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Tokyo Stock Exchange: Structure, operations.....

Source: Wikipedia
Tokyo Stock Exchange
東京証券取引所
The Stock Exchange occupies a narrow site in Tokyo's securities district
Type Stock exchange
Location Tokyo, Japan
Coordinates 35°40′57.60″N 139°46′43.71″E / 35.682667°N 139.7788083°E / 35.682667; 139.7788083
Founded 1878
Owner Tokyo Stock Exchange Group, Inc.
Key people Taizo Nishimuro, Chairman
Atsushi Saito, President & CEO
Yasuo Tobiyama, MD, COO & CFO
Currency Japanese yen
No. of listings 2,294
MarketCap US$3.1 trillion (May 2010)[1]
Volume US$3.7 trillion (Dec 2009)
Indexes TOPIX
Nikkei 225
Website TSE.or.jp
The Tokyo Stock Exchange (東京証券取引所 Tōkyō Shōken Torihikijyo?), called Tōshō (東証?) or TSE for short, is located in Tokyo, Japan and is the third largest stock exchange in the world by aggregate market capitalization of its listed companies. The Tokyo Stock Exchange had 2,294 listed companies with a combined market capitalization of US$3.1 trillion as of October 2010.[1]

Structure

The TSE is incorporated as a kabushiki kaisha with nine directors, four auditors and eight executive officers. Its headquarters are located at 2-1 Nihombashi Kabutocho, Chūō, Tokyo. "Kabutocho" is the largest financial district in Japan. Its operating hours are from 9:00 to 11:00 am, and from 12:30 to 3:00 pm. From April 24, 2006, the afternoon trading session started at its usual time of 12:30 p.m.
Stocks listed on the TSE are separated into the First Section for large companies, the Second Section for mid-sized companies, and the Mothers (Market of the high-growth and emerging stocks) (ja:マザーズ?)[2] section for high-growth startup companies. As of October 31, 2010, there are 1,675 First Section companies, 437 Second Section companies and 182 Mothers companies.[3]
The main indices tracking the TSE are the Nikkei 225 index of companies selected by the Nihon Keizai Shimbun (Japan's largest business newspaper), the TOPIX index based on the share prices of First Section companies, and the J30 index of large industrial companies maintained by Japan's major broadsheet newspapers.
89 domestic and 19 foreign securities companies participate in TSE trading. See: Members of the Tokyo Stock Exchange
Other TSE-related institutions include:
  • The exchange's press club, called the Kabuto Club (ja:兜倶楽部 Kabuto kurabu?), which meets on the third floor of the TSE building. Most Kabuto Club members are affiliated with the Nihon Keizai Shimbun, Kyodo News, Jiji Press, or business television broadcasters such as Bloomberg LP and CNBC. The Kabuto Club is generally busiest during April and May, when public companies release their annual accounts.
On 15 June 2007, the TSE paid $303 million to acquire a 4.99% stake in Singapore Exchange Ltd.[4]

History

Prewar history

The Tokyo Stock Exchange was established on May 15, 1878, as the Tokyo Kabushiki Torihikijo (東京株式取引所) under the direction of then-Finance Minister Okuma Shigenobu and capitalist advocate Shibusawa Eiichi. Trading began on June 1, 1878.
In 1943, the exchange was combined with ten other stock exchanges in major Japanese cities to form a single Japanese Stock Exchange (ja:日本証券取引所 Nippon Shōken Torihikisho?). The combined exchange was shut down and reorganized shortly after the bombing of Nagasaki.

Postwar history

The Tokyo Stock Exchange reopened under its current Japanese name on May 16, 1949, pursuant to the new Securities Exchange Act.
The TSE runup from 1983 to 1990 was unprecedented, in 1990 it accounted for over 60% of the world's stock market capitalization (by far the world's largest) before falling precipitously in value and rankings today, but still remains one of the 3 largest exchanges in the world by market capitalization of listed shares.
The trading floor of the TSE was closed on April 30, 1999, and the exchange switched to electronic trading for all transactions. A new facility, called TSE Arrows (ja:東証アローズ Tōshō Arrows?), opened on May 9, 2000.
In 2001, the TSE restructured itself as a stock company: before this time, it was structured as an incorporated association (ja:社団法人 shadan hōjin?) with its members as shareholders.

I.T. issues

The exchange was only able to operate for 90 minutes on November 1, 2005, due to bugs with a newly installed transactions system, developed by Fujitsu, which was supposed to help cope with higher trading volumes. The interruption in trading was the worst in the history of the exchange.[5] Trading was suspended for four-and-a-half hours.
During the initial public offering of advertising giant Dentsu, in December 2001, a trader at UBS Warburg, the Swiss investment bank, sent an order of 610,000 shares in this company at 1 yen each, while he intended to sell 1 share at 610,000 yen. The bank lost £71 million.[6]
During yet another initial public offering, that of J-Com, on December 8, 2005, an employee at Mizuho Securities Co., Ltd. mistakenly typed an order to sell 600,000 shares at 1 yen, instead of an order to sell 1 share at 600,000 yen. Mizuho failed to catch the error; the Tokyo Stock Exchange initially blocked attempts to cancel the order, resulting in a net loss of 347 million US dollars to be shared between the exchange and Mizuho. Both companies are now trying to deal with their troubles: lack of error checking, lack of safeguards, lack of reliability, lack of transparency, lack of testing, loss of confidence, and loss of profits. On 11 December, the TSE acknowledged that its system was at fault in the Mizuho trade. On 21 December, Takuo Tsurushima, chief executive of the TSE, and two other senior executives resigned over the Mizuho affair.[5][7][8][9][10][11][12][13]
Wikinews has related news: Heavy selling leads to shortened session at Tokyo stock exchange
On January 17, 2006, the Nikkei 225 fell 2.8%, its fastest drop in nine months, as investors sold stocks across the board in the wake of a raid by prosecutors on internet company livedoor. The Tokyo Stock Exchange closed early on January 18 due to the trade volume threatening to exceed the exchange's computer system's capacity of 4.5 million trades per day. This was called the "livedoor shock." The exchange quickly increased its order capacity to five million trades a day.[14]

