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Tokyo Stock Exchange, Inc. (TSE) will make a partial review to the trading system for ToSTNeT and other transactions in tandem with the consolidation of ToSTNeT trading functions into the new derivatives trading system scheduled to begin operation in October 2007.
ToSTNeT trading is a widely utilized trading method created to meet the transaction needs, and includes block and basket transactions that are difficult to carry out effectively in auction trading (the auction market).
The main purpose of the review is to enhance the convenience of ToSTNeT trading, including diversifying trading methods in the market for foreign stocks through the inclusion of foreign stocks in ToSTNeT, as well as introducing off-auction repurchases for a company's own shares, which are increasing as a new trading method year by year.
The outline of the review is as follows.
- Addition of tradable securities
Foreign stocks and beneficiary certificates of the Nikkei 300 Trust will be newly added to the securities tradable through the ToSTNeT system.
- Introduction of new trading system to repurchase a company's
own shares
Off-auction repurchase trading of a company's own shares will be introduced as a new trading method for repurchasing the shares after prior public announcement by the listed company. (Closing price trading in ToSTNeT will remain to make repurchases of a company's own shares after prior public announcement available.)
Trading participants must submit prior notice to the TSE before making a repurchase of a company's own shares through off-auction repurchase.
On the day after receiving the notice, the TSE will execute transactions by matching sell orders with buy orders at the closing price of the day when the notice is received (Sell orders must be placed between 8:00 am and 8:45 am).
- Review of single stock transactions
The TSE will abolish the function for anonymously negotiating conditions for transactions between different trading participants. Instead, the trading participants will enter the code of the transaction's other trading participant into the system.
Trading participants will execute transactions in auction trading with the target price being the VWAP (Volume Weighted Average Price), and will then be able to conduct single stock transactions with customers without price limitation.
- Review of basket transactions
Basket transactions will also be able to be conducted between different trading participants.
Basket transactions for convertible bonds (CB) will be computerized.
- Review of closing price transactions
In the event that no contracted prices (including the last special quote) are formed in auction trading, closing price transactions in ToSTNeT will be conducted at the base price for the daily price limit of the day.
The TSE will continue trading by executing transactions whenever bid and asked prices are matched.
- Others
The TSE will require trading participants to clearly indicate margin trading in ToSTNeT trading and will computerize off-auction distribution sale trading.
