Plans to Submit Legal Amendment Bill Next Year
On August 13, the Nihon Keizai Shimbun (Nikkei) reported that the Japanese government will strengthen its crackdown on irregularities in high-frequency trading (HFT), where stocks are traded in microseconds.
The Financial Services Agency of Japan plans to revise the Financial Instruments and Exchange Act to impose fines even for illicit profits below 10,000 yen (approximately 93,500 won). Until now, if the illicit profit per transaction was less than 10,000 yen, it was excluded from being subject to fines. As a result, even if illicit trading was repeated and generated significant profits, it was difficult to impose sanctions if the average profit per transaction did not meet the threshold.
From 2019 to March 2023, about 80% of daily profits by high-frequency trading firms per stock were less than 10,000 yen. During this period, there was only one case in which the Japanese government imposed a fine for abuse of high-frequency trading.
While high-frequency trading has the positive effect of increasing market liquidity, there have been ongoing concerns about its misuse, such as artificially moving prices by driving up stock prices through massive buying and then selling off rapidly.
The Financial Services Agency plans to review not only the fine criteria but also improvements to the overall system. Discussions will begin within the year at the Financial System Council, an advisory body to the Prime Minister, with the aim of submitting a bill to revise the law to the regular session of the National Diet next year. The Japanese government also intends to strengthen monitoring of high-frequency trading irregularities in cooperation with foreign authorities.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
