1. Introduction
SBI SECURITIES Co., Ltd.’s (“SBI Securities”) Dark Pool (“Dark Pool”) is an alternative liquidity pool (“ALP”) for Japan Equities, allowing users, including internal SBI Securities trading desks to interact with our liquidity in an automated fashion. The Dark Pool is currently available in Japan, Singapore and Hong Kong (operated by SBI Securities).
These Alternative Liquidity Pool Guidelines of SBI Securities (“ALP Guidelines”) provide comprehensive details on the operation of SBI Securities’ Dark Pool. These ALP Guidelines are applicable to clients of SBI Securities (Hong Kong) Limited (“Clients”) that consent to their orders being routed to SBI Securities’ Smart Order Routing system (“SOR”) and/or Dark Pool.
The latest version of these ALP Guidelines and additional materials containing information on SBI Securities’ Dark Pool can be found on the website of SBI Securities (Hong Kong) Limited.
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Scope of Products
SBI Securities’ Dark Pool supports all equity securities listed on the Tokyo Stock Exchange (“TSE”) except for Foreign Stocks. However, orders for suspended securities cannot be executed within the Dark Pool.
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Trading Hours
Orders can be matched within the Dark Pool during the continuous trading sessions of TSE. However, orders cannot be matched on or before market open and after the last minute prior to market close (AM and PM).
2. User Eligibility
Only Clients that are Qualified Investors (as defined in the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission) are eligible to be users of SBI Securities’ Dark Pool and these ALP Guidelines will be brought to the attention of each Qualified Investor prior to any of their orders being routed to SBI Securities’ Dark Pool. Clients must opt in before orders are routed to SBI Securities’ SOR and/or Dark Pool for the first time.
Orders from eligible users who have opted in will be systematically placed within SBI Securities’ Dark Pool.
Eligible users who have opted in can choose to send their orders only to the Dark Pool (and not to the TSE nor to any Proprietary Trading System (“PTS”) connected to SBI Securities’ SOR) by selecting the algorithm strategy “Dark Peg” on their graphical user interface.
3. Matching Price
Matches may occur at any price between the best bid and best offer of the TSE.
4. Order Types and Parameters
SBI Securities’ Dark Pool supports the following order types and order parameters:
Market Order: Order can match at any price between the best bid and best offer of the TSE.
Limit Order: Order can match at the limit price or better, which is between the best bid and best offer of the TSE.
5. Order size
The minimum cross size is the TSE board lot size. There is no minimum executable quantity definition.
6. Pool Priority
There is only one pool of liquidity and SBI Securities’ Dark Pool continuously matches orders in price, time priority while the stock is in its continuous trading phase on the primary exchange.
Principal orders raised by SBI Securities’ trading desk (“Principal Orders”) may be routed to the Dark Pool, which include orders where SBI Securities is trading as principal in the transaction. Agency orders from Clients (“Agency Orders”) may be matched against such Principal Orders. Agency Orders are not prioritized above Principal Orders and all counterparties are treated with equal priority.
7. Additional Information of Order Routing and SBI Securities’ Dark Pool
For Clients who use SBI Securities’ SOR, the SOR splits and executes slices to the connected PTS and TSE (Multi-sweep). Sliced orders routed to TSE would be submitted to internal matching in SBI Securities’ Dark Pool before being placed on TSE.
The Client has an option to enable the SOR to place its orders on any connected PTS, if the SOR decides that it can execute the orders at a better price or at the same price as the relevant indication price on the TSE. However, the SOR will not compare with potential prices in the Dark Pool.
8. Additional Information of Connected PTS
SBI Securities’ SOR is currently connected to the PTS operated by Japannext Co., Ltd. (“Japannext”) and the PTS operated by Osaka Digital Exchange Co., Ltd. (“ODX”).
Japannext PTS and ODX PTS are automated trading systems where transactions in Japan-listed securities are executed off-exchange with pre-trade price and volume transparency. Orders routed to each PTS are only executed at that particular PTS, and are not routed to the exchange, ALPs or another PTS.
