The Tokyo Stock Exchange (TSE) plans to rebuild its Japanese futures trading market to pre-crisis levels with a new futures trading platform from NYSE Technologies, the IT arm of exchange group NYSE Euronext.
The new system will be based on the Tdex+ platform which has been used for trading options on the TSE since October 2009. The TSE will begin migrating futures products to the low-latency platform in Q3 2011. Tdex+ and its successor are based on the LIFFE CONNECT platform that has supported trading on the London International Financial Futures and Options Exchange (LIFFE) since November 2000.
The TSE expects the upgrade to provide the market with lower latency and improved liquidity via the introduction of market making facilities as well as the introduction of inter-commodity spreads and closed auction facilities.
“The Japanese futures trading market contains significant growth potential.
We believe promoting this market will bring forth a great investment opportunity for not only the Japanese investor, but investors worldwide,” said Atsushi Saito, president and CEO of the Tokyo Stock Exchange Group.
“Before the financial crisis we had a large futures market. We hope to recover that as a first stage, and we believe it has the potential to double in size after that,” said a spokesman for the TSE. In addition he said that the exchange planned to expand its co-location offering for cash equities and futures as the volume of electronic trading increased. “Currently 20-30% of electronic trading orders in Japan are run via co-location services but this level will expand,” he added.
The TSE introduced a new electronic trading platform for equities, Arrowhead , on 4 January 2010 and is intended to facilitate high-frequency trading strategies. The platform was launched as the threat from rival, low-cost proprietary trading systems (PTSs) increases. Alternative trade venue group Chi-X Global launched its PTS Chi-X Japan on 29 July 2010.