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Japan, Land of Rising Opportunities

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4 November 2022

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As Fitzgerald wrote in The Great Gatsby, “Life starts all over again when it gets crisp in the fall.”

It is a great metaphor for embracing change. More than ever, we as market operators need to constantly pivot and improve our offerings especially during these times of change and uncertainty.

It is therefore not a coincidence that this year’s Fall Equinox marked the start of holiday trading at Osaka Exchange (OSE) and Tokyo Commodity Exchange (TOCOM). Coming out of a global pandemic and facing a shift in consumer behavior, and facing uncertainty both geo-politically and macro-economically, the move underscores Japan Exchange Group's ambition to be the market of choice for capital flows.

At JPX, we embrace our role as an agent of change. We we're delivering on our promise of being consumer centric and striving as an agent of change to facilitate and cater to modern investors’ needs.   

jpx holiday table

Regular volume counted participants that represent 70% on a daily ADV basis were present and actively traded from day one. As the first couple of official trading days were an overall success, market participants both domestic and internationally applauded the move to offer additional trading opportunities. In an increasingly interlaced and interdependent world, many Japanese domestic investors took advantage to hedge and transfer risk on OSE and TOCOM. The addition of 288 hours of additional trading opportunities, the successful start has led some of the remaining participants that took a more cautious approach to revisit their position and to start considering making the holiday market available to their clients.

24/7 trading and the overall increase of retail participation during the pandemic has also had a positive effect on rejuvenating the average Japanese retail investor. The average retail investor opening new accounts were traditionally in their 40s and 50s. During the pandemic, the average was about 10 years younger, and we experienced a massive influx of new participants. It is this boost in a new form of younger, more agile but also still less affluent retail participants that calls for more flexible and more granular products.

OSE has therefore designed new micro futures as well as mini options contracts that will become the bridge for these new additional players to enter our market. Retail participation in Japan is already fairly high as it has constantly hovered around the 25% mark and elevated the Nikkei 225 mini to the #4 most actively traded index futures contract globally. We believe that this new addition will further boost our position as financial marketplace and as the anchor market and benchmark in the APAC region.

The increase in retail investor’s financial literacy is also reflected by an increase in retail options participation, in order to further support our domestic and international retail broker participants, we have designed Nikkei 225 mini options to maximize the pool of eligible retail investors to enter these products. Both products will go-live in May 2023.

Looming inflation and macro-economic paradigm shifts also call for more efficient and elaborate hedging tools in the fixed income space. OSE has therefore grasped the opportunity to list STIRS futures from May 2023. Being the CCP as well as the mother market of JGB futures, this move will provide unprecedented margin efficiency and market access to the Japanese and global fixed income space, we have the ambition to rejuvenate the Japanese capital market and beyond.

Last but not least, we will launch three ESG futures, delivering on our promise to facilitate a net zero future we will do our part by promoting and educating the markets.

As you can see, we are open for business and in the spirit of the Great Gatsby, "We will run faster and stretch our arms farther”.

Contact Details

Osaka Exchange / Tokyo Commodity Exchange Derivatives Business Development

E-mail: ose-dmg@jpx.co.jp

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