Impending rule changes will allow Japanese market participants to access alternative venues when the main exchanges experience outages.
The Japan Securities Dealers Association (JSDA) is planning to draw up new guidlines which allow proprietary trading systems (PTSs) to remain open when the Tokyo Stock Exchange (TSE) or Osaka Securities Exchange (OSE) suffers a system glitch.
The move comes after an outcry over the JSDA’s actions earlier this month, when – as the regulator for PTSs – it halted trading at the alternative venues after an IT failure shutdown the trading of 241 stocks on the TSE.
The 2 February outage lasted almost four hours but the technical difficulties would not have affected the PTSs’ ability to trade and the OSE did continue trading.
The JSDA is currently consulting with a working group of industry representatives and hopes to reach consensus by the end of March, implementing the new rules by April.
“We are pleased by the JSDA’s quick response to the 2 February events. It further validates Japan’s need for alternative trading venues,” said Yasuo Hamakake, representative director of Chi-X Japan. “Japan is an important market globally and should adopt rules and regulations that endorse alternative venues to provide investors with greater reliability. Chi-X Japan is committed to working with the JSDA to build a framework that benefits the trading community.”
A merger between TSE and OSE was announced 22 November and is currently slated for January 2013.
TSE’s Arrowhead trading platform, introduced early 2010, was not the cause of the failure, a spokesperson for the bourse said.
The country's two main PTSs Chi-X Japan and SBI Japannext accounted for 2.65% and 3.22% of Japanese blue-chip trading last month.