Popular options trading drives Japanese exchanges to seek enhanced earnings from OTC strategy ETF listing.

The major stock exchanges in Japan are seeking to seize opportunities for growth in income-enhancing strategies. At the Tokyo Stock Exchange, trading strategies such as "covered call options" are becoming increasingly popular. To facilitate this, the Tokyo Stock Exchange is planning to allow actively managed ETFs using over-the-counter derivatives to be listed. Kei Okazaki and Ryutaro Someya, heads of the listing department at the Tokyo Stock Exchange, stated that the exchange is seeking guidance from a consulting firm to promote the listing of ETFs using non-listed instruments. Currently, while listed ETFs can use options from the Osaka Derivatives Exchange, the use of over-the-counter derivatives is still prohibited. The Tokyo Stock Exchange hopes to obtain approval from the Japanese Financial Services Agency by June of next year to enable the listing of such ETFs. They note that this change will help reduce fund management costs.