Takeshi Fukuda

Japannext Co., Ltd.

The introduction of Proprietary Trading System (PTS) regulation in 1998 encouraged innovation and competition among exchange venue operators in Japan. Japannext Co., Ltd. was established in November 2006 with the support of Japan's top 4 on-line brokers (SBI Securities, Rakuten Securities, Orix Securities, and Click Securities) to create a full-fledged PTS venue to replicate ECNs (Electronic Connection Networks) in the US, serving as an after-hours market for on-line users. In August 2007, Japannext launched a nighttime market with a system licensed from Atos Euronext Market Solutions (AEMS) which was used by the Euronext exchange in Europe. Later, Goldman Sachs Japan joined as a shareholder and liquidity provider to promote and develop the nighttime ECN market in Japan. Subsequently, in October 2008, Japannext launched a daytime market to cater to the needs of global brokerage houses to create competition and bring about innovations in the Japanese equity market. To this effect, Japannext willingly responded with the introduction of new features such as IOC (Immediate or Cancel), FOK (Fill or Kill), and Iceberg (Reserved) order types, as well as decimal tick sizes, all readily used in the US and European exchanges. The daytime market became a first of its kind side-by-side market running along with the incumbent exchanges including TSE (Tokyo Stock Exchange) and OSE (Osaka Securities Exchange). As a result of ongoing innovations, many visionary global brokerage houses enthusiastically joined Japannext PTS as both participants and shareholders. Today, Japannext is the oldest thriving PTS venue with 33 active members (local and global brokerage houses) in Japan with 5% market share. It has firmly established a basis for contributing actively to public forums, seminars, and private discussions – and endeavors to spearhead and drive innovations in the Japanese capital market.