TOKYO May 19 Japan tightened regulations on
high-frequency trading (HFT) this week, passing into law
measures that will require HFT firms to register with
Other nations in Europe and elsewhere in Asia are looking to
tighten the leash on high-frequency traders who program
ultra-fast computers to trade in milliseconds without human
intervention. Some major U.S. exchanges want to introduce speed
limits on trading.
The growing presence of HFT on the Tokyo Stock Exchange
(TSE) has raised concerns high-speed trading could destabilise
markets and leave retail investors at a disadvantage.
The law was passed by parliament on Wednesday and the new
regulations could come into force as early as 2018.
Japan's market regulator, the Financial Services Agency
(FSA), has said previously it wanted HFT participants to
register and to ensure proper risk management measures were in
"The definition has not yet been created. We can guess at
who might be affected, but we don't know for sure the full scope
of who will be affected," said Seth Friedman, chief executive of
advisory firm Shiroyama Consulting Co..
The new rules stipulate that a company engaging in HFT will
have to establish an office in Japan or be represented in the
country by an agent.
HFT accounted for about 70 percent of orders on the Tokyo
Stock Exchange in 2016, FSA estimates show.
High-speed trading accounted for slightly less than half of
actual traded value, according to market participants, taking
into account order cancellations. That would amount to slightly
less than 321 trillion yen ($2.9 trillion) based on figures on
the TSE website for total trade in cash equity of 643 trillion
(Reporting by Lisa Twaronite; Editing by)