, including HKEX, is to graduate from an intermediary that merely facilitates trading and listings, to becoming a provider of solutions in high-value market data.

Nasdaq Inc, for example, is evolving its business to include data innovation. In 2021, it announced a multi-year partnership with Amazon Web Services to build the next generation of cloud-enabled infrastructure for the world’s capital markets. It has also made forays into the rapidly growing market of regulatory technology – or regtech – as companies wake up to the massive data needs of modern financial compliance.
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The London Stock Exchange Group has already made the transition: today, it derives under 4 per cent of its annual revenues from listing and trading activities – most of its earnings come from its data and analytics businesses.

The offices of London Stock Exchange Group Plc in Paternoster Square in the City of London, UK, on January 3. Photo: Bloomberg
The offices of London Stock Exchange Group Plc in Paternoster Square in the City of London, UK, on January 3. Photo: Bloomberg
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