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November 2009

Update : Nov. 26, 2009


1. Signing a Memorandum of Understanding on Listing TOPIX Futures on NYSE Liffe

On November 24, 2009, Tokyo Stock Exchange, Inc. (TSE) and NYSE Liffe, a derivatives exchange operating subsidiary of NYSE Euronext Group, signed a Memorandum of Understanding (MOU) that TOPIX Futures would be listed on NYSE Liffe in the United Kingdom.

The TSE has strived to expand trading opportunities for TOPIX Futures, such as introducing an evening session in June 2008. However, some have pointed out that TOPIX Futures is not necessarily well-known or convenient for investors due to its short trading hours, in addition to needs from investors to trade TOPIX Futures in the middle of the night in Japan (during daytime in Europe and the United States). On the other hand, many trading participants and market-related parties in Japan are not positive about extending the current auction trading hours, which will increase labor and system-related costs. Therefore, the TSE has continued deliberations to seek another way to support the needs of all parties involved.

The TSE has decided to list TOPIX Futures on NYSE Liffe, given the access environment for investors in Europe and the United States which it has developed, as well as its previous cooperative history with the TSE in JGB Futures trading. This will enable investors to trade TOPIX Futures during the daytime in Europe and the United States. Specifications for financial instruments (contract months, trading units, etc.) listed on NYSE Liffe will be essentially the same as those of TOPIX Futures listed on the TSE. The trading hours are scheduled to be from 3:00 pm to 6:00 am of the following day in Japan (to 5:00 am during daylight savings time in London). With the combined trading hours of the TSE and NYSE Liffe, TOPIX Futures will be traded for a maximum of 19.5 hours a day (currently 7 hours).

At the same time, the TSE is looking into a scheme that automatically transfers daily final positions for TOPIX Futures listed on NYSE Liffe (position transfer scheme). Under this scheme, investors will be able to enjoy the convenience of simple position management.

Based on this MOU, TOPIX Futures is anticipated to be listed on NYSE Liffe sometime in June 2010.

For more information:
TOPIX Futures to trade on NYSE Liffe from summer 2010(TSE News:Nov. 24, 2009 )

2. Progress of arrowhead Development

"arrowhead", the next-generation trading system, is scheduled to be activated at the first session of the new year on January 4, 2010. Currently, arrowhead development is in the final stage, with the TSE conducting tests to check system linkage between arrowhead and all TSE systems including the Market Information System and the Clearing System as well as tests for trading participants to check functional linkage and connections in an environment similar to the actual one. As of today, the TSE has carried out these general tests with trading participants, etc. 17 times in total and all the tests have gone very smoothly. In particular, the TSE has confirmed outstanding order processing performance. Therefore, the TSE believes that its initial target to process orders with 10 ms. or less will sufficiently be achieved.

The TSE is scheduled to hold a meeting in early December, 2009 to assess arrowhead activation on January 4, 2010. The result will be publicized on the TSE website.

Additionally, the TSE will create a new website that displays the differences between arrowhead and the current trading system as well as simulates order placement on the TSE website in the near future. The TSE would like to invite all interested users to take advantage of this feature when it is available.

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