On Nov. 22, FIA submitted comments to the Financial Services Agency of Japan regarding proposals for the implementation of a new law establishing a regulatory framework for high speed trading on Japanese exchanges. The letter, which was drafted with substantial input from the FIA Principal Traders Group, expressed support for a principles-based approach to the regulation of automated trading and commended the proposal for ensuring that market participants implement pre-trade risk controls and other measures to minimize the likelihood of market disruption and "abnormal" orders. FIA cautioned that the broad scope and definition of high-speed trading in the proposal could capture a wide variety of market participants including trading firms, hedge funds, asset managers and brokers domiciled both domestically in Japan and overseas. Additionally, registration requirements triggered by the use of co-location may create a situation where participants will need to assess whether it is cost-effective to access Japanese financial markets in this manner. FIA also commented on a number of specific provisions, including the requirements to provide descriptions of trading strategies, information about officers and directors, financial information, and annual reports.
The full letter is available in Resources on the right.
