10/12/2012

Trade change brings trade talk

Against the backdrop of a transforming regulatory and trading platform, Bank of America Merrill Lynch Global Execution Service (GES) hosted a panel discussion with institutional investor clients in Tokyo to discuss the impact of these changes. On November 14, GES delivered an up-to-date market progress to its clients. The discussion brought in-depth insights to the audience in light of the unprecedented opportunities in the electronic trading platform industry. The trading platform tender offer bid rule in Japan was eased at the end of October, resulting in more convenient trades in the proprietary trading systems (PTS). Together with the planned merger of the Tokyo Stock Exchange (TSE) and Osaka Stock Exchange (OSE) in January 2013, the potential for the trading platform to expand in the coming years is exhilarating.

Quick facts
What is the Tender Offer Bid (TOB) rule? Under the Securities and Exchange Law of Japan (SEL), a tender offer is required and shareholders will need to disclose any bids for more than 5% of outstanding shares after a series of off -market share purchases from 11 or more shareholders during any 60-day period. Before the easing, a buyer could potentially breach this TOB rule if participa ting in any PTS venues such as Chi-X or Japannext as all trades executed in PTS venues are off-market crosses. What does latency mean? Simply put, the time period from the moment a trader sends an order until it hits the exchange. Lower latency means that the investors/traders are able to grab liquidity faster. The panel discussion featured panelists from key industry players and a broad range of topics. Hidenori Hirabayashi, senior trader at GES, one of the panelists of the event, said what made the discu ssion beneficial for our clients was that they were able to hear the views from all possible angles regarding the TSE/OSE merger: buy-side, sell-side, and the stock exchanges themselves. The discussion showcased BofA Merrill Lynchs extensive expertise to advise and support our clients. Kotaro Yamazawa, a member of the Board at OSE reported progress on the merger of the two stock exchanges and emphasized this consolidation benefits investors as there will be a single liquidity pool and a single set of regulations. Masami Hatakeyama, co-CEO of SBI Japannext, one of the leading PTSs in Japan, unveiled the growth in transaction volume in their system after regulatory easing, whereas Junya Umeno, head of Trading at BlackRock Japan stressed the importance of pursuing the best execution policy. The GES aims at leading the thought leadership discussion showcasing our clients progress in the Japan market. As trading as a whole evolves to a lower latency environment, more emphasis will be required on execution analysis. Brokers will need to understand market behavior at the micro level in order to fully service their clients, said Hirabayashi. Bank of America Merrill Lynch continues to offer variety of product lines and is ready to challenge upcoming market evolution using our reliable trading platform and flexible market/execution analysis capability. Quality of execution is the key driver for us to establish the right recognition in this challenging market 2013. About GES Global Execution Services (GES) offers a full suite of premier multi-asset trading solutions for equities and listed derivatives trading enhanced by Bank of America Merrill Lynchs vast global resources, access to superior liquidity, world class technology and leading scale positions in the capital markets. GES offers algorithmic trading, execution consulting, direct market access (DMA), quantitative analytics and research, and execution management systems.