Osaka’s past, present and future

Japan’s second city is best known in finance circles as the one of three locations in which the Nikkei 225 futures contract can be traded (alongside Singapore and Chicago), but visitors to the Osaka Securities Exchange might also consider the ATC Ageless Center.

Located at the Asia and Pacific Trade Center, a stone’s throw from the Intex Center which is currently hosting the Sibos 2012 banking conference, the Ageless Center tackles a problem that Japan is facing much sooner than the rest of the world: the super-ageing society.

The Japanese government has predicted that two in every five of Japan’s population will be 65 or over by 2055. The Ageless Center reflects a realisation that only a limited proportion of the nation’s financial resources should be utilised looking after those too frail to look after themselves.

The center has two sections. The first is a permanent exhibition focused on "health, welfare and care-giving". In reality, it is largely a showroom for products designed to improve the mobility and general quality of life of the elderly and their carers, which also helps younger generations to experience the difficulties they may face in their advanced years. The second section is devoted to care prevention. This space serves as a large community centre for Osaka's retired citizens who wish to remain active physically and mentally. Here, they can participate in a variety activities from karaoke to table tennis to tai chi, with the aim of prolonging an independent life for as long as possible.

The competing needs of young and ageing populations are well known. Japan is far from alone in worrying about saddling the young with taxes to pay for the needs of the older generations. On the Saturday I tried to visit the Ageless Center, those competing needs were thrown into slightly comic relief by the fact that preparations for a pop concert had closed the Ageless Center. The gentle strains of retired karaoke singers was replaced by thousands of teenagers, many colourfully dressed in cosplay or as their favourite manga characters. As a result, my impressions of the facility rely heavily on a six-minute corporate video.

The Asia and Pacific Trade Center is sandwiched in between two busy wharfs in the centre of a vast port that remains a major contributor to Osaka's economy and the key reason why the city gave birth to a bourse that became one of the world's largest derivatives exchanges. The Osaka Securities Exchange is in the process of merging with the Tokyo Stock Exchange with the stated aim of creating a venue that will serve as “the growth engine of the Japanese economy and the financial hub of Asia”, in the words of TSE president Atsushi Saito.

For those working in investment management of course, the problem of the super-ageing society is both a personal and professional issue. The ability of investment institutions to source sufficient returns from the financial markets to fund pensions is under increasing scrutiny in light of the financial sector scandals of the recent past and the low growth prospects of the immediate future. The merger of Japan’s major exchanges may well reduce trading costs and allow investment firms to generate returns through a wider range of investment and trading strategies. But there are many more changes that would also help, such as domestic investment institutions being willing to invest beyond Japanese shores, source liquidity from alternative exchanges, or working their broker relationships harder to unbundle executing and trading costs.

Sometimes the end-goal of efficient investment processes can seem abstract, but the ATC Ageless Center – even via video – helped bring it home to me.