The admission of the first remote trading participant on the Tokyo Financial Exchange (TFX) is expected to open the door for similar agreements on Japanese exchanges.
Last week global multi-asset brokerage Newedge announced that it became the sponsoring clearer for GH Financials, a London-based provider of direct access to futures and derivatives exchanges, for its membership to the TFX.
Starting 1 September, GH Financials has been approved as a remote member for trading in euroyen futures on the TFX, the first instance of an overseas trading firm gaining direct access to a Japanese exchange.
Following a two-year period of exchange upgrades in Japan, including the launch of the Tokyo Stock Exchange's Arrowhead trading platform, Julien Le Noble, CEO of Newedge Japan, believes the country is now looking to attract more foreign liquidity onto its shores.
“Japanese regulators seem to be very supportive of remote membership across futures and equity exchanges,” Le Noble told theTRADEnews.com. “They are primarily looking at the roles of each party, i.e. between clearing members, trading participants and exchanges, to ensure that there is a sensible balance between each before progressing further.”
As well as improving matching engine technology to entice high-frequency trading flow, Le Noble said that the new trading platforms implemented by various exchanges have helped Japan to adopt global financial standards such as FIX, which will ease to connectivity process for remote members.
However, to accelerate further remote membership to all futures and equities exchanges across Japan, Le Noble suggests that exchanges should provide incentives to make connecting more attractive for foreign firms.
“Remote membership has proven successful in other parts of the world, but there are still some areas to clarify and improve for it to be as attractive as the US and Europe,” said Le Noble. “For example, exchanges should offer specific advantages for remote members that regular clients wouldn't be able to enjoy, such as discounts on exchange transaction and connectivity fees.”