TOKYO, Oct 2 (Reuters) - The Tokyo Stock Exchange, Asia's biggest bourse by market capitalisation, is revamping trade in stock options to boost liquidity and keep its ranking as it faces rising competition from regional rivals in Hong Kong and India.
With 88,256 contracts traded in 2008, the volume of stock options on the TSE lags the Chicago Board Options Exchange, the International Securities Exchange, as well as the exchange in Hong Kong and India's National Stock Exchange, according to TSE data.
"Increased volume in options trading means larger volume for cash trading. That will lead to a bigger market as a whole," Masashi Sekizawa, a director of derivatives at the TSE, told Reuters in an interview on Friday.
"Considering the size of the Japanese market compared to places like India, options trading should be growing more here. The problem is liquidity."
The Tokyo exchange, which is the second largest in the world by domestic market cap, began options trading in 1997. It kicks off the revamp on Monday, introducing market makers, including UBS Securities and Mitsubishi UFJ Securities, to secure liquidity and using a faster, more powerful trading system.
The overhaul covers options in stocks, including some exchange-traded funds, the Topix index and JGB futures.
Market making will initially be in options on stocks which make up the Topix Core 30 blue-chips, including such companies as Mizuho Financial Group and Canon Inc. (Reporting by Aiko Hayashi)