The Tokyo Commodities Exchange (TOCOM) is extending its service offering to high-speed traders with a new platform and a new proximity service, both to go live in September of next year. The provider of the proximity service, AT Tokyo, operates some of the largest data centers in the world, and was selected by TOCOM because of its good reputation and years of experience.
TOCOM explained in a statement that the new service will offer ultra-low latency connections to a single access point, as well as connectivity to other bourses both domestically and globally. Among them are Singapore Stock Exchange, the Hong Kong Stock Exchange, and CME Group. The connections to the different bourses will depend on the telecom carrier the data centers work with, which include more than 20 companies, among them PCCW Global, Citic Telecom, KDDI and Global Cloud Xchange.
As for the new platform, TOCOM said that it will utilize the J-Gate derivative system developed by the Tokyo Exchange Group, which is based on Nasdaq’s Genium, which is also used by the Singapore Exchange, specifically designed to handle large volumes of trades across asset classes. For clearing services, TOCOM will use the Japan Securities Clearing Corporation’s system.
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Pre-Trade Risk Management
In addition, the bourse will introduce a pre-trade risk management tool, TradeGuard, once again provided by Nasdaq. The tool allows organizations using it to place risk checks wherever they will be most appropriate – pre-trade, at-trade, or on-trade – with these checks also covering cross-asset and cross-market analysis. The solution has a low latency with the aim of minimizing impact on trade execution. TOCOM said that it will mandate all its members to use the tool when it’s launched.
With the launch of the new system, TOCOM will also introduce some changes to its rules and regulations, including an earlier start to the trading day, an earlier start to order acceptance, as well as the introduction of an immediately executable price range. Some of the changes, like those regarding trading day length, are pending regulatory approval.