The Tokyo Stock Exchange Group Inc. and the Osaka Securities Exchange will work toward getting their new holding company, Japan Exchange Group Inc., listed on the first section of the TSE in January, sources said.
The two companies plan to submit an application for the listing to the Financial Services Agency after a special shareholders’ meeting scheduled for November, sources said. The special meeting will be held to seek approval of the business integration of the TSE and OSE under the holding company on Jan. 1.
The two exchange operators also decided to adopt the derivatives trading system of the OSE after the integration, according to the sources. They will work to complete the derivatives market integration by around January 2014, after combining their cash stock markets, other than those for startup firms, next July.
The TSE and OSE are speeding up procedures for the business integration, including the selection of board members for the holding firm and the development of a business plan. At board meetings in late October, the two firms will decide the content of proposals to be submitted to the special shareholders’ meeting.
For the planned listing on the TSE, the holding company will take over the securities code of the OSE, which is listed on the OSE’s Jasdaq market for startups and will be the surviving company, the sources said. At the launch of the new holding company, TSE shareholders will receive 0.2019 OSE share for each TSE share. OSE shares will become those of the holding company.
The TSE and OSE had agreed to work to achieve an early listing of the holding company on the first section of the TSE while maintaining the company’s listing on the OSE.
The TSE is examining the listing eligibility of the holding company on the TSE. To ensure objectivity, the two firms will ask the FSA to check the result.
Online brokers regroup
Internet-based securities companies are looking to create new business models in the face of declining earnings as individual investors shun the stock market.
In the April-June quarter, all five major online brokerage firms — SBI Securities Co., Rakuten Securities Inc., Matsui Securities Co., Monex Inc. and Kabu.com Securities Co. — logged shortfalls in revenue and profit.
The stock market is “virtually closed” following price falls caused by unfavorable developments such as the European debt crisis, said Michio Matsui, president of Matsui Securities.
The situation is gravely affecting online stockbrokers, which, as Kabu.com President Masakatsu Saito put it, “rely heavily” on brokerage commissions paid by individual investors for stock trading.
To turn the situation around, Matsui Securities has lowered its minimum price unit to ¥0.1 per share, compared with ¥1 for conventional stock trading involving payments by investors upon the conclusion of deals.
Monex is seeking a new earnings opportunity in foreign exchange margin trading. “We will expand our foreign exchange trading business as exchange rates move more (widely)” than stock prices do, Monex President Oki Matsumoto said.
Hoping to boost their commission revenues, other online brokerage firms are following suit.