The Tokyo Stock Exchange (TSE) has outlined changes to its trading rules that will take effect when it launches Arrowhead, its new cash equities trading system, on 4 January next year.
According to the TSE, the new simplified rules were drafted following feedback from trading participants and are designed to ensure smooth price formation and improve liquidity.
Among the changes are revisions to rules for simultaneously-placed bids and offers, the reduction of tick sizes, the revision of price limits on bid/offers and quote renewals. The TSE will also introduce a sequential trade quote, which will be used to prevent sudden price fluctuations caused by a single bid or offer.
Under the new rules, trading participants will need to clarify whether each bid/offer was entered automatically or manually.
The exchange will also eliminate half-day holidays on the first and last business days of the year, so trading will take place as normal on these days.
All the new revisions will take effect in parallel with Arrowhead’s introduction, except the elimination of half-day holidays, which will be enacted on 30 December 2009.
The TSE embarked on the Arrowhead project following a series of system outages. The new platform will offer increased capacity, sub-10-millisecond order confirmations and the ability for firms to co-locate their trading systems with the exchange.