Tokyo Stock Exchange and London Stock Exchange Group outline framework for new growth market
London Stock Exchange Group plc and Tokyo Stock Exchange Group, Inc. (the TSE) today published an outline framework for their new Tokyo-based market for growing companies. 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 structure will be based on the London Stock Exchange’s successful AIM market, which is underpinned by a regulatory framework specifically designed to suit the needs of smaller, growing companies, and by the key role played by Nominated Advisers (Nomads) in assisting issuers with 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 & CEO of the TSE, said: “Creating a market for professionals is an important step forward in internationalizing Japan’s financial markets. Through immense efforts by all parties involved, a required amendment in the Act has been passed and we have made substantial progress in developing the new market. 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.”
Clara Furse, Chief Executive of the London Stock Exchange, said: “Creating a market that will contribute to the growth of the world’s second largest economy and equity market is an immensely exciting opportunity. We have been making very good progress, building a strong partnership with both the Tokyo Stock Exchange and the Tokyo financial community to help unlock the potential of growth companies in Japan and beyond.”
The new market will draw on the London Stock Exchange’s experience and expertise as the creators and operators of AIM, the world’s leading market for growing companies, and on the TSE’s expertise and strong infrastructure in the Japanese market. 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.
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For further information, please contact:
Tokyo Stock Exchange Group, Inc.
Mitsuo MIWA, Media Relations
London Stock Exchange plc
Patrick Humphris / Catherine Mattison
+ 44 (0)20 7797 1222
Notes to editors
Comments on the new market outline should be sent to by 29 August 2008.
AIM, the world’s largest market for growing companies, was established by LSE in 1995. It combines an appropriate regulatory framework with high standards of information disclosure that meet the needs of global investors. As of the end of June 2008, 1,657 companies were quoted on AIM (including 339 non-U.K. companies), with a total market capitalization of £91.3 billion (19.9 trillion yen). The market is designed to offer companies appropriate mechanisms for raising capital both on and after admission. Since its creation, companies quoted on AIM have raised a total of £59.0 billion (12.9 trillion yen), of which £26.9 billion pounds (5.9 trillion yen) was raised through further fundraising after admission to AIM.
About Nominated Advisers (Nomads)
The role of the Nomad is key to AIM’s principles-based regulatory framework, facilitating a market that is simpler and more efficient for growing issuers to use, and gives investors confidence that the companies they are investing in are appropriately regulated.
Companies proposing to admit to AIM must engage a Nomad that is approved and monitored by the Exchange to assess their suitability for a public market and advise them on the admission process. Once on AIM, companies must retain a Nomad at all times, and the Nomad must ensure the company’s ongoing compliance with the AIM rules, with particular regard to disclosure obligations.
The close association between the Nomad and their client companies gives Nomads a powerful incentive to ensure that the companies they advise maintain high regulatory standards, in order to safeguard their own reputation and investors’ trust in their ability to bring quality companies to the market.