The green light was lit on the creation of a Japanese mega-bourse Tuesday as the shareholders of the Tokyo Stock Exchange and the Osaka Securities Exchange approved a US$1.6 billion merger.
The final hurdle was cleared by two extraordinary meetings of the respective exchanges to approve the transaction.
The merger is scheduled for 1 January and will create the third-largest exchange in the world by market value behind New York Stock Exchange operator NYSE Euronext and Nasdaq OMX.
However, with regional rivals such as Shanghai likely to be growing rapidly in the coming years, the new Japan Exchange (JPX) will have its work cut out to become the Asian financial hub it aspires to be.
TSE president Atsushi Saito will be CEO of JPX, with OSE president Michio Yoneda becoming COO. Saito has stated he wants the new bourse to not only be a regional hub but no less than “the growth engine of the Japanese economy".
The merger follows protracted negotiations between two sides, which reportedly saw high-level government intervention behind the scenes to ensure a deal came to fruition. The new entity’s two cash-equity platforms will be merged by July and their derivative operations by March 2014.
The unified exchange platform will offer trading in approximately 3,500 listed companies with a combined capitalisation of around US$3.5 trillion, 140 exchange-traded funds, as well as derivatives including TOPIX futures, Nikkei 225 futures, and JGB futures, according to Natsuho Torii, a TSE spokesperson.
“This merger improves market convenience through technological integration and unifying exchange platforms, which will offer more investment opportunities by increasing product variety on a single platform,” said Torii.