Equity trading: Chi-X takes on Tokyo
Chi-X has announced that it is bringing its multilateral electronic equities trading platform to Japan, placing itself in direct competition with the oft-criticised Tokyo Stock Exchange.
The platform has enjoyed some success in Europe and is now equivalent to being the fifth-largest exchange in the region, says Mark Howarth, chief operating officer for the Asia-Pacific region at Chi-X, during a visit to assess the progress of the Tokyo operation.
He says: "The benefits of the system are that customers can trade across multiple markets quickly; trading is cheaper than on traditional exchanges; and we can offer innovative order types that allow new trading strategies."
Breaking the Tokyo market will not be simple, however. Although, according to Howarth, Japan does offer one of the better sets of existing legislation for allowing new stock exchanges to enter the market, there are still difficulties.
"There’s no specific MTF [multilateral trading facility] regulation in place – the closest thing is the PTS licence, which is more geared towards broker-dealers," says Howarth. "We don’t want to be a full exchange, offering IPOs and the like but a trading facility. So we are examining ways to use the existing PTS licence as a starting point."
Previous attempts at using this licence to kick-start electronic trading in Japan have had mixed results. More than one bond-trading platform has come and gone after failing to gain significant market share, and existing PTS-holders in that market, such as J-Bond, have struggled to graduate from merely surviving to converting the market to their way of thinking.