Japan Exchange Group Inc. (8697), created by the merger of the nation’s two biggest bourses, is willing to pursue an alliance or merger with an overseas exchange to drive growth, Chief Executive Officer Atsushi Saito said.
CME Group Inc., the world’s largest futures exchange, Deutsche Boerse AG (DB1), owner of the Frankfurt bourse, BM&FBovespa SA (BVMF3), operator of Latin America’s biggest trading venue, and Korea Exchange Inc. (028810) are all partners the company would be prepared to negotiate with, Saito said in an interview in London yesterday.
“We are waiting for a proposal from those who have a wide scope of business and big market share,” Saito said. “If these nice, handsome venues approach we are prepared to sit at the table.” He said no conversations have yet taken place and there’s no certainty an agreement would ensue.
The merger of the 134-year-old Tokyo Stock Exchange Group Inc., home to Toyota Motor Corp. (7203) and Canon Inc., and Osaka Securities Exchange Co. was part of a government plan to reinvigorate the market by forming a national bourse trading stocks, commodities and other securities. The new company, which started trading on Jan. 4, was formed as lower trading volumes drive exchanges around the globe to unite.
“In Japan, our market share is already more than 90 percent so we would need to look overseas,” said Saito, who was in London speaking at the ICMA Japan Securities Summit. “We are happy to have a conversation; we have not had an approach yet.”
Hong Kong Exchanges & Clearing Ltd. (388), the world’s largest bourse by market value, completed the $2.2 billion takeover of the London Metal Exchange in December. Singapore Exchange Ltd. (SGX), the operator of Southeast Asia’s biggest stock market, is in talks to join London Stock Exchange Group Plc by buying a stake in LCH.Clearnet Ltd., Europe’s largest clearinghouse, according to three people familiar with the negotiations.
IntercontinentalExchange Inc. is purchasing New York-based NYSE Euronext in an $8.2 billion transaction announced on Dec. 20 to expand into European derivatives as well as U.S. stocks and options.
Japan Exchange, which is working with Tokyo Commodity Exchange Inc. on its technology, would be interested in discussing further collaboration in a drive to boost its commodity-derivatives business, Saito said.
“We would like to talk to them about the business model,” he said, adding that hurdles in regulation, clearing and settlement would need to be resolved before any combination might occur.
Tocom, Japan’s biggest raw-material bourse, has been surpassed in size by China’s Shanghai and Dalian exchanges and hasn’t made a profit since the year ended March 2009 after a government crackdown to protect individual investors.
Japan Exchange is seeking to expand its post-trade operations after its interest-rate-swap clearing service drew 22 of the biggest banks, Saito said. In addition, the bourse will look to process more trades in new asset classes and is ready to serve other Asian exchanges, such as in the Philippines, according to the executive.
“We are also looking to any other Asian markets that don’t have their own systems,” he said. “We would be pleased to collaborate with them.”
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