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The
Tokyo Stock Exchange or TSE, located in Tokyo,
Japan, is the second largest stock exchange
market in the world by market value, second only to the
New York Stock Exchange.
It
currently lists 2,271 domestic companies and 31 foreign
companies, with a total market capitalization of over 5
trillion USD. [1]
The
Tokyo Stock Exchange was established on May 15, 1878, as
the Tokyo Kabushiki Torihikijo under the direction
of then-Finance Minister Okuma Shigenobu and capitalist
advocate Shibusawa Eiichi. Trading began on June 1, 1878.
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Structure
The main
trading room of the Tokyo Stock Exchange, where nowadays the
trading is done through computers
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, Tokyo, 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"
section (for high-growth startup companies). As of March 2006,
there are 1,721 First Section companies, 489 Second Section companies
and 156 Mothers companies.
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, 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 15th June
2007, the TSE paid $303 million to acquire a 4.99% stake in Singapore
Exchange Ltd. [2]
History
The Stock
Exchange occupies a narrow site in Tokyo's securities district
Prewar
history
The Tokyo
Stock Exchange was established on May 15, 1878, as the Tokyo
Kabushiki Torihikijo 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. 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 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 with its members
as shareholders.
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. [3] Trading was suspended for four-and-a-half hours.
During the
initial public offering of J-Com on December 8, 2005, an employee
at Mizuho Securities Co., Ltd. mistakenly typed an order to sell
610,000 shares at 1 yen, instead of an order to sell 1 share at
610,000 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. [4] [5] [6] [7] [8] [9] [10] [11]
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. [12]
Alliances
London Stock Exchange and Tokyo Stock Exchange
are developing jointly traded products and share technology, marking
the latest cross-border deal among bourses as international competition
heats up. Tokyo Stock exchange is also looking for some partners
in Asia, and more specifically with Singapore Exchange, which
is considered as becoming a leading financial hub in Asia-Pacific.
Recently, some rumors close to the deal are telling that Tokyo
Stock Exchange is preparing for the first semester of 2008 a takeover
the Singapore Exchange, or at least take a major stake. In June
2007, Tokyo Stock Exchange already purchased a 5% of SGX, and
it is only the beginning of a bigger participation.
References
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