Japannext is 48.8% owned by SBI Holdings, Inc. and is regulated by the Financial Services Agency in Japan as a Financial Instruments Business Operator.
ODX is 70% owned by SBI Holdings, Inc. and is regulated by the Financial Services Agency in Japan as a Financial Instruments Business Operator.
9. Matching Permissions and Opt-in Arrangements
Users by default are opted-out of interacting with SBI Securities’ Dark Pool entirely. If they opt in, at the moment there is no option to opt out from interaction with either Principal Orders or Agency Orders.
10. Technical Summary
Order Entry Protocol : SBI Securities’ Dark Pool supports order entry via FIX.
BBO Source : Direct from TSE
Feeds from the Dark Pool : The Dark Pool is a completely dark trading venue. There is no outbound market data feed made available internally or externally. SBI Securities’ SOR and trading algorithms do not receive any information about orders resting in the Dark Pool.
Trade Reports : Synchronously to ToSTNet
11. Commissions and Fees
Orders that are executed within SBI Securities’ Dark Pool are subject to the usual negotiated commission rates and standard market charges. There are no additional fees or rebates for providing or taking liquidity in SBI Securities’ Dark Pool.
12. Order Amendment and Cancellation
Unexecuted orders may be cancelled or modified at any time during the trading day. (Such modifications may result in a loss of queue priority). Any unexecuted orders remaining in SBI Securities’ Dark Pool until one minute before market close and will be automatically cancelled.
13. Aggregation
Orders are not aggregated within SBI Securities’ Dark Pool.
14. SOR Audit Trails Report
Upon request, regular SOR Audit Trails Report can be made available to the users of SBI Securities’ Dark Pool concerning the transactions that are conducted on their behalf in the Dark Pool. Fill information is provided back to users in real-time with the SBI Securities’ Dark Pool indicated in FIX message Tag 30.
15. Internal Control Procedures
SBI Securities’ Risk Management Department and Examination Department set the framework for SBI Securities’ minimum standards in relation to internal control procedures.
- If necessary and subject to internal approval procedure, SBI Securities can cancel orders in the Dark Pool or disable the Dark Pool entirely.
- The usage capacity is regularly monitored and appropriate capacity planning is conducted.
16. Access to the Dark Pool
Equity Execution High Touch and Direct Market Access (“DMA”) desk – real-time visibility of the execution information on the Dark Pool. No real-time view of the pool.
Facilitation traders – real-time visibility of the execution information on the Dark Pool. No real-time view of the pool.
Compliance – visibility over orders executed on the Dark Pool on a post-trade basis but no view of the pool – to perform surveillance on orders executed on the Dark Pool to ensure adherence with local rules and regulations.
Middle Office – access to post-trade Dark Pool order information but no view of the pool – performance of normal trade booking, confirmation and settlement procedures.
IT specialists – real time access to the Dark Pool system – to monitor the technical health of the Dark Pool platform and to provide 1st and 2nd line of support for incident investigation and remediate visibility.
17. Risks
Interactions in SBI Securities’ Dark Pool should be viewed with the same caution as any other trading venue, lit or dark. Further, SBI Securities do not represent that the Dark Pool is in any way “safer” than any other trading venue.
Although all SBI Securities’ Dark Pool matches occur within the BBO, the SBI Securities’ Dark Pool execution price may not always be better than the price that could have been achieved on the TSE.
As with all trading venues, SBI Securities’ Dark Pool may occasionally be impacted by market data or system delays or outages which may result in users’ orders being delayed or cancelled.
18. Version Control
These ALP Guidelines will be updated over time as necessary to ensure that they remain comprehensive, accurate and current. The most current version will be published on the website of SBI Securities (Hong Kong) Limited.
| Version | Date | Changes |
| 1.0 | Nov 2020 | Implementation of ALP Guidelines |
| 1.1 | Mar 2021 | Initiation of SBI Securities’ Dark Pool service in Hong Kong |
| 1.2 | Jul 2021 | Minor updates to Sections 3, 4 and 6 |
| 1.3 | Oct 2022 | Inserted information regarding ODX |