The head of Nasdaq's international operations reiterated Monday that the prolonged domestic slump was behind Nasdaq Stock Market Inc.'s decision to pull out of Japan.

"The tough and unfortunate decision (to withdraw from Japan) was caused by conditions beyond our control," John Hilley, chief executive of Nasdaq International Inc., said during a news conference in Tokyo.

On Friday, Nasdaq said it will withdraw from the Nasdaq Japan Market, which it set up in partnership with the Osaka Securities Exchange and Softbank two years ago -- just as the U.S. tech bubble was beginning its implosion.

The market will be tentatively renamed the Japan New Market and will continue to be operated by the OSE. Nasdaq Japan Inc. will eventually be dissolved, Hilley said.

During the news conference, aimed at soothing jittery investors and companies, he repeatedly stressed the firm's commitment to provide a smooth transition for the 98 listed companies to the Japan New Market, saying the OSE is allowed to use the Nasdaq brand until the end of the year.

"Trading will continue as normal and the companies' access to the capital market will not be interrupted," he said.

The pep rally came as some listed companies are already mulling moves to other bourses.

Hilley also stressed that the decision to pull out of Japan was made due to the worsening economic conditions in the country; he also signaled an end to expansion in Asia and said the firm will focus its attention on Nasdaq Europe for the time being.

At the same time, Hilley said restrictive Japanese trading rules stymied business by preventing Nasdaq Japan from trading more freely in international shares.

He also blamed the unwillingness of Japanese brokerages to adopt an upgraded computer system that would link Nasdaq's Japanese listings with Nasdaq's U.S. and European markets in 2003. The system is already in place in Europe.

FSA rules out merger

The head of the Financial Services Agency on Monday balked at a proposed amalgamation of the Jasdaq market and a planned successor bourse to the Nasdaq Japan market for startup venture businesses.

"Letting the two compete would be more advantageous to listed companies and investors," FSA Commissioner Shokichi Takagi said at a news conference. "We prefer a regime in which efficacy would be spurred by an inter-market competition backed by a market mechanism."

Takagi made the remarks three days after the Osaka Securities Exchange announced it agreed to end a cooperative arrangement with Nasdaq Japan Inc. on Oct. 15.

The OSE made the bitter decision as Nasdaq Stock Market Inc. of the United States, operator of the world's largest electronic stock market, decided to pull out of the flagging Japanese stock market.

With the termination of the OSE-Nasdaq Japan alliance, the OSE will rename the Nasdaq Japan market tentatively as "Japan New Market."

Shares of firms listed on Nasdaq Japan will be traded on the successor bourse, with listing and trading rules remaining intact, the OSE said.

Asked about possible adverse consequences for the Nasdaq Japan-listed firms, Takagi said, "Although I do not believe it (the pullout) will immediately hurt the firms, I would like to monitor whether it might not inconvenience the firms and investors."

The Nasdaq Japan market, managed by Nasdaq Japan, opened in June 2000 within the OSE premises as a fundraising venue primarily for startup ventures. About 100 companies are listed on the market. Softbank Corp. and Nasdaq Stock Market each own 43 percent of Nasdaq Japan.

Meanwhile, the OSE said a new startup venture, Tokyo-based NetVillage Co., will list its shares on the planned successor to Nasdaq Japan on Sept. 19.

NetVillage provides services to Internet-capable mobile phones. It logged 1.33 billion yen in sales and 114 million yen in pretax profit in the business year that ended March 31.

A NetVillage official said: "The name of the market where we will debut does not have to be Nasdaq (Japan). We are not contemplating listing shares on bourses other than (Japan New Market)." The official added the firm aims to solidify its financial standing through the planned debut on the envisioned bourse.