Japan Financial Services Agency considers raising trading volume cap as AI and chip stocks surge

Japan’s top financial regulator is eyeing a change that could reshape how its securities markets operate. The Financial Services Agency is considering raising the 10% cap on proprietary trading volume, a move driven by surging activity in AI and semiconductor stocks that has been straining the existing limits. Japan has been pouring government money into its technology sector, with subsidies estimated at ¥10 trillion (roughly $67 billion) aimed at supercharging AI and semiconductor industries. What the current cap actually means Japan’s FSA oversees securities firms and Proprietary Trading Systems, known as PTS, under the Financial Instruments and Exchange Act. Think of PTS platforms as alternative trading venues that compete with the Tokyo Stock Exchange. They let firms match buy and sell orders outside the main exchange. These platforms currently can’t handle more than 10% of total trading volume in a given security. In English: if a stock trades a million shares in a day across all venues, no single PTS can account for more than 100,000 of those shares. Back in 2022, Japan’s Financial System Council recommended relaxing volume caps on certain auction-style PTS operations. The id...