ASIAN EQUITY MARKETS AND TRADING Chompunuch Bunsumpun
Dec 19, 2015
ASIAN EQUITY MARKETS AND TRADING
C h o m p u n u c h B u n s u m p u n
Quiz
What is the 1st largest stock market in Asia by market capitalization?
A. Bombay Stock Exchange
B. Shanghai Stock Exchange C. Tokyo Stock Exchange D. Hong Kong Stock Exchange
Tokyo Stock Exchange (TSE)
Tokyo
Other Stock Exchanges in Japan Osaka Nagoya Fukuoka Sapporo JASNAQ
TSE – Brief History
1878
First-founded in May 15
19491943
Combined with other exchanges to become single Japanese Stock ExchangeShut down
due to the war (after the bombing of Nagasaki)
1969
Reopened in May 16
TOPIX was introduced
1982
Introduced first computer-assisted system
Trading floors was closed; Switched to electronic trading for all transactions
20011999
Restructured itself as a stock company
In the 1880s
In 1959 – Black Board with
Chalk
NOW
TSE – Current Snapshot
Largest of the 6 exchanges in Japan Over US$4 billion market cap Over 2,300 companies listed (both domestic
and foreign) TSE market segmentation:
Two main benchmark indexes – Nikkei 225 and the TOPIX
First Section
Second Section
“Mothers” Section
TSE – Market Structure
A continuous order-driven market No specialist
No official market making activities Intermediaries known as “Saitori”; order
clerks Market hours:
Who can trade on the TSE market? Only TSE
member (“Trading Participant”) can trade securities directly in the market.
Individual investors
Foreigners
Customer A Customer B
Securities Company A (Trading Participant)
Tokyo Stock Exchange
Securities Companies B (Non-trading Participant)
Placing orders via phones or Internet
Placing orders through TSE trading system as brokerage
orders
TSE Membership
Membership requires corporate license Four types of license are available and
may be combined
Capital requirements vary by license
Trade securities as a dealer
Trade as a broker
Underwrite new securities
Handle retail distribution of
securities
TSE Members - Classified into two Groups
Trading clerks for customers accounts
Buy and sell for own accounts
Brokers among regular members
Maintain limit orders
Issue special quotes
Regular Members Saitori
Unlike the U.S. Specialists, Saitoris do not trade for their own account
How does trading work on TSE?
Order type: Market Order & Limit Order
During normal trading session, order priority is determined based on Price Priority Time Priority
Only day order Trading Unit: Mostly
1000 shares
How does trading work on TSE?
“Itayose” Method – Opening, Closing, After trading halts
“Zaraba” Method – Regular trading session Daily Price Limit
Special Quote Latest IT: Arrowhead Settlement: T+3 basis by Japan Securities
Depository Center (JASDEC)
Base Price(The closing price of the
previous day)
Daily Price Limit
For example;Maximum ¥600Base Price ¥500Minimum ¥400
¥100¥100
Tools
for
Mark
et
Vola
tilit
y
Market Outlook
Global exchange consolidation trend The rational for exchange mergers are typically
driven by‒ Additional access & cost savings‒ Improve liquidity and efficiency
Trading links trend – ASEAN With increased competition, TSE may force to
seek alliances
Final Thought – Major Comparison to NYSE
Order-driven market No specialist Members only Have break Price daily limit &
Special quote
Hybrid market With specialists Members only No break Circuit breaker
Final Quiz
What is the major difference between NYSE Specialist and TSE Saitori?
A. Broker among members B. Do not trade for
their own accounts
Thank you for listening
Q&A
Sources
Wikipedia Investopedia Tokyo Stock Exchange Website World Federation of Exchanges
Website ASEAN Exchange Website J.P. Morgan Research Video Link: http://
www.youtube.com/user/radioerrols#p/u/23/92FQA6loopY