Tokyo Stock Exchange Group Inc. said Tuesday it will delay going public until after 2010 due to deteriorating business conditions and slumping equity markets.
TSE President Atsushi Saito said separately that the company will carry out executive pay cuts of up to 30 percent as it anticipates a group pretax net loss of ¥7 billion for the year ending this month due to losses on its shareholdings.
The operator of the TSE had originally intended to go public later this year but decided it would not be able to secure enough funds by its market debut at a time when trading volumes have shrunk sharply as foreign investors pull out cash amid the market turmoil.
“We will make preparations to aim for an early listing after 2010 as we look for future recovery of market conditions and our earnings,” Saito said.
The delay also follows a court decision to put off indefinitely a ruling on Mizuho Securities Co.’s ¥41.5 billion damages suit against the bourse.
The ruling is expected to weigh heavily on its earnings because Mizuho Securities is demanding large-scale compensation for the massive losses the brokerage suffered over an erroneous order it placed in 2005, an incident it blamed on the TSE’s computer system.
The bourse had hoped to strengthen its financial base by going public to invest in advanced trading systems that will boost its competitive edge amid accelerating global consolidation of stock exchanges.
It has already invested about ¥30 billion in its next-generation computerized trading system, which is expected to begin operating next year.
But Saito emphasized that the delay in the plan to go public will not seriously affect its future system investments or its efforts to seek tieups with other exchanges across the globe.
Naked shorting ban
The ban on “naked short selling” of stocks will not expire as planned on March 31 and instead will be extended until the end of July to help stabilize domestic stock markets, financial services minister Kaoru Yosano said Tuesday.
“We think it is appropriate to keep restrictions on short selling and measures to facilitate companies’ purchases of their own stocks for the time being, while markets remain unstable,” Yosano told a news conference.
The Financial Services Agency introduced the ban on transactions known as naked short selling in late October amid stock plunges. The FSA has also relaxed restrictions on companies’ purchases of their own stocks to help lift share prices.
Short selling is believed to be one factor behind the market tumble. In such trading, large volumes of shares are borrowed and sold in the hope that the shares can be purchased later at a lower price.
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