The integration of the Tokyo Stock Exchange and the Osaka Securities Exchange will create the world’s third biggest cash stock market, according to the Japan Exchange Group, or JPX. The combined markets include 3,423 listed companies with the market capitalization of $4.2 trillion.
The move by the umbrella company JPX is to attract more foreign funds, since the integration will provide more efficient trading amidst stiffer international competition. The merger will also slash operational costs, and these funds can be used to promote Japanese equities overseas. They will also be able to improve their transactions speeds in order to better compete with the US and European bourses that are rapidly expanding through acquisitions, as well as other Asian markets that are gaining prominence.
Aside from bringing down the costs for both companies, the merger will also help listed companies from the OSE have more prospects of becoming a component of investment trusts because these stocks’ main trading platform is the TSE. The JPX will integrate derivative trading operations at the OSE by March 2014 to be able to cut down 7 billion yen (approx. $70 million) per year on operations costs.
The TSE is already third globally, next to NYSE Euronext and NASDAQ OMX, with a trading value of $3.04 trillion in the first five months of 2013. But there’s only a very small margin that separates it from the Chinese bourses that had a $2.94 trillion combined trading value on the Shanghai Stock Exchange and the Shenzhen Stock Exchange in the same period.
[ via Mainichi ]