Self-Regulatory Operations: Examining Trades

Examining Trades

To maintain the fairness and soundness of the market, the Market Surveillance Department of TFX monitors daily trades. Also, based on results of trade monitoring by the Market Surveillance Department, the Self-Regulation Bureau examines trades.

1.Trade Monitoring

The Market Surveillance Department mainly conducts the following two types of monitoring.

(1)Real-Time Monitoring

TFX’s Market Surveillance Department monitors in real time whether any trades that may potentially become an issue of fair price formation are being executed. If any potentially problematic trade is found, the Market Surveillance Department conducts a hearing on the trade and gives a warning or takes other actions as necessary.
Of such trades on which a hearing was conducted and a warning or a recommendation was given as the result of real-time monitoring, trade records are created by the Market Surveillance Department on cases where TFX’s monitoring standards were violated.

(2)After-the-Fact Monitoring

In addition to the real-time monitoring described above, TFX’s Market Surveillance Department extracts trade data that violate TFX’s monitoring standards after the fact and creates monitoring records. The Market Surveillance Department verifies the monitoring records and, if necessary, conducts a hearing with the Trading Member concerned, enters the details in the trading records, and request improvements or take other actions as required.

2.Examination of Trades

All monitoring, hearings, and other relevant records are circulated to the Self-regulation Bureau, and the Self-regulation Bureau examines the trades.
The examination by the Self-regulation Bureau involves reviewing the monitoring records and other data circulated and verifying the decisions made and actions done by the Market Surveillance Department. Then, if a fact that may potentially damage fairness in the market or cause investor protection issues is found, the Self-regulation Bureau will conduct a hearing with the Trading Member concerned.
In addition, when the Self-regulation Bureau conducts inspections on Trading Members, it extracts facts that may potentially become issues in operating the TFX market or may give rise to such concerns, widely from monitoring records on the Trading Members in advance, checks the details, and, if necessary, gives warning so that the situation will be improved.