Enhanced TSE arrowhead Cash Equity Trading System launched

1. Background for System Renewal

On January 4, 2010, arrowhead was launched with the cooperation of Fujitsu as a trading platform that boasted high speed processing and reliability of the highest global standard. In the years that followed, the market environment evolved, and cash equity markets today handle a much larger number of orders and face a growing tendency toward short-term periods of high order traffic. To accommodate the changing needs of investors, the arrowhead renewal project was launched in December 2012.

2. Features of New arrowhead

New arrowhead was developed based on the fundamental principles of improving reliability, improving convenience, and improving processing capabilities of the existing arrowhead platform.

(1) Improve Reliability

Risk management functions have been introduced to mitigate risk from advancements in electronic and high speed trading.

1. Order Cancellation on Abnormal Disconnection (Cancel on Disconnect)
2. Order Suspension/Cancellation (Kill Switch)
3. User-designated Hard Limit
4. Issues for Testing (Dummy Symbol)
   (For details on risk management functions, see Appendix 1. (23 KB/A4, 1 page))

(2) Improve Convenience

Trading rules have been revised to further increase market convenience.

1. Optimization of Tick Sizes

   Since 2014, TSE has implemented its program to optimize tick sizes in phases with the aim of providing price improvements and reducing the time-to-execution for limit orders. Phase I began in January 2014 with the narrowing of the tick sizes at certain price bands for TOPIX100 constituents. This was followed by Phase II in July 2014, which introduced decimal pricing at certain price bands. For Phase III, based on feedback from investors and other factors, the tick sizes for some price bands have been changed. (For details on the changes in the tick size table over the course of the tick size optimization program, see Appendix 2. (32 KB/A4, 1 page))

2. Additional Condition for Sequential Trade Quotes

   The sequential trade quote mechanism was introduced in January 2010 to suppress sudden and sharp price moves due to a single order. The mechanism has been enhanced with an additional condition to display sequential trade quotes for similar price moves resulting from multiple orders. (For details on sequential trade quotes, see Appendix 3. (83 KB/A4, 1 page))

(3) Improve Capabilities

System processing capabilities have been enhanced to accommodate large increase in order volume and short-term periods of high order traffic.

1. Secure Stable Processing Capabilities

   Secure greater processing capacity (approx. double previous system levels) to ensure stable operations during periods of high order traffic.

2. Processing Capabilities	Before renewal	After renewal
   Order Response Time	About 1.0 millisecond	Less than 0.5 milliseconds
   Information Dissemination Time	About 2 - 2.5 milliseconds	Less than 1.0 millisecond
   Order Processing (per day)	137,000,000	270,000,000

3. Secure Sufficient Capacity

   System capacity can be flexibly augmented to accommodate increase in order volume, etc.

3. The High-Reliability, High-Speed Technology Underpinning New arrowhead

New arrowhead achieves improvements in reliability and processing performance by bringing together Fujitsu's technological strengths with its comprehensive strengths as an integrated ICT provider, including its high-reliability, high-performance servers, such as the FUJITSU Server PRIMEQUEST and the FUJITSU Server PRIMERGY, along with middleware such as the FUJITSU Software Primesoft Server, which incorporates new high-reliability, high-speed technology. (For more details on the high-reliability, high-speed technology that underpins arrowhead, see Appendix 4. (108 KB/A4, 3 pages))