Japan’s derivatives market reforms likely to result in greater transparency and security
Repeated regulatory reforms in Japan’s derivatives market to bolster trade volumes whilst promoting competitiveness among its exchanges and alternative trading platforms. October 02, 2012 | Levina LimThe past two decades have seen the land of the rising sun beset by a problematic decline – a falling population, a relatively stagnant economy, and periodic natural disasters leading to deflation and a shrinking labour force. Developing and consolidating the Japanese exchange and derivatives market has been regarded as an important attempt by the nation to boost its economy and regain its economic stature in the eyes of the world. Formal exchanges in Japan’s derivatives market is characterised by a trend of consolidation, resulting in five derivatives exchanges dealing in a specific range of derivative products over time. Two of these exchanges (Tokyo Stock Exchange and Osaka Securities Exchange) are merging to become what will be known as the third largest bourse in the world. However, trading volume for Japan’s derivatives exchanges pales in comparison to that of the world’s major exchanges (only one tenth of Korea Exchange’s trade volume). Total trading volume for Japan’s derivatives exchanges in international scene negligible Figure 1. Japan’s domestic derivatives trading volume comparison Regulation plays a key role, for better or worse. The introduction and adoption of central counterparty clearing houses (CCPs) by Japan, in line with the G20 mandate is expected to increase trading transparency, for the purpose of increasing investor confidence and attracting higher volumes of trade by both domestic and international investors. Towards this end, the Commodity Derivatives Act and Financial Instruments and Exchange Act (FIEA) have been revised several times according to international standards. An attempt has also been made to revive the rice futures market, Dojima Rice Exchange, which unfortunately had a negligible impact on market volumes. The requirement to clear over-the-counter (OTC) trad... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Exchanges, Japan, Markets & Exchanges, Regulation, Trading & DataExchanges,Japan,Markets Exchanges,riskregulation,Trading & Data, Exchanges,Japan,Markets & Exchanges,Regulation,Trading & Data, Keywords:OSE, TSE, CCP, Commodity Derivatives Act, FIEA, Dojima Rice Exchange, FIBO, Jun Azumi, HFT, Arrowhead, Chi-X, SBI Japannext OSE, TSE, CCP, Commodity Derivatives Act, FIEA, Dojima Rice Exchange, FIBO, Jun Azumi, HFT, Arrowhead, Chi-X, SBI Japannext
|