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Hiroko Nakata
Tokyo, Nov 13: Driven by cost-cutting needs and heightened competition, the Tokyo Stock Exchange (TSE) seems set to end its 120-year history of floor trading of shares next April, industry officials said on Friday.
The TSE is seen following in the footstep of its rival Osaka Securities Exchange, which moved entirely to system trading last December, keeping up with the London and Paris stock exchanges.
While the move would mean the end of the TSE's time-honoured system of hand-signalling transactions, industry members were seen moving towards cheaper computerised trading, which has already been introduced in many European bourses.
TSE officials confirmed on Friday that an end to the costly floor trading system in April was proposed on Thursday by one of the exchange's policy-making committees and will be presented to the board of directors next Tuesday.
The TSE has long considered closing its floor trading. Maintenance of the "pit", where traders cut deals, costs the exchange about 300 million yen($2.45 million) a year. But it has taken time to make a final decision partly because smaller brokerage houses resisted, as the disappearance of floor trading will lead to a lack of information for them, brokers said.
"Three major brokerages are ready for an immediate shut-down of floor trading, but smaller ones are resisting," said a broker at a major Japanese securities house.
"But the TSE will be forced to end floor trade after the end of this fiscal year (in March) due to cost-cutting," he said.
Like other stock exchanges around the world, the TSE has struggled to survive in growing competition to keep members from leaving the bourse.
The number of member brokerages has been on the decline, with some foreign firms delisting shares from the TSE due to the high cost of keeping them listed and the small turnover of their shares.
In an attempt to secure a stable income base, the TSE said on Thursday it would increase the standard charge for initially listing shares on the bourse to 12 million yenfrom 10 million yen from January 1.
The bourse also said it was raising the annual fee for maintaining a listing. A listing of 10 million shares would cost 1.2 million yen per year, up from the current one million yen.
Earlier this year, the TSE announced a planned easing of various regulations.
The TSE also introduced new stock indices in April that enable investors to make easy comparisons between the Tokyo market and other major exchanges around the world.
Six new cash stock indices in line with the total value of the shares and trading volume were announced, aimed at more accurately reflecting stock market conditions.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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