Japan Exchange Secures Technology Vendor for Next-Generation Platform

Japan’s leading financial trading bourse, the Japan Exchange Group (JPX), has selected new technology partners to develop its derivatives trading terminal. JPX has appointed NASDAQ OMX and NTT DATA Corporation, the move comes after five months from the initial commencement of the search.

The country’s largest cash and derivatives trading venue selected the two vendors after announcing in February 2014, that it was looking to upgrade its technology. The firm will look to develop its position as a preferred electronic trading hub, the new system will enable JPX to offer multiple-asset classes and offer a robust Risk Management solution.

The exchange issued a statement on its website about the new platform proposal: “Developing the next-generation derivatives trading system is an important supporting infrastructural initiative toward JPX's core strategy of expanding the derivatives market set forth in our medium-term management plan.

We will fully utilize the latest in technology to arrive at a system that enhances the risk management functions and other aspects of our systems, and can accommodate commodities, OTC derivatives and other products that are not available on the current J-GATE trading system.”

The exchange plans to roll out the new terminal in 2016, and will immediately commence development of the next-generation derivatives trading system.

Developing JPX as a Global Venue

Last year, the Osaka Exchange (an entity in JPX) made proposals to launch an Indian equity index contract denominated in the yen. The Japanese exchange would become the second major player in Asia after Singapore which offers the Nifty Futures contract. Since the merger of the Osaka Exchange and the Tokyo Stock Exchange, the new group aims to be the largest trading venue in the region.

The exchange states: “We believe that our constant efforts to increase our competitive edge and further enhance the reliability of our infrastructure will contribute to the realization of a highly reliable and convenient market for investors, trading participants and other market users.”

Disappointing Earnings

Latest earnings results for Q1 till the end of June 30th haven't been so promising for the bourse. The lackluster trading environment, coupled with low Volatility has impacted volumes. The exchange reported earnings for the quarter at $77 million, a drop of 37% from figures reported a year earlier. A similar trend witnessed in trading activity across its main products, the exchange suffered a drop in activity, with Cash Equities and TOPIX futures both declining 37% YoY.

The Japanese marketplace has faced a number of challenges both in its cash and derivatives markets, with new regulations and declining trading activity. On Tuesday the 29th of July, participants from the country's FX, derivatives and banking world will be discussing the key issues, trends and future developments impacting the Japanese market at the 2nd Forex Magnates' Tokyo Summit.