The prospects for Tokyo Stock Exchange Group Inc. going public on its own market this year are becoming increasingly murky due to slumping equity markets and the bourse’s own eroding profits amid the global financial crisis.
An unexpected delay in a key court decision over a massive damages suit against the TSE is also raising the possibility it may review the timing of its plan, officials familiar with the matter said.
By going public, the TSE had hoped to raise funds to seek tieups with other exchanges and to invest in advanced trading systems to boost its competitive edge amid accelerating global consolidation between stock exchanges.
But trading volumes on the Tokyo markets have shrunk sharply, with foreign investors pulling out their funds following the spread of the global credit turmoil.
With stock markets languishing, there is a growing possibility the TSE may fetch a low share price when it debuts and be unable to secure the funds it had anticipated from the listing.
“If markets continue to trade at current levels, we may have no choice but to give up going public,” a senior TSE official said.
The bourse has already invested about ¥30 billion for its next-generation computerized trading system, which is expected to begin operating next year.
“If we cannot improve our fundraising abilities by going public, we will not be able to survive future competition,” the official said.
The TSE may also be forced to put off its plan after a court decision — initially expected in February — over Mizuho Securities Co.’s ¥41.5 billion damages suit against the bourse was postponed for an indefinite period.
Mizuho filed the suit after suffering massive losses over an erroneous order it placed in 2005, an incident it blamed on the bourse’s computer system.
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