Atsushi Saito spearheaded the rehabilitation of supermarket chain Daiei Inc. and 40 other ailing companies until March as president of the Industrial Revitalization Corp. of Japan, the government-backed bailout agency that disbanded in March.

Now Saito, 67, is set to embark on a new challenge — turning the Tokyo Stock Exchange into the No. 1 market in Asia.

“The (TSE’s) goal is to establish its position in the world as a gateway to Asia’s financial market,” said Saito, who will replace Taizo Nishimuro as president at the TSE’s annual shareholders’ meeting June 22.

The TSE is promoting strategic alliances with foreign stock exchanges as competition among the world’s bourses intensifies. Saito will be tasked with working out the details.

The TSE and the New York Stock Exchange agreed to a tieup in late January that includes a possible capital alliance. The Tokyo-based bourse is also in talks with the London Stock Exchange and bourses in Asia, including South Korea and Shanghai, on setting up operational tieups.

Last June, the NYSE and pan-European stock exchange Euronext agreed to merge to create the world’s first intercontinental market, accelerating the trend toward industry consolidation.

“We will take win-win approaches in working out the details (of our alliance),” Saito said. “Every party must benefit from the partnerships.” He also said the TSE must be careful about cultural differences and recklessly importing systems from other bourses, which he said he believes will only lead to confusion.

The TSE has high expectations of Saito, who has expertise in the securities business, overseas experience and management abilities, as the bourse aggressively pursues cross-border alliances.

In a 35-year career at Nomura Securities Co. — the nation’s leading brokerage — Saito worked in New York for a combined 10 years, eventually serving as executive vice president from 1995 to 1997.

But Saito said it is important to boost the TSE’s competitiveness before hastily concluding alliances.

“What we have to do first is to build a foundation for (future growth) by expanding our range of financial products and providing ample liquidity,” to make the bourse more convenient for investors, he said.

This includes listing its stock on the TSE by 2009 to expand its fundraising capacity and boosting transparency.

To prepare, the bourse is working to reorganize itself and build a next-generation trading system scheduled to go online in 2009.

The TSE is set to become a holding company in September, with a market management firm and a “self-regulatory” firm to ensure fair trading under its wing. Saito will double as president of the holding company and the market management firm.

The reorganization is aimed at enhancing corporate governance and credibility at the TSE, which has suffered heavily from system failures and lack of trading capacity.

Critical to this are the system upgrade and the introduction of the new one, which are intended to regain investor trust following a major system crash in November 2005 caused by its failure to allow Mizuho Securities Co. to correct an erroneous trading order.

The programming blunder at the TSE cost Mizuho Securities more than 40 billion yen.

Then in January 2006, the TSE was forced to close early after prosecutors raided Internet startup Livedoor Co., triggering a huge selling frenzy that overwhelmed its trading system.

“The system directly affects the competitiveness of a stock market,” Saito said, noting the next-generation system will have to be capable of handling orders faster.

In its midterm plan through the 2009 business year, the TSE has budgeted 46.4 billion yen for information technology equipment.

“I think we will have to continue making a constant investment of about 10 billion yen to 20 billion yen (annually) for IT facilities.”

Saito said the listing of the TSE’s own shares will create a bit of tension at the bourse.

“It’s good to work under the surveillance of shareholders,” he said.

At the same time, however, Saito said the TSE should always keep in mind that the bourse has a public role.

As it prepares to go public, Saito said, “the TSE must be more sensitive to the demands of society and the market.”

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.