Earlier this year we implemented a survey of FIA Japan members as to what our objectives for the fiscal year starting April 2018 should be. We received various interesting feedback, including on tax issues, but one of the common theme proposed was actually around the ETF market in Japan and how we could promote or support its further development.
Our Market Development Committee, chaired by FIAJ President Richard (“Chip”) Clairmont, took the lead on this initiative and organized a very well attended ETF roundtable on June 29. Participants included 7 ETF Providers (Asset Managers), 10 Market Making firms from the FIA Japan Principal Trading Group (JPTG), JPX/TSE, as well as representatives from FIA and FIA Japan. Though the main venue was in Tokyo, participants from Sydney and Singapore were also able to join via video conferencing.
During this three-hour session, the group discussed the new ETF market making scheme on TSE (which went live on July 2), including creation and redemption sizes, blackout dates, cut off times, as well as other points that the group felt could be improved. In the second part of the session, TSE made a presentation of its plans for smoother creation and redemption. Finally, the group exchanged views and ideas on how to improve the overall market, including the delisting of so-called “zombie ETFs” that are no longer traded.
The participants agreed to continue the discussion with the objective to work together as part of an industry-wide effort to improve and help develop the ETF market in Japan. Several practical steps will be taken in the next couple of months, such as further research into some of the main barriers that impair the development of the ETF market, including regulations. The group also agreed to reconvene in September or October to follow up on the status of the TSE ETF market making scheme.