Tokyo Stock Exchange to Amend Tick Size Rules for Enhanced Market Liquidity and Price Discovery
Tokyo, Japan – September 2, 2025 – The Japan Exchange Group (JPX) today announced that the Tokyo Stock Exchange (TSE) will be implementing amendments to its tick size rules, effective September 4, 2025. This significant adjustment, detailed in a recent announcement, aims to further refine the market structure by optimizing the granularity of price movements, thereby fostering improved liquidity and more efficient price discovery for listed securities.
The update, titled “[東証]9月4日以降の呼値の単位の取扱いについて” (Regarding the Handling of Tick Size Units from September 4th), signals a continued commitment by the JPX to adapt its market rules to evolving trading dynamics and to enhance the overall competitiveness of the Japanese capital markets.
While specific details regarding the exact changes to the tick size units for different price bands are expected to be elaborated upon in further JPX communications, the underlying objective is clear: to strike a more appropriate balance in how prices can move. Tick sizes, the minimum permissible price increments for a security, play a crucial role in market microstructure. An overly wide tick can hinder the ability of market participants to trade at nuanced prices, potentially impacting liquidity and leading to wider bid-ask spreads. Conversely, an excessively narrow tick can lead to an increase in the volume of small price fluctuations, potentially impacting trading efficiency.
The JPX’s decision to revise these rules reflects a thorough analysis of market data and a proactive approach to addressing any potential inefficiencies. By adjusting the tick sizes, the TSE anticipates several key benefits for market participants, including:
- Enhanced Liquidity: A more appropriate tick size structure can encourage greater participation from a broader range of investors by facilitating smoother and more cost-effective trading. This is particularly important in today’s fast-paced global financial environment.
- Improved Price Discovery: Finer pricing increments allow for more accurate reflection of supply and demand, leading to more efficient price discovery. This benefits all market users by providing more reliable price signals.
- Reduced Trading Costs: By aligning tick sizes with current market conditions, the TSE aims to minimize unnecessary trading costs associated with overly wide spreads or excessive small-tick transactions.
- Strengthened Market Competitiveness: These adjustments contribute to maintaining the TSE’s position as a leading global exchange by ensuring its market structure remains efficient and attractive to both domestic and international investors.
The JPX has a proven track record of implementing thoughtful market reforms. This latest initiative underscores their dedication to continuously improving the trading environment on the Tokyo Stock Exchange. Market participants are encouraged to review the official announcement from the JPX for the precise details of the tick size revisions and to prepare for the implementation of these changes on September 4, 2025. This proactive measure is expected to contribute positively to the overall health and vitality of the Japanese equity market.
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日本取引所グループ published ‘[東証]9月4日以降の呼値の単位の取扱いについて’ at 2025-09-02 07:00. Please write a detailed article about this news in a polite tone with relevant information. Please reply in English with the article only.