RFQ Platform

Overview of RFQ Platform "CONNEQTOR"

Background

Tokyo Stock Exchange (TSE) introduced a Market Making Scheme for ETFs in 2018 with the aim of improving ETF liquidity, and has continued to make improvements to it since. In addition, to facilitate large-scale transactions that are difficult to execute in auction sessions, TSE began considering the provision of an RFQ (request-for-quote) function in October 2019.
TSE has decided to begin development of this service for use on the market now that the realization of the technology is in sight, having completed the design process with the kind cooperation of many of the institutional investors who will become users and confirmed their needs. TSE plans to launch this service at the end of this 2020.
The platform for using this RFQ function is named CONNEQTOR, which incorporates TSE's wish to make ETF trading more efficient by connecting institutional investors, securities companies, and market makers more closely.

Outline of RFQ Function/Trade Flow

The RFQ function enables institutional investors who want to trade a particular ETF at a particular quantity, etc. to send out a request for a quote to a large number of market makers. They can then trade at a price individually offered by a market maker. In CONNEQTOR, although the quotes are shown anonymously, the process is highly transparent, and investors are able to trade only at the best price offered. The trading flow using the RFQ function is as follows:

Trading Flow Using the RFQ Function

1. An investor submits a request to "buy XXX ETF for JPY YYY" on CONNEQTOR.
2. Market makers show prices.
3. The investor requests a trade if the quote shown is the best price (the best price will always be shown).
4. The market maker who offered the best price confirms and accepts the proposed trade.
5. The brokers designated in advance by the investor and the market maker approve the trade.
6. The authorized trade is cleared and settled via ToSTNeT as an on-exchange trade.
7. Investors can obtain logs for the trade flow, operations flow, and quotes shown.

Information for using CONNEQTOR

Trading Participants available to institutional investors

CONNEQTOR is scheduled to come into operation in December 2020. Institutional investors are scheduled to be able to trade ETFs using CONNEQTOR through the following Trading Participants from the first day of operations.
New applications from Trading Participants will be announced on this page. Any Trading Participant may apply to provide this service, so if you wish to use CONNEQTOR, please contact your preferred Trading Participant.

* As of September 9 2020
* In Japanese alphabetical order.

SMBC Nikko Securities Inc.
Goldman Sachs Japan Co.,Ltd.
JPMorgan Securities Japan Co.,Ltd.
Daiwa Securities Co. Ltd.
Nomura Securities Co.,Ltd.
Mitsubishi UFJ Morgan Stanley Securities Co.,Ltd.

Connection to CONNEQTOR via dedicated lines used for QUICK's services

Users of QUICK's terminals (QUICK Workstation) will be able to connect to CONNEQTOR via dedicated lines used for QUICK's existing financial information services. Connections made via QUICK will incur no additional fees, and both initial and monthly fees will remain free.

* Monthly information fees will apply for new addition of QUICK Workstations.