Special Rules for Business Regulations and Brokerage Agreement Standards Relating to the J-NET Market

Transcription

1 Standards Relating to the J-NET Market (As of April 1, 2018) Osaka Exchange, Inc. Chapter 1 General Provisions Rule 1. Purpose 1. These Special Rules prescribe the special rules for the Business Regulations and the Brokerage Agreement Standards, with respect to acceptance of entrustment, etc. of market transactions of derivatives (excluding brokerage for clearing of securities, etc.) on the market where market transactions of derivatives (excluding index futures trading based on the index enumerated in Rule 5, Item 11 of the Business Regulations and the Exchange Foreign Exchange Margin Trading prescribed in the Rule 1, Paragraph 1 of Special Rules for Business Regulations and Brokerage Agreement Standards Relating to Exchange Foreign Exchange Margin Trading; the same shall apply hereinafter) are carried out outside a trading session (hereinafter referred to as the "J-NET Market"), among the OSE markets (meaning the financial instruments exchange markets established by OSE; the same shall apply hereinafter). 2. Any matters which are not prescribed in these Special Rules shall be governed by the Business Regulations and the Brokerage Agreement Standards. Rule 2. Definitions of Terms The meanings of the terms used in these Special Rules shall be as defined respectively in the following items as well as in other rules herein: (1) "J-NET trading" shall mean market transactions of derivatives which are carried out in an off-auction market, and refer to the trading prescribed in the following item and Item 3. (2) "J-NET single issue trading" shall mean market transactions of derivatives whose volume is equal to or exceeds the volume prescribed by OSE pursuant to these Special Rules. (3) "J-NET combo trading" shall mean market transactions of derivatives in which a sale and purchase of a certain number of issues (meaning contract months in the case of futures trading; the same shall apply hereinafter) are carried out at the same time with such number specified by OSE pursuant to these Special Rules. (4) An "auction market" shall mean, out of the OSE markets, a market in which market transactions of derivatives are carried out in a trading session. 1

2 Chapter 2 Special Rules for Business Regulations, etc. Rule 3. Bids and Offers for J-NET Trading 1. A Trading Participant (meaning a Futures, etc. Trading Participant prescribed in Rule 2, Paragraph 2 of the Trading Participant Regulations or a Government Bond Futures, etc. Trading Participant prescribed in Paragraph 3 of the same rule; the same shall apply hereinafter) must make a bid or an offer when it intends to carry out J-NET trading. In such cases, the Trading Participant shall clearly indicate to OSE the matters enumerated in the following items as well as any other matters deemed necessary by OSE. (1) Whether such bid or offer is made for a customer account or for its proprietary account; (2) If such bid or offer is made for low latency trading (meaning low latency trading prescribed in Article 2, Paragraph 41 of the Financial Instruments and Exchange Act (Act No. 25 of 1948; hereinafter referred to as the "Act"); the same shall apply hereinafter), to that effect. 2. A bid/offer for J-NET trading shall be made from a Trading Participant Terminal Device of said Trading Participant. 3. A bid/offer for J-NET trading shall be made on the basis of prices stipulated by OSE. 4. For J-NET single issue trading in which a sale and a purchase are carried out simultaneously, the same Trading Participant shall simultaneously make an offer and a bid that is matched with such offer. 5. For J-NET combo trading, the same Trading Participant shall simultaneously make an offer and a bid that is matched with such offer for each issue. 6. In addition to the provisions of these Special Rules, OSE shall specify matters necessary with respect of bids and offers for J-NET trading. Rule 4. Trading Hours for J-NET Trading 1. The trading hours for J-NET trading shall be the hours stipulated in the following items for each type of market transactions of derivatives: (1) Government bond futures trading and government bond futures options trading: From 8:20 a.m. to 3:15 p.m. and from 3:25 p.m. to 5:30 a.m. on the following day (2) Index futures trading (excluding index futures trading based on Nikkei Stock Average Volatility Index (hereinafter referred to as "Nikkei 225 VI futures trading")) and index options trading: From 8:20 a.m. to 4:00 p.m. and from 4:15 p.m. to 5:30 a.m. on the following day (3) Nikkei 225 VI futures trading: From 8:20 a.m. to 4:00 p.m. and from 4:15 p.m. to 7:00 p.m. (4) Securities options trading: 2

