The Nasdaq Japan Market-a for-profit organization with 50-50 ownership by the National Association of Securities Dealers (NASD) and SOFTBANK Corp.-opened to a trading volume of 680,000 shares on its first day of business this week, carrying an initial listing of eight companies.
The first eight-Xnet Corp., Creek & River Co., Sugi Pharmacy Co., Digital Design Co., Digicube Co., Don Quixote Co., Honda Verno Tokai Co. and Masternet Co.-represent a broad cross-section of Japanese industries, including technology, pharmaceuticals and multimedia.
Nasdaq Japan will initially function as a section of the Osaka Securities Exchange (OSE) and make use of that exchange's trading system. Over time, IndigoMarkets-a joint-venture of the Nasdaq Stock Market and SSI Technologies of India-will develop Internet-based trading and marketing systems for Nasdaq Japan. Within two years, the interconnection and integration of Nasdaq U.S., Nasdaq Europe and Nasdaq Japan to form Nasdaq global markets will take place, according to Frank Zarb, NASD chairman and CEO.
Though the OSE will continue to carry out clearance and settlement services, the systems created by IndigoMarkets will create an independent electronic trading platform for Nasdaq Japan. Nasdaq Japan's market engine will be based on The Electronic Securities Architecture (TESA) technology owned and operated by IndigoMarkets. The Nasdaq Japan market structure will take the form of a unique hybrid, functioning as both an order-driven and quotation-driven exchange.
SOFTBANK Corp. Chairman and CEO Masayoski Son says that the closed nature of Japan's markets have been a difficult climate for entrepreneurs to raise capital. "We are not only bringing another market to compete with the local market, we are going to bring global connectivity," explains Son. That means a worldwide pool of liquidity when Nasdaq global becomes a reality.
Tatsuyuki Saeki, president and CEO of Nasdaq Japan, says he expects to add about 10 companies a month to the exchange. Although, he says, limiting the newcomers to 10 per month might be difficult, with companies clamoring to be listed. It is important "to keep it down to 10 to maintain the quality of the operations."
Zarb says there is a possibility that Nasdaq 100 Companies will be listed on Nasdaq Japan, but that would be done slowly to make sure trading and settlement transactions work properly. Zarb adds that some anachronistic, "protectionist" laws, such as the requirement that all financial documents be written in the Japanese language, are barriers to the listing of non-Japanese companies. Nasdaq Japan, he says, is working with the Japanese government to change those laws. Zarb adds, "The talking is over, the planning is over,