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‘Japan to speed up exchange reform’

TOKYO: Japan must speed up reforms in the Tokyo Stock Exchange and Commodities Exchanges to attract more money from overseas, members of the government’s top economic council said.

Recent turmoil in financial markets has handed Japan a valuable lesson in the need to develop markets for securitised products and to improve the market environment, they said.

The TSE is the world’s second-largest bourse behind the New York Stock Exchange but is struggling to keep up with other major exchanges more cosmopolitan Asian centres such as Singapore.

The number of foreign companies listed on the TSE was only 25 in 2006, compared with 450 on NYSE, according to the Japanese government.

“A plan for liberalising rules for listing financial products on exchanges should be made before the end of the 2008/09 business year,” four private-sector members of the council said in a paper submitted to the council on Friday. The 2008/09 business year ends in March 2009.

Currently, the Financial Services Agency (FSA) must approve all new exchange-traded funds (ETFs) before they are listed. The council members, including Fujio Mitarai who heads Japan’s biggest business lobby, welcomed the authorities’ moves to allow ETFs to be listed on the TSE and efforts to link the country’s different exchanges.

The panel members said by linking the exchanges and transforming the Tokyo bourse into a cross-market investment centre, Japan’s capital markets would become more competitive as other exchanges around the world continue to join forces.

The TSE plans to list its own shares in 2009 as part of efforts to strengthen its financial position to compete with overseas peers. The council members’ paper also welcomed FSA’s move to lower legal barriers that separate banks, brokerages and insurance companies as well as to raise fines in order to more effectively deter illegal actions.

The paper said that giving market players more freedom as well as making sure they abide by the rules is necessary to invigorate Japan’s financial markets. reuters

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