From 22 July, 2014, sub-yen tick sizes are being introduced for TOPIX100 stocks. Furthermore, TOPIX100 stock prices will now contain decimals.
Tick sizes of 0.5 yen will be introduced for prices under 5,000 yen, with increased granularity down to 0.1 yen for values of less than 100 yen. Since trading units of TOPIX100 stocks are either in 100 or 1,000 shares, trades will not result in payment with amounts under one yen.
The exchange said that narrower tick sizes for high liquidity stocks are expected to increase investor confidence by offering price improvement and shorter waiting time until order execution, with a wider choice of limit order prices.
TOPIX100 is an index of 100 1st section stocks in Japan that offer high liquidity and large market capitalisation. It includes internationally traded blue chip names such as Sony, Toshiba, Mizuho Nissan and Panasonic.
Tick sizes for higher yen values were reduced on 14 January
2014. Since then, spreads have showed a tendency to widen in Japan, and one explanation
mooted is that this has been caused by the tick size changes. At this stage,
with insufficient data available that supports that thesis, it remains
unproven.