Warrants issuers battle algo predators in Hong Kong

Threat of high-frequency traders forces banks to spend big on tech

It can take years and considerable sums of money to build a warrants business in Hong Kong. The investment can begin to unravel in a mere one-millionth of a second.

The derivative warrants market in Hong Kong, with its paper-thin spreads and zero stamp duty, has long been a target for high-frequency trading firms on the hunt for fleeting differences between the price of the structured product and its underlying stock. If an issuer’s technology is not up to scratch in this market, the lost basis