Introduction
Japans securities market is an important feature of the nations economy and financial system. It is composed of both the Tokyo Stock Exchange (TSE) and the Osaka Securities Exchange (OSE). It is the second largest stock exchange in Asia and the fourth largest in the world.
In the past decade, Japanese securities markets have been significantly influenced by numerous changes in terms of regulation, ownership, and attitudes. These have not only allowed for a continuous effort to better the market and attract more issuers and traders, but also impacted the relative size and structure of the market.
History
The modern Japanese securities market has a long history dating back to the 19th century. In 1878, the first security issue was made in the form of government bonds. Encouraged by the success of government bonds, a number of private securities began to be issued in the early 1880s.
In 1878, a Tokyo Stock Exchange, later known as the OSE, was established. In 1899, the TSE, the first stock exchange in Japan, was established to facilitate trading of securities issued by private companies. Initially, the TSE dealt with securities offered only by the Imperial Government, but with the passage of the Securities Exchange Law of 1945, it started trading shares issued by private companies as well.
Today
Today, the TSE and the OSE are the two main players in the Japanese securities market. They are operated by the Japan Exchange Group, a private-sector, self-regulatory body. The number of listed companies on the TSE is 2281 and 872 on the OSE. The total market capitalization of the TSE is $5.5 trillion, and the OSEs market capitalization is $1.2 trillion.
The Japanese securities market is driven by corporate, individual and institutional investors. In recent years, foreign investment in Japanese securities has increased significantly, as investors have become more attracted to the Japanese market.
Regulation
The Japanese governmental authorities, namely the Ministry of Finance (MOF) and the Financial Services Agency (FSA), have implemented a regulatory regime aimed at promoting fair and orderly securities market transactions. These include regulations that govern disclosure, insider trading and market manipulation.
To ensure the stability of the market and protect investors, the Financial Instruments and Exchange Law of 2006 has been implemented. This law provides for tighter regulation of the securities market and introduces measures such as increased collateral requirements, increased disclosure requirements and increased surveillance powers.
The MOF and FSA have also increasingly relied on the self-regulatory function of the Japan Exchange Group (JEG) which is responsible for regulating listed companies and authorizing new securities. The JEG has imposed various restrictions and rules on listed companies, including those designed to prevent unfair dealings, unjustified fees and manipulative activities.
Conclusion
The Japanese securities market is an important part of the nation’s economy and financial system. It is composed of both the Tokyo Stock Exchange (TSE) and the Osaka Securities Exchange (OSE). In terms of regulation, ownership and attitudes, the market has seen numerous changes in the past decade. The TSE and OSE are regulated by the Japan Exchange Group (JEG), and the government authorities MOF and FSA have implemented a regulatory regime to protect investors. Foreign investors are increasingly attracted to the Japanese market, leading to a larger and more globalized market.
