OSE Committee Sees Need to Launch Derivatives Holiday Trading

In Japan, between the end of April and the beginning of May, the country closes its financial markets for its Golden Week. This longer than normal closure time brings with it additional risks, such as flash crashes, which was even more pronounced in 2019 when the financial markets were closed for ten days.

Osaka Exchange, Inc. (OSE), part of the Japan Exchange Group (JPX), has been looking into introducing derivatives holiday trading since 2019, in order to break up the long holiday periods, which would reduce risk and increase the international competitiveness of Japan's capital markets.

In January of this year, OSE established a "Working Group on Derivatives Holiday Trading." This consisted of market participants and facilitated the discussion of implementing derivatives holiday trading in further detail.

Now that the working group has been in discussions for about six months, JPX has compiled the discussions. According to the report, the subcommittee confirmed that there is a demand for derivatives holiday trading and that such efforts are also significant toward strengthening the international competitiveness of Japan's capital markets.

Because of this, OSE and market participants have agreed to continue discussions, with the aim to implement the holiday trading as early as possible, which will likely be 1-2 years after the launch of J-GATE3.0, a next-generation derivatives trading system. This system is scheduled to be launched in the third quarter of the fiscal year 2021.

OSE proposed holiday trading to be treated as the night session

In particular, the OSE has proposed to the JGATE3.0 subcommittee that holiday trading will be treated as part of the night session of the previous day.

Furthermore, mark-to-market of futures transactions and Settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term of options premiums will be conducted together with the transactions conducted on the business day after the holiday. Under the proposed framework, reference and settlement prices won't be updated based on holiday trading.