3 From 8:20 a.m. to 4:00 p.m. 2. When it deems necessary, OSE may temporarily change the trading hours prescribed in the preceding paragraph. In such cases, OSE shall notify Trading Participants of such change in advance. Rule 5. Execution of Transactions in J-NET Trading 1. For J-NET single issue trading, a transaction shall be executed when either of a bid/offer matches an offer/bid placed to match such bid or offer. 2. For J-NET combo trading, a transaction in each issue shall be executed when all offers for the issues match all bids placed to match such offers. 3. Notwithstanding the provisions of the preceding two paragraphs, if OSE deems that any price of a bid or offer referred to in the preceding two paragraphs is not appropriate considering the trading condition, etc. in a trading session, a transaction(s) shall not be executed. Rule 6. Notification and Confirmation of Transaction Details 1. When J-NET trading was carried out, OSE shall notify both the selling Trading Participant and the purchasing Trading Participant of the details of the trading through its trading system. 2. When Trading Participants received notification referred to in the preceding paragraph, they shall check and confirm the details thereof. 3. Details of the trading which were notified pursuant to the provisions of Paragraph 1 may be corrected only if OSE deems it necessary. Rule 7. Temporary Halt of J-NET Trading In the cases referred to each of the following items, OSE shall temporarily halt J-NET trading of the issues referred to therein for the duration of the temporary halt in auction trading of such each issue: (1) Where trading in whole or in part of issues of futures is temporarily halted in a trading session pursuant to the provisions of Rule 33, Paragraph 1 of the Business Regulations (including cases where trading is temporarily halted pursuant to the provisions of Paragraph 3 of the same rule): The issues for which trading is temporarily halted; (2) Where trading in whole or in part of issues of government bond futures options or index options is temporarily halted in a trading session pursuant to the provisions of Rule 33, Paragraph 4 of the Business Regulations: The issues for which trading is temporarily halted. Rule 8. Suspension of J-NET Trading 3

4 In the cases enumerated in the following items, OSE may suspend J-NET trading (limited to government bond futures trading in the case of Item 1, index futures trading in the case of Item 2, securities options trading in the cases of Items 3 through 5, government bond futures options trading in the case of Item 6, and index options trading in the case of Item 7) according to the procedures established by OSE: (1) Where government bond futures trading in a trading session has been suspended pursuant to the provisions of Rule 32 of the Business Regulations; (2) Where index futures trading in a trading session has been suspended pursuant to the provisions of Rule 32 of the Business Regulations; (3) Where securities options trading in a trading session has been suspended pursuant to the provisions of Rule 32 of the Business Regulations; (4) Where trading in an underlying security is suspended pursuant to the provisions of Rule 29 (excluding Item 4) of the Business Regulations of Tokyo Stock Exchange, Inc.; hereinafter referred to as "TSE") and Rule 19 (excluding Item 4) of the Special Regulations of Business Regulations and Brokerage Agreement Standards Concerning ToSTNeT Market of TSE or when any measure equivalent thereto is taken on a financial instruments exchange market established by another financial instruments exchange; (5) Where an issuer of an underlying security conducts a shareholder-directed spin-off; (6) Where government bond futures options trading in a trading session has been suspended pursuant to the provisions of Rule 32 of the Business Regulations; (7) Where index options trading in a trading session has been suspended pursuant to the provisions of Rule 32 of the Business Regulations; (8) Where OSE deems that J-NET trading shows, or is likely to show, unusual movement, or when OSE deems it inappropriate to continue trading in terms of trading management; or (9) Where OSE deems it difficult to continue J-NET trading in the event of a problem in the operation of the trading system, etc. Rule 9. Transactions for Error Correction, etc. pertaining to J-NET Trading 1. In the event that a Trading Participant has failed to execute a customer's order for J-NET trading on the OSE markets under his/her instructions due to errors, etc. by truly unavoidable reasons, such Trading Participant may, in accordance with the provisions of OSE, with the prior approval of OSE, execute a sale or purchase at a price recognized as reasonable by OSE for its proprietary account as a counterparty to such transaction. 2. The settlement of a sale or purchase in the preceding paragraph shall be made on the day that would be the settlement day if the sale or purchase had been executed in accordance with the original instructions of the customer. 4

5 Rule 10. Business Regulations Applied Mutatis Mutandis 1. The provisions of Rule 20 through Rule 22, Rule 25, and Rule 29 of the Business Regulations shall apply mutatis mutandis to J-NET trading. 2. The provisions of Rule 17 of the Business Regulations shall not apply to J-NET trading. Chapter 3 Special Rules for the Brokerage Agreement Standards Rule 11. Instructions, etc. Upon Customer Order 1. In cases where a customer entrusts an order for J-NET trading, the customer shall give an instruction or notification regarding the matters enumerated in the following items to the Trading Participant for each order; provided, however, if the Trading Participant agrees on a method for J-NET trading settlement designated in advance by the customer, it shall be deemed that the instructions referred to in Item 3 have been given. (1) Whether the order is for J-NET single issue trading or J-NET combo trading (2) Matters provided in each of the following categories a. through e. of market transactions of derivatives. a. Government bond futures trading (a) Issue (b) Contract month b. Index futures trading (a) Underlying index (b) Large contracts or mini contracts for index futures trading on Nikkei Average and TOPIX (Tokyo Stock Price Index) (c) Contract month c. Securities options trading (a) Underlying security (b) Quantity of an underlying security for one trading unit of the securities option (c) Securities put option or securities call option (d) Contract month (e) Exercise price d. Government bond futures options trading (a) Issues pertaining to government bond futures transactions executed by exercise (b) Government bond futures put option or government bond futures call option (c) Contract month (e) Exercise price e. Index options trading 5

