SINGAPORE - The Tokyo Stock Exchange plans to launch a market-maker programme for exchange traded funds (ETFs) that could expand market liquidity, boost development of ETF products and promote new indices.
Asset under management of ETF with the Tokyo Stock Exchange stands at US$160 billion, says Yoriyuki Sugiyama, general manager and chief representative of the Tokyo Stock Exchange at The Asset 2nd ETF Asia Summit in Conrad Centennial Singapore.
“We’re considering to introduce an ETF market-making scheme,” adds Sugiyama. Under the scheme, a market maker or liquidity provider offer quotes on both a buy and sell price in an ETF in a bid to make profit from the bid-offer spread.
The volatile market conditions this year have benefited ETF markets in general. The world's fastest growing asset class is expected to exceed US$7 trillion in five years, cite industry experts at the forum.
In Japan, the ETF market is seeing a strong flow of institutional capital as institutions seek stable returns amid a low interest rate environment. The Tokyo Stock Exchange intends to boost trading volume in the ETF market with the market-maker scheme and a number of other initiatives.
Sugiyama believes the ETF market could benefit from increased participation from liquidity providers in what could further strengthen Japan’s leading role as a major ETF centre in Asia.
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