Following approval by shareholders on Nov. 20, Tokyo Stock Exchanges Group and Osaka Securities Exchange will merge on Jan. 1 and the Japan Exchange Group will become the holding company for the two exchanges. The newly created entity will rank fourth in the world in size, following the London Stock Exchange, and the aggregate value of shares of the businesses listed in the Tokyo and Osaka exchanges as of October make it the largest in Asia.
The new entity will likely have a difficult time as Japan's stock exchanges are facing very tough competition from overseas stock exchanges. Nonetheless, it is hoped that it will help to reinvigorate business activities in Japan and resuscitate the sluggish economy by enabling businesses to raise funds through stocks with ease.
TSE controls more than 90 percent of spot stock transactions in Japan, while OSE dominates trading of financial derivatives. Spot stock trading on the two exchanges will take place solely in Tokyo by July 2013, while the markets for financial derivatives will be concentrated in Osaka by March 2014.