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The Japan Exchange Group (JPX) has announced a change in the daily price limits for certain exchange-traded Funds (ETFs) and Exchange-Traded Notes (ETNs) on the Tokyo Stock Exchange (TSE). The decision, effective immediately, is aimed at addressing heightened market volatility in these instruments and improving liquidity.
The adjustment expands the upper price limits for two specific ETFs while keeping the lower limits unchanged. This move comes in response to significant trading activity, where certain ETFs and ETNs frequently hit their price ceilings, causing trading halts and limiting market flexibility. Among the affected products are high-profile instruments like the TOPIX Bull 2x ETF and the Nikkei 225 Double Inverse Index ETF.
For the TOPIX Bull 2x ETF, the upper daily price limit will increase by 400 yen, reaching 416.6 yen, up from the previous cap of 336.6 yen. Similarly, the Nikkei 225 Double Inverse Index ETF will see its upper limit extended to 1,367 yen, a substantial rise from its prior ceiling. By broadening these limits, JPX aims to prevent frequent trading disruptions and allow more room for price movements during periods of market volatility.
This change is part of a broader strategy by the JPX to align its market regulations with global standards and manage the increasing volatility in ETF and ETN trading. The organisation remains committed to ensuring a stable and orderly trading environment, as these adjustments are seen as essential to keeping up with evolving market demands and investor needs.
Globally, financial markets are trending towards more flexible price limit structures, especially in managing volatile instruments like ETFs and ETNs. JPX’s decision reflects this shift, highlighting the growing importance of these products in Japan’s financial landscape.
This broader trend is being adopted by many exchanges around the world to improve the robustness of their trading systems, ensuring smoother operations even during price fluctuations. This expansion of price limits demonstrates JPX’s proactive approach to modernising Japan’s financial market regulations while providing a more flexible framework to support both institutional and retail investors.