Regulation Asia: Next Phase for Electronic Trading in Japan

Significant progress has been made by various countries since the G20 leaders first announced their commitment to implement mandatory reporting and clearing of over-the-counter (OTC) derivative transactions. In the race for operational readiness, Japan currently leads its peers in Asia Pacific with a firm timeline to effect mandatory trading on electronic platforms this year.

Amendments were made to the “Financial Instruments and Exchange Act” by the Japan Financial Services Agency (JFSA) in September 2012, with a plan to introduce mandatory use of Electronic Trading Platforms (ETP) for over-the-counter (OTC) derivatives. After public consultation on proposed regulations in July last year, JFSA has confirmed this new legislature in November with effect from September 2015.

Bloomberg is fully committed to support the trading of relevant instruments and provide required solutions for compliance. In the lead up to the implementation of an ETP framework for OTC derivatives this year, we are pleased to announce Bloomberg’s first electronically executed and cleared yen swap trade. The trade was executed between Mizuho Bank and BNP Paribas Securities, with delivery for clearing into Japan Securities Clearing Corporation (JSCC).

Mr. Manabu Akasaka, Head of Derivatives Market Team at Mizuho Bank believes that improved transparency and efficiency are imperative to enhancing the development of global financial markets. Healthy market development in his view will promote market participation and generate a positive growth cycle. Mizuho Bank will continue to proactively contribute to the development of Tokyo’s financial market.

Mr. Manoj Rangwani, Deputy Head of Fixed Income Sales at BNP Paribas Securities expects that the wide deployment of electronic trading platforms will further the development of the entire interest rate derivatives market and extend market participation with improved security, efficiency and liquidity. As one of the participants of the yen interest rate swap market, BNP Paribas Securities will continue contributing to its overall market development.
Bloomberg’s e-trading solution is delivered via a single, integrated platform with direct connectivity to major central counter party clearing venues and system vendors.

On October 2, 2013, when the CFTC’s SEF rules went into effect, Bloomberg SEF was the first to receive approval to operate as a multi-asset swap execution facility (SEF).

Last October, we marked our one year anniversary with more than $6 trillion in transactions totaling nearly 150,000 trades done across multiple asset classes, including interest rate swaps, credit default swaps, and foreign exchange and commodity derivatives.

With over 25 years of experience in Japan and over a decade of experience in delivering electronic trading solutions, Bloomberg is uniquely positioned to help our clients navigate an increasingly challenging and complex regulatory environment.

For more information on financial regulation and how Bloomberg can help, visit https://www.bloomberg.com/professional/solutions/regulation/

Kuni Ishibashi, Head of Japan Sales, Bloomberg L.P.