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.