Only 4% of Japan swaps have traded electronically

ETP volumes are low despite mandate and participants are worried about regulation's future scope

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Electronic trading off to a slow start

Japan's switch to electronic trading of certain over-the-counter interest rate swaps has got off to a sluggish start – due to a narrow mandate – with just 4% of the overall market being transacted on an electronic trading platform.

Japan's electronic trading mandate took effect on September 1, requiring onshore institutions with ¥6 trillion ($59 billion) of OTC derivatives to execute mandated swaps using an electronic trading platform (ETP).

The mandated tenors are extremely narrow, covering

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