Tokyo and London Exchanges team up to create high growth market in Japan

The proposed market structure has been developed following extensive discussion with market participants, and will take advantage of the opportunity created by the revised Financial Instruments and Exchange Act passed in June 2008, which enables the establishment of Exchange-regulated markets.

The new market will be based on London’s Alternative Investment Market (AIM) which is designed to suit the needs of smaller, growing companies. It particular it will duplicate AIM’s Nominated Advisers (Nomads), which assisting issuers in meeting their obligations as public companies.

It is anticipated that the new market will address the funding gap faced by growing companies in Japan and elsewhere in Asia, while providing new opportunities for a range of Japanese and international professional investors.

Atsushi Saito, President and CEO of the Tokyo exchange said, “Creating a market for professionals is an important step forward in internationalising Japan’s financial markets.”

“Adopting the Nomad system, a highly effective and proven structure used in operating the AIM market in the UK, will be an innovation in Japan. I firmly believe that it will serve as a major driver for the development of Japan’s securities markets as a whole. In partnership with the London Stock Exchange, we hope to build a dynamic risk equity market in Japan, on which companies aiming to raise capital can work together with professional investors, to develop a most successful growth market in Asia.”

The new market will be a joint venture in which the London Stock Exchange and TSE are equal partners, and will apply for permission to establish the market as soon as possible following the implementation of the revised Financial Instruments and Exchange Act, aiming to start full operation of the market in early 2009.

Comments on the new market outline should be sent to http://www.tse.or.jp/english/rules/newmarket/index.html by 29 August 2008.