Tokyo: Japan’s biggest market for start-ups Jasdaq Securities Exchange Inc. is in talks with the Bombay Stock Exchange Ltd (BSE) to attract Indian companies to list on its board, a move that may help arrest a slide in trading volumes.
Step forward: Jasdaq CEO Takashi Tsutsui says that eventually, the two sides may take a stake in each other.
Jasdaq aims to attract Indian companies to sell Japanese depositary receipts on its NEO market for technology stocks, said Takashi Tsutsui, chief executive of the Tokyo-based bourse. Tsutsui said he hopes to reach a formal agreement as early as next month.
“We see opportunities to use our experience in the global market and we can do that by allying with exchanges around the world,” Tsutsui, 57, said on Tuesday. “We’ve basically reached a memorandum of understanding.”
An agreement with Asia’s oldest bourse may help Jasdaq compete for listings with Tokyo Stock Exchange Inc., which handles 90% of trading in Japan and has struck alliances with the New York Stock Exchange Inc. and the London Stock Exchange Plc. this year. Daily trading on Jasdaq slumped 54% from a year earlier in the six months ended 30 September, and it forecasts a full-year loss.
Securities exchanges globally are making acquisitions and forging alliances to expand and give investors the option to trade multiple financial products round-the-clock as bourses compete to attract capital. Almost $50 billion (Rs1.98 trillion) of proposed mergers by exchanges were announced in the past two years, according to data compiled by Bloomberg.
India trading surge
The total market value of stocks traded in India has doubled this year to $1.7 trillion ranking it fifth in Asia, after Japan, China, Hong Kong and Australia. Average daily trading on BSE has risen 44% this year. The agreement may extend to BSE and Jasdaq taking a stake in each other, Tsutsui said, declining to give further details. Kalyan Bose, spokesman at BSE, declined to comment.
At home, Jasdaq faces competition from the Tokyo bourse. The Tokyo exchange, the world’s second largest, plans to set up a market open solely to institutional investors in 2008 in cooperation with the London Stock Exchange, which currently operates the Alternative Investment Market.
Jasdaq converted itself in 2004 into an exchange from an over-the-counter market. Average daily trading dropped to 38.4 billion yen (Rs13.44 crore) in the six months ended 30 September, according to a statement on 22 October. The bourse expects to post a group loss of 1.67 billion yen for the year through 31 March.
Japan Securities Dealers Association, which holds 72% of the Jasdaq market, has been considering options including mergers with the Tokyo bourse or Osaka Securities Exchange to boost its competitiveness. A final plan is expected to be announced on 27 December.
BSE, established in 1875, has the longest history in Asia and more than 4,800 companies listed. Jasdaq, started in 1976, offers trading in 977 stocks.
An alliance with BSE would mark Jasdaq’s fourth with an overseas marketplace. The bourse has already agreed to work with counterparts in the US, South Korea and China, Tsutsui said. “We’ve just begun taking steps forward globally this year,” Tsutsui said.
Jasdaq is also seeking an alliance with India’s National Stock Exchange (NSE) to swap information including trading systems, said Tsutsui. He visited India on 3 and 4 December to meet with management, including Rajnikant Patel, chief executive officer of BSE, and J. Ravichandran, director at NSE.
Daily trading on NSE, founded in 1992, is double that of its 132-year-old rival.
Officials at NSE couldn’t immediately be reached for comment.
Pooja Thakur in Mumbai contributed to this story.