New High Speed Trading For Tokyo Stock Exchange

The Tokyo Stock Exchange (TSE) has decided to launch new arrowhead, the trading system for the cash equity market, on September 24 (Thu.) as planned after confirming migration operations for arrowhead renewal.

The required upgrade comes as a reaction to a sharp increase in the number of buy and sell orders in recent years. The increase has resulted from the spread of ultra high-speed transactions among investors, by which they can repeat automatic buying and selling orders in an extremely short space of time.

The TSE’s current trading system, called “arrowhead,” was put in place in January 2010. The major upgrade is the first in five years.

Super high-speed transactions rest on computer algorithms that allow small-lot transactions to be automatically repeated several hundred times per second. Such fast trading is believed to account for about half of all TSE transactions.

In 2010, the number of orders hovered around about 10 million per day at the TSE.

After the Bank of Japan relaxed monetary policy in October 2014, the figure reached about 30 million to 40 million on many days. On Aug. 25 this year, the figure hit 91 million largely due to violent fluctuations in stock prices, which were sparked by developments in China.

The upgraded trading system will make it possible for the TSE to process up to 270 million orders per day, nearly double the figure prior to the upgrade. The new system will halve the time needed now to accept orders issued by investors, down from one one-thousandth of a second to one two-thousandths of a second.

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