6 (a) Underlying index (b) Index put option or index call option (c) Contract month (d) Exercise price (3) New sale or new purchase, or resale or repurchase (4) Number of contracts (5) Contract price (6) Trading hours (7) Valid period of customer's order (8) In the case where such entrustment is one pertaining to low latency trading, to that effect. 2. Notwithstanding the provisions other than those enumerated in the items in the preceding paragraph, if there is an agreement between a customer and the Trading Participant, the customer may instruct the matters referred to in Item 3 of the preceding paragraph before the cut-off time designated by the Trading Participant that is before 6:30 p.m. of the day on which the trading day on which the transaction is entrusted ends. 3. In the case in the preceding paragraph, if the customer does not instruct the matters referred to in the preceding paragraph before the cut-off time specified in the preceding paragraph, it shall be deemed that a new sale or a new purchase has been instructed. 4. When a customer entrusts J-NET trading pertaining to low latency trading, the customer shall notify the Trading Participant, in each case, of the trading strategy specified separately by OSE. Rule 12. Instructions, etc. upon Customer Order for J-NET Trading pertaining to Give-up 1. When a customer entrusts a J-NET trading pertaining to give-up, he/she shall give the Order Execution Trading Participant instructions on the matters enumerated in the following items in addition to the matters enumerated in each item (excluding Item 3) of Paragraph 1 of the preceding rule. (1) Instruction to the effect that it is a J-NET trading pertaining to give-up (2) The name of the Designated Clearing Execution Trading Participant (3) Matters necessary for the Designated Clearing Execution Trading Participant to confirm which customer conducts the J-NET trading pertaining to give-up 2. Notwithstanding the provisions of the preceding paragraph, if there is an agreement between the customer, the Order Execution Trading Participant and the Designated Clearing Execution Trading Participant, the customer may give the instruction referred to in the preceding paragraph by the cut-off time which the Order Execution Trading Participant specifies that is before 4:45 p.m. of the day of the trading day on which such transaction is entrusted ends; provided, however, that, for securities options contracts and government bond futures options contracts, in the event that such day is the last trading day, for the contract month whose last trading day has arrived, the 6

7 customer shall give such instructions no later than a time stipulated by the Order Execution Trading Participant that is before 4:00 p.m. 3. Notwithstanding the proviso to Paragraph 1 of the preceding rule and the provisions of Paragraph 2, when a give-up is effected, the customer shall instruct the matters enumerated in Paragraph 1, Item 3 of the preceding rule regarding the new J-NET trading to the Clearing Execution Trading Participant by the cut-off time which the Clearing Execution Trading Participant specifies that is before 5:15 p.m. of the day on which the trading day on which such transaction is entrusted ends; provided, however, that, for securities options contracts and government bond futures options contracts, in the event that such day is the last trading day, for the contract month whose last trading day has arrived, the customer shall give such instructions no later than a time stipulated by the Clearing Execution Trading Participant that is before 4:30 p.m. 4. In the event that J-NET trading that a customer intends to entrust pertains to give-up, the proviso to Paragraph 1 of the preceding rule (excluding the term "provided, however,"; the same shall apply hereinafter), and the provisions of Paragraphs 2 and 3 of the preceding rule shall be applied mutatis mutandis. In such cases, the term "Trading Participant" in the proviso to Paragraph 1, and Paragraphs 2 and 3 shall be "Clearing Execution Trading Participant"; the term "Item 3" in the proviso to Paragraph 1 shall be "Paragraph 1, Item 3 of the preceding rule" in Paragraph 1; the term "preceding paragraph" in Item 2 shall be "Paragraph 1 of the preceding rule"; and the term "preceding paragraph" in Item 3 by "Paragraph 2 of the preceding rule". 5. In the event that a sale or purchase of J-NET trading pertaining to give-up is extinguished, the entrustment between the customer and the Order Execution Trading Participant shall be terminated and, at the same time, a new entrustment pertaining to the settlement shall arise between the customer and Clearing Execution Trading Participant with respect to the sale or purchase of J-NET trading that newly arises pursuant to the provisions of the same paragraph. Rule 13. Effectiveness of Customer's Order at Resumption of J-NET Trading Even in the event that OSE has suspended J-NET trading pursuant to Rule 8, any outstanding customer's order shall remain effective during the duration of such order instructed by the customer as prescribed in Rule 11, Paragraph 1, Item 7; provided, however, that this shall not apply to cases where the customer has instructed to cancel such order in such an event. Chapter 4 Miscellaneous Rule 14. Notification and Publication to Trading Participants, etc. OSE shall notify Trading Participants and publicize the total trading volume, etc. on the J-NET market of OSE on a daily basis through its trading system, etc. in accordance with the provisions 7

8 of Article 130 of the Act. Rule 15. Application to Brokerage for Clearing of Securities, etc. The provisions of Chapter 2 shall apply to the brokerage for clearing of securities, etc. pertaining to J-NET trading by regarding the Trading Participant that entrusts the brokerage for clearing of securities, etc. as the entity that carries out such J-NET trading. 8