Japan Bourse Sees Big Derivatives Business

Japans number two stock exchange is gearing up for a burst of business from Big Bang deregulation and is hoping to carve out a role as the nations stock-derivatives capital.

But this may be a tall order for a regional bourse whose turnover is now only 10 percent of all stock trading in Japan.

Osaka Securities Exchange (OSE) officials said they are racing to make sure the bourse is a big beneficiary of trading liberalisation under Prime Minister Ryutaro Hashimotos financial Big Bang plan.

The proposed changes include, among other things, widening stock trading to include options on individual stocks that would mean lucrative new business. Japan, which has been generally cautious on derivatives, has stock index options but not options on individual stocks at the moment.

 

We still have so many issues we have to tackle here within the framework of deregulation, the OSEs president, Kyoji Kitamura, told a recent news conference. We couldnt get to any of them last year, so we really have to focus on it now.

Kitamura did not go into detail but said the bourse would like to develop more derivatives-based products and take on a role similar to that of Chicago, the US centre for financial futures. Industry sources say the bourse is aiming to start trading the new options in July.

The new instruments would be a good fit for the OSE, which already sees itself as a derivatives centre as the birthplace of Nikkei 225 futures.

But it will be competing with the Tokyo Stock Exchange, Japans main bourse.

The Tokyo Stock Exchange (TSE) could aim to be like New York or London. We are aiming to be on equal footing with Chicago, Kitamura said.