Update : Feb. 03, 2009
Tokyo Stock Exchange Group, Inc. (TSE Group) and London Stock Exchange Group plc. (LSE) held discussions on a new professional investor-oriented market that will be established and operated as a joint venture between the two exchanges. On January 29, 2009, they agreed to confirm the name of the market and publish a rule book after establishing a new company to operate the market in December 2007.
The official name is "TOKYO AIM". The name is the combination of "TOKYO" from the Tokyo Stock Exchange (TSE), which is the operational base of the new market, and "AIM" from the London Stock Exchange's AIM, which was the model for TOKYO AIM.
Adopting the structure of London's AIM which uses the Nominated Advisors (Nomad) system, the rule book will provide a flexible regulatory framework that is targeted at professional investors. The TSE will work out the details while taking into consideration comments and opinions from the public and discussions with market-related parties before the market is launched.
It is anticipated that the launch of TOKYO AIM will take place in spring 2009 upon the acquisition of a license from the Financial Services Agency of Japan.
The following is a breakdown of the 3rd quarter financial results for the fiscal year ending March 2009.
Due to a more than 20% decrease in stock trading value during auction trading on a year-on-year basis and other factors, trading participation fees were down 20% from the corresponding period of the previous year. Listing-related revenue was down 23% from the previous year due to a decrease in IPOs, etc. However, one of the TSE subsidiaries, TOSHO SYSTEM SERVICE CO., LTD. generated revenue through its contract to dematerialize stock certificates with Japan Securities Depository Center, Inc. As a result, operating revenue was down 6% to JPY53.8 billion.
On the other hand, operating expenses were up approximately 20% to JPY40.7 billion from the previous year due to an increase in system-related expenses including depreciation costs.
As a result, operating profits during the quarter were down 44% to JPY13.0 billion from the previous year and ordinary profits were down 42% to JPY15.0 billion from the corresponding period of the previous year. After deducting corporate taxes and others, net profit for the quarter was down 47% to JPY7.8 billion.
The TSE Group conducted the third "Survey on the Tokyo Stock Exchange". In the survey, the TSE Group asked the general public including individual investors, trading participants, listed companies and institutional investors about the image they have of the TSE, how user-friendly the TSE market is, their level of satisfaction, etc. (This survey is conducted annually at this time of year on a regular basis.)
When asked about "Commendable measures recently taken by the TSE", a majority of trading participants and institutional investors responded "The development of new financial instruments such as ETFs" while many listed companies answered "The improvement of the listing system". The results are very encouraging as the TSE has particularly focused on these measures as priority issues. The TSE will continue to work towards being more proactive in developing these areas.
On the other hand, the TSE received slightly negative responses from some trading participants regarding the new professional-oriented market, as compared with other measures. While the TSE Group is not optimistic about setting up the new market under the present stringent circumstances, the exchange is fully aware of a necessity to plant the seeds of growth towards the new era in the current financial crisis. At the same time, the TSE Group believes that the new market will provide a solid foundation for economic growth in Japan and Asian nations.
The TSE Group will develop future business plans which reflect the information learned from this survey and continue endeavoring to improve operational management in order to gain greater appreciation and support from market users.