Japan's FSA To Streamline The Tokyo Stock Exchange

Japan’s Financial Services Agency (FSA) is planning to realign and streamline the Tokyo Stock Exchange — the world's third-largest by market cap — from four trading markets to three. 

What's Happening With The Tokyo Stock Exchange?

The TSE operates four cash equity markets for investors, including non-professional; First Section; Second Section; Mothers; and JASDAQ.

A plan is in motion to revamp the Tokyo Stock Price Index (Topix) of all issues listed on the TSE’s First Section into a new index covering fewer actively traded stocks.

Yasumasa Tahara, the director of Japan’s Financial Services Agency, discussed the realigning of the TSE during a press conference on Wednesday hosted by the Tokyo Metropolitan Government.

The TSE First Section does not have some very good companies,it is hard for the TSE to sort hem out and the recent performance of the Topix has been dragged by those companies, Tahara told Benzinga.

The FSA is thinking about re-categorizing them and creating a premium market, he said, adding that the companies that belong to the market should have good corporate governance.

What Happens Next With The Tokyo Stock Exchange?

So far, the proposals have been presented at a recent meeting of a working group of the Financial System Council, an advisory panel to the prime minister.

Japan has many good companies, and small- and medium-sized enterprises are growing rapidly, Rheos Capital Works CEO Hideto Fujino said at a separate press conference on Wednesday hosted by the Tokyo Metropolitan Government. Rheos has $7.8 billion in assets under management. 

The fund has been able to yield higher returns than the Topix index because of its strong customer base, which has provided a regular stream of income, Fujino said. 

TOPIX ETF Gathers $1.58B

Passive investments in Japan have seen huge inflows.

At the end of September, the Bank of Japan held ETF/ETP assets of $256 billion, according to ETFGI, an independent research and consulting firm. 

The substantial inflows can be attributed to the top 20 ETFs by net news assets, said Deborah Fuhr, managing partner and founder of ETFGI. 

Those ETFs collectively gathered $6.122 billion in September, and the TOPIX Exchange Traded Fund gathered $1.58 billion alone.

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Photo By Tanzeel Akhtar.