TSE Tick Sizes: Phase 2 Outcomes

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By Makoto Nagahori, COO, Chi-X Japan

Since the introduction of TSE’s tick size program, we have seen three key developments in Japan:
1. Greater interest amongst investors in trading mid cap names on PTS’s.
2. Increased interest from key technology providers and local brokers in accessing alternative markets
3. Investors placing greater focus on execution costs and achieving better execution quality.
For the month of July 2014 Chi-X average number of symbols traded reached 1678, up from 1330 in January 2014. This is a trend we expect to continue as firms embrace an ability to efficiently access liquidity across multiple markets.

Market share in mid-cap names surpassed 10% market share in several well know names, with over 89% of the trades capturing Price Improvement.

We are encouraged by the trading community’s response to the most recent set of changes in tick sizes, as investors intensified their search for Price Improvement opportunities and lower cost of execution; as a result alternative venues are well positioned to attract new liquidity.
Our technology partners have also embraced these changes and capitalised on the tick size changes by proactively offering their customers, many of which are local broker dealers, access to Chi-X Japan. We are excited to see brokers redefine best execution by connecting to markets that offer them access to greater liquidity.
We operate markets in both Australia and Canada where tick sizes are harmonised. We believe that over time the TSE’s tick size program will enable local and retail brokers access to alternative venues and promote fair and equal competition.