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TSE merger with Osaka bourse up, running

Kyodo

The Tokyo and Osaka bourses integrated the trading of shares Tuesday at the Tokyo Stock Exchange, making it the world’s third-largest exchange by number of listed companies.

Japan Exchange Group Inc., created this year through the merger of the operating companies of the TSE and the Osaka Securities Exchange, aims to attract more foreign funds by boosting trading efficiency through the integration to meet fierce international competition.

“Now I can breathe a little easier,” TSE President Akira Kiyota said at the start of trading, which went off without a hitch and saw the Nikkei 225 stock average end the morning session up 61.95 points, or 0.43 percent, at 14,568.20. The first day ended with the Nikkei at 14,599.12, a gain of 92.87 points.

“The merger of the cash markets is a first step in the realignment of markets (in Japan),” Kiyota said, adding he hopes to make the TSE more international in nature and a “representative of Asian markets.”

The number of listed firms on the TSE rose from 2,323 to 3,423 with the addition of 1,100 stocks previously traded only on the OSE. That raised the Tokyo bourse from seventh to third place in the world in terms of listings, after India’s BSE and Canada’s TMX Group.

By slashing costs through the merger, the umbrella company known as JPX plans to bolster promotion of Japanese equities overseas and enhance fast transaction systems to compete against international rivals when U.S. and European bourses are expanding through acquisitions and Asian exchanges are growing rapidly.

With a trading value of $3.04 trillion in the first five months of 2013, the TSE already ranked third globally after NYSE Euronext and NASDAQ OMX. But only a small margin separates it from Chinese bourses as the combined trading value at the Shanghai Stock Exchange and Shenzhen Stock Exchange totaled $2.94 trillion in the same period.

The merger will lower costs for firms that were on both bourses, while firms newly transferred from the OSE to the TSE will have more prospects of becoming a component of investment trusts.