Japanese proprietary trading system (PTS) SBI Japannext will
launch its X-Market on 2 July, offering smaller investment firms the
opportunity to reduce cost by trading in larger tick sizes.
“The X-Market will assist online and local brokers who can’t
connect to a PTS due to the smaller tick sizes,” Chuck Chon, CEO, SBI Japannext
told theTRADEnews.com. “Historically, such firms faced significant cost to
connect because they would have to modify their mid- and back-office systems to
handle decimal tick sizes.”
Chon explained that the X-Market will use designated
liquidity providers to provide quotes at the same tick sizes as the Tokyo Stock
Exchange (TSE), which are wider than those used by SBI Japannext.
This would make it more economically
viable for small trading firms to operate on SBI Japannext, according to Chon.
“We are broadening the range of our market participants and
giving them a chance to gain from our lower cost of trading, which is typically
35% cheaper that the commissions on the TSE,” he said. “We also do not charge for
market data, providing participants with further savings.”
SBI Japannext broke the 5% market share barrier in trading
volumes on 18 May, the first time a PTS has ever taken that much share of the
trading on the TSE. Japannext accounted for 3.43% Japanese market share for the
whole month; rival PTS Chi-X Japan held 2.46%, while the TSE had 89.86%,
according to figures provided by Thomson Reuters.