Futures

Market Maker Scheme

Update : Jan. 04, 2013

1. What is the Market Maker Scheme

The Market Making Scheme is a system that creates a trading environment where market makers continually quote bids and offers for designated contracts so that investors can trade the contracts at any time. The TSE introduced this scheme into the options market for the first time in Japan.

In addition to PMMs (Primary Market Makers) who quote bids and offers continuously, by giving incentives to LPs (Liquidity Providers) who aggressively trade and provide the markets with liquidity, we expect active transactions and higher price transparency.

2. Obligation and Incentive of Market Makers

Market Maker Type	PMM	LP
Contract	Mini JGB Futures Mini Index Futures Bank/Elec Index Futures Dividend Index Futures	Mini JGB Futures Mini TOPIX Futures
Obligation	80% or above quoting time period for the morning and the afternoon sessions with the predetermined conditions (*1)	No Obligation
Incentive	Fee discount for market making contract + Bonus discount for Large Futures contract

• (*1)Market maker scheme for the evening session is also implemented. For further details, please see below "Market Making Scheme on TSE Futures Market".
• (*2)Fee discount is applied to the transaction in the auction market. Market makers eligible for bonus discounts is determined by the monthly trading volume in the auction market.

Obligation and Incentives of PMM

Items		JGB Futures	Index Futures
Contract		mini JGB Futures	mini TOPIX	Core30	TSE REIT	TSE Banks	TSE Electric Appliances	Nikkei 225 Dividend Index
Continuous Quoting	Market	Only auction market (ToSTNeT trading is not subject to discount.)
	Time Period	Over 80% of the morning and the afternoon sessions
	Contract Month	Only the 1st contract month (The subsequent contract month shall be quoted from the start of the week containing the last trading day of the 1st contract month. The requirements for the maximum spread and minimum quantity are the same as those for the 1st contract month.)						From the 1st to the 4th contract month
	Max Spread	0.03yen	1.0pt.	1.0pt.	4.0pts.	1.0pt.	4.0pts.	4.0-7.0yen
	Min Quantity	100 lots	100 lots	50 lots	50 lots	20 lots	20 lots	300 lots
Incentive	Trading Fee after Discount	for free	2yen/contract (Monthly trading volume is more than 1 mil： 1yen/contract)	for free	for free	for free	for free	for free
	Bonous Discount	Large JGB Futures: 30yen/contract (65yen/contract after discount)	Large TOPIX Futures: 5yen/contract (50yen/contract after discount)	-	-	-	-	-

Obligation and Incentive of LP

Item	JGB Futures				Index Futures
Contract	mini JGB Futures				mini TOPIX Futures
Obligation	LP is not subject to any obligations.
Incentive	Monthly Trading Volume	10,000 or less	More than 10,000-20,000 or less	More than 20,000	20,000 or less	More than 20,000-1 mil or less	More than 1 mil-2 mil or less	More than 2 mil
	Trading Fee after Discount	20yen /contract (no discount)	5yen /contract	5yen /contract	7yen /contract (no discount)	3yen /contract	2yen /contract	1yen /contract
	Bonous Discount	-	Large JGB Futures: 10yen/contract (85yen/contract after discount)	Large JGB Futures: 20yen/contract (75yen/contract after discount)	-

3. Designated Market Makers

Market Makers	PMM						LP
Trading Participants	mini JGB	mini TOPIX	Core30	REIT	Banks/ Elecs	Div. Index	mini JGB	mini TOPIX
The Hokuetsu Bank, Ltd.							○
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.		○
UBS Securities Japan Ltd		○					○	○
Societe Generale Securities (North Pacific) Ltd.							○	○
SANKO SECURITIES CO., LTD.								○
NISSAN CENTURY SECURITIES CO., LTD.		○						○
Newedge Japan Inc.	○	○	○		○		○	○
Nomura Securities Co., Ltd.		○	○	○		○	○	○
Barclays Capital Japan Limited								○
BNP Paribas Securities (Japan) Limited		○				○
ABN AMRO Clearing Tokyo Co., Ltd.	○	○					○	○
Merrill Lynch Japan Securities Co., Ltd.	○	○	○	○	○	○
Total	11	20	3	2	2	3	14	13

• (*)The figures in the table are the number of companies that can participate in market making, including entrusters.

4. Official Rule Book

Market Making Scheme on TSE Futures Market