Examination of Trades (Market Surveillance) at TOCOM
Even in the case where a trade executed at the Exchange is not determined to be an unfair trade, which is prohibited by Article 116 of the Commodity Derivatives Act, if it violates, or is likely to violate, the rules of the Exchange, the Exchange will give a direction or sanction to the member who received the entrustment of the trade and the member will in turn take an appropriate action against the customer such as giving a warning, imposing trade restrictions, etc., in accordance with its internal compliance policy.
The following examples are provided as typical examples of acts that are suspected to be unfair trading, etc. You are advised that if you engage in such acts repeatedly, you may likely be subject to a warning or trade restrictions.
- Intentional Price Manipulation during Call Auction (Ita-awase)
- The practice of placing buy (sell) orders for the purpose of moving the contract price of a call auction (Ita-awase) while placing sell (buy) orders in advance, during and/or right before the Non-cancel Period (NCP), as well as right before determining the contract price of the closing auction for the day session.
- The practice of cancelling an order placed earlier, or amending price and/or quantity of an order placed in advance, for the purpose of moving the contract price of a call auction (Ita-awase), right before the Non-cancel Period (NCP) as well as right before determining the contract price of the closing auction for the day session.
- Intentional Price Manipulation during Continuous Trading (Zaraba)
During continuous trading, the practice of becoming the buyer and the seller for an execution, as well as getting an order executed by placing a buy (sell) order seemingly chasing a higher (lower) price, independently or in collaboration with other persons, for the purpose of moving the price. - Intentional Price Manipulation during Settlement Price Calculation Period
The practice of trading independently or in collaboration with other persons, for the purpose of manipulating the settlement price (delivery price) during the settlement price calculation period. - Misegyoku (fake order or spoofing)
The practice of luring buy (sell) orders from other market participants, for the purpose of pushing up/down the price, by misleadingly showing many buy (sell) orders (Misegyoku) during continuous trading without any intention to execute the buy (sell) orders, and then, right when a buy (sell) order is placed by another market participant, placing a corresponding buy (sell) order to be executed. - Front-running
When a broker received a buy (sell) order from a customer, taking advantage of knowing that placing such order would increase (decrease) the market price, the practice of placing a proprietary buy (sell) order in the same contract month and getting executed at the market level before placing said customer order, for the purpose of executing one’s own buy (sell) order at a price lower (higher) than said customer order, then, place the customer buy (sell) order and get it executed at the risen (fallen) price level. - Transfer of Profits
After receiving sell orders and buy orders from customers during continuous trading, not placing said customer orders immediately for the purpose of getting profits on one’s own proprietary transactions by using said customer orders, the practice of first placing one’s own proprietary buy (sell) order that matches with said customer sell (buy) orders and getting executed, and then, place one’s own proprietary sell (buy) order against said customer buy (sell) orders, as to be executed at a higher (lower) price than the original transaction’s contract price, and also, the practice by the same token for the purpose of providing profits to customer transactions using one’s own proprietary transactions.
With regards to determining the existence of an intention for such practices, the Exchange will consider it sufficient if the intention can be objectively recognized after considering a series of actions, etc. as a whole, in addition to the obvious cases where the subjective intention of the perpetrator is confirmed. It should be noted that acts that violate the rules of the Exchange include those arising from carelessness or negligence.