The Tokyo Stock Exchange (TSE) aims to boost yield-enhancing strategies by allowing actively managed exchange-traded funds (ETFs) that use over-the-counter (OTC) derivatives like swaps and options, Bloomberg News reported Monday, citing managers at the new listings department of the exchange.

Currently, ETFs in Japan can only use listed options from Osaka's derivatives exchange, but the TSE is now seeking regulatory approval to expand this to OTC instruments, said the newswire.

Exchange officials hope to secure the Financial Services Agency's (FSA) approval by June next year, which could reduce fund management costs, the publication said, adding that the FSA did not comment on the proposal.

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