Hours

The exchange's normal trading sessions are from 09:00am to 11:00am and from 12:30pm to 3:00pm on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance.[15] The exchange is closed for the following holidays: New Year's Day, Coming of Age Day, National Foundation Day, Vernal Equinox Day, Shōwa Day, Constitution Memorial Day, Greenery Day, Children's Day, Marine Day, Respect for the Aged Day, Autumnal Equinox, Health and Sports Day, Culture Day, Labour Thanksgiving Day, and The Emperor's Birthday.[16]

Alliances

The London Stock Exchange (LSE) and the TSE are developing jointly traded products and share technology, marking the latest cross-border deal among bourses as international competition heats up. The TSE is also looking for some partners in Asia, and more specifically is seeking an alliance with the Singapore Exchange (SGX), which is considered as becoming a leading financial hub in the Asia-Pacific region. Recently, some rumors close to the deal suggest that the TSE is preparing for a takeover of the SGX, or at least take a major stake, in the first semester of 2008. The TSE has already acquired a 5% stake in the SGX as of June 2007, deemed to be only the beginning of greater participation.
In July 2008 the London Stock Exchange (LSE) and the TSE announced a new joint venture Tokyo-based market, which will be based on the LSE's Alternative Investment Market (AIM).[17]

See also

PrefSymbol-Tokyo.svg Tokyo portal

References

  1. ^ a b "Japan's Tokyo Stock Exchange is the second largest stock market with a market value of $ 3.1 trillion.". Economic Times. June 19, 2010. http://economictimes.indiatimes.com/markets/global-markets/China-becomes-worlds-third-largest-stock-market/articleshow/6068129.cms. Retrieved 19 Jun 2010. 
  2. ^ Tokyo Stock Exchange. "Mothers". http://www.tse.or.jp/english/listing/mothers/index.html. Retrieved April 8, 2010.  (English)
  3. ^ Tokyo Stock Exchange. "Breakdown of TSE listed stocks". http://www.tse.or.jp/english/listing/breakdown/index_e.html. Retrieved April 8, 2010.  (English)
  4. ^ Yasu, Mariko (2007-06-15). "Tokyo Stock Exchange Buys 4.99% of Singapore Exchange (Update2)". Bloomberg. http://www.bloomberg.com/apps/news?pid=20601080&sid=aZ2hmIz6eyrw&refer=asia. Retrieved 2010-07-10. 
  5. ^ a b Fujitsu execs take pay cut after Tokyo exchange crash, 25th November 2005
  6. ^ Fat fingered typing costs a trader’s bosses £128m
  7. ^ Tokyo Exchange Struggles With Snarls in Electronics NY Times,December 13, 2005
  8. ^ "What's Going on at the Tokyo Stock Exchange - Seeking Alpha". Japan.seekingalpha.com. http://japan.seekingalpha.com/article/5077. Retrieved 2010-07-10. 
  9. ^ Tokyo Stock Exchange admits error in Mizuho trade botch-up, 12 December 2005
  10. ^ Mizuho Says Trader Error to Cost It at Least $224 Mln (Update5), Bloomberg, December 9, 2005
  11. ^ "archives". Taipei Times. 2005-12-10. http://www.taipeitimes.com/News/worldbiz/archives/2005/12/10/2003283851. Retrieved 2010-07-31. 
  12. ^ "Tokyo Stock Exchange plans cash settlement in Mizuho fiasco - report". Forbes.com. November 12, 2005. http://www.forbes.com/finance/feeds/afx/2005/12/11/afx2383299.html. Retrieved 2010-07-10. 
  13. ^ "Botched stock trade costs Japan firm $225M - Business - World business - msnbc.com". MSNBC. 2005-12-14. http://www.msnbc.msn.com/id/10394551/. Retrieved 2010-07-10. 
  14. ^ After Panic, Tokyo Market Rebounds, NY Times, January 19, 2006
  15. ^ Market Hours, Tokyo Securities Exchange via Wikinvest
  16. ^ http://www.tse.or.jp/english/about/calendar.html TSE : Calendar
  17. ^ Ku, Daisy (July 29, 2008). "London bourse outlines framework for Tokyo JV | Reuters". Uk.reuters.com. http://uk.reuters.com/article/mergersNews/idUKL920962620080729?pageNumber=1&virtualBrandChannel=0. Retrieved 2010-07-10. 

Further reading

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