TOCOM Introduces a New Direct Access Method to Accommodate High Frequency Traders
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Tokyo Commodity Exchange, Inc. (“TOCOM” or the “Exchange” hereafter) announced today that the Exchange has introduced a new access method which allows brokers to provide their customers with direct access to TOCOM markets (“Direct Access” hereafter). This program is expected to improve convenience for the market participants using high frequency program trading.
Formerly, customers of TOCOM’s Broker Members (futures commission merchants or brokers), who are not entitled to place orders directly to the Exchange system, were required to trade through the system of Broker Members. As it could cause some latency, there has been a growing demand for the introduction of Direct Access among the customers who are engaged in high frequency trading based on algorithms, so that they can fully take advantage of their technology in trading.
In response to such demands, TOCOM have streamlined the rules to allow customers to execute Direct Access, provided, the Broker Members construct a system to continuously monitor their customer’s all orders, transactions and status. Necessary amendments to the Market Rules and Brokerage Rules have been permitted by the Minister of Economy, Trade and Industry today, and the Exchange put them in effect immediately.
It is often the case when overseas investors wish to use Direct Access, the Exchanges are required to obtain an approval from the regulatory authority of their jurisdiction. TOCOM introduced the new access method, however, aiming at offering Direct Access to the customers from the countries where such an official approval system is not adopted.