TOKYO Oct 19 Japan plans to tighten regulations
on high-frequency trading (HFT), whose growing presence in the
Tokyo Stock Exchange has raised concerns such trades could
destabilise the market and put retail investors at a
Regulators in Europe and elsewhere are also placing
high-frequency traders, who use ultra-fast computers to
automatically place trades, under closer scrutiny as they have
been blamed for accentuating market volatility.
Japan's market regulator, the Financial Services Agency,
made public on Wednesday its plan to require high-frequency
traders to register and to ensure proper risk management
measures are in place.
HFT accounted for about 70 percent of orders placed at the
Tokyo Stock Exchange in 2016, FSA said.
"It is not appropriate to eliminate all algorithmic fast
trading from the Japanese market as it includes the kind that
contributes to smooth market transactions," FSA said in
materials handed out at its working group discussing the issue.
The agency said, however, it needs to have a tighter grip on
HFT given concerns raised by market participants that these
high-speed automatic trades could destabilise market.
Others were worried that retail investors without access to
such services might feel disadvantaged and thus stop
participating, FSA said.
Regulators in other countries have highlighted similar
concerns. HFT will be directly regulated by the European
Securities and Markets Authority (ESMA).
India's capital market regulator in August said it was
looking at various potential limits on so-called algo traders,
including imposing "random speed bumps," which would randomly
delay execution of some orders.
(Reporting by Taiga Uranaka and Takahiko Wada; Editing by