Understanding the Basics of Japanese Stock Market
04 Trading Rules in the Japanese stock market
If you're looking to invest in the Japanese stock market, understanding its trading rules is fundamental. Let's go over some common trading rules for Japanese stocks.
1. Trading hours:
Morning session: 9:00 am-11:30 am JST (Singapore time: 8:00 am-10:30 am)
Afternoon session: 12:30 pm-3:00 pm JST (Singapore time: 11:30 am-2:00 pm)
2. Price change limits
Unlike many markets, where stock prices don't have limits on daily price movements, the Tokyo Stock Exchange sets a range to prevent sudden and potentially harmful swings due to investor sentiment and other factors. This range is based on the previous trading day's closing price and is linked to the stock's price (view details in the following chart).
3. T+0 trading
The Japanese stock market allows for the same-day buying and selling of stocks, known as T+0 trading. However, you can only make one such transaction per stock per day. This means if you buy and sell a stock on the same day, you cannot use the proceeds to repurchase that same stock until the next day. You are free, though, to use the funds to buy and sell a different stock within the same day.
4. The minimum number of shares tradable and the smallest price movement
In Japan, the standard lot size for trading shares of domestic companies is 100 shares, meaning orders need to be placed in 100-share increments. However, other types of securities such as ETFs, REITs, or foreign stocks may have different lot sizes. You can find these details on the quote page on moomoo.
The tick size, or the smallest possible price movement, for Japanese stocks depends on the stock's price. Stocks are categorized by price levels, and each category has its own set tick size (see in the following chart).
5. Settlement rules
In Japan, the stock market follows a T+2 settlement cycle. Essentially, if you sell your stocks today, the actual exchange of shares and money between your brokerage and the settlement institution takes place two trading days later. Once this settlement process is complete, the proceeds from your sale will become available for you to withdraw.
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