Flow Traders gains approval for HFT business in Japan

Regulatory approval means Flow Traders can participate in the Japan Exchange Group’s ETF market maker scheme.

High-frequency trading (HFT) firm Flow Traders has been handed formal regulatory approval in Japan to operate a high-speed trading business.

The Financial Services Agency of Japan (FSA) registered the firm which will allow it to participate in a newly established exchange-traded fund (ETF) market maker programme, Flow Traders said via LinkedIn announcement.

Japan Exchange Group’s (JPX) ETF market maker scheme launched on 2 July, aiming to improve liquidity of ETFs by providing incentives to designated market makers who fulfill obligations for issues based on applications.

With continuous quote by market maker, a sufficient amount of orders are shown at a fair price so investors can buy and sell ETFs at a desired timing, JPX said. The scheme also includes asset managers as sponsors for further incentives.  

Market makers involved in the scheme include Nomura Securities and Mitsubishi UFJ Morgan Stanley Securities.

“The programs goal is to increase liquidity in a defined set of ETFs to improve the attractiveness of these products to investors and is the first such program for ETFs in Japan,” Flow Traders said. “Flow Traders beliefs it can contribute via this program to future growth of the ETF market in Japan.”

In May, Flow Traders went live in Hong Kong as a designated securities market maker on the Hong Kong Stock Exchange as a liquidity provider on the Hong Kong Futures Exchange. The move allows the firm to provider liquidity in Hong Kong listed ETFs and futures as a regulated entity.

Chief trading officer, Folkert Joling, commented at the time that the approval was an important milestone for Flow Traders in Asian ETF markets.

“The smooth and fast implementation is a great accomplishment and we would like to thank the entire Flow Traders team in Asia for their commitment and efforts to get this realised in such a short time frame,” Folkert added.