Japan pulls plug on Nasdaq venture

By RAY HEATH
Updated:

 

AMBITIOUS plans by the Nasdaq screen-based stock exchange in New York to build a major market for new companies in Japan and expand its 24-hour global operations have collapsed after the Osaka Stock Exchange called a halt to the joint venture.

The OSE said it would cancel its contract with Nasdaq Japan from 15 October, following the reported decision by Nasdaq in New York to pull out of the Japanese operation.

The OSE, which is Japan's number two market, will continue to run the day-to-day operations under the name of Japan New Market, but it will be in direct competition with the Mothers market - the Market of High Growth and Emerging stocks - run by the Tokyo Stock Exchange.

The formal pull-out has ended a week of rumours that the project was in deep trouble as the extended Japanese bear market, the struggling economy and regulatory red tape stifled Nasdaq's plans to build a market which would attract Japan's brightest young companies.

Earlier this week Nasdaq set a deadline of the end of the month to reach a decision on the future of the market in which it has 43% stake, along with its major partner, Softbank, Japan's once high-flying internet venture capital firm. The remaining 14% is held by a group of Japanese, European and US investment houses.

Nasdaq officers in Japan are reported to have confirmed the view that closure was inevitable due to the lack of response and the steady pile-up of losses.

When Nasdaq Japan was launched with much fanfare two years ago, it set a target of attracting up to 2,000 hot-shot enterprises, but managed only to list 98 companies, although it claimed to have captured around 30% of the initial public offerings market. This wasn't enough to support the market and trading losses had piled up to 5.2bn yen (£27m) by the end of 2001.

Despite Nasdaq's success in building up its US operation, Nasdaq Japan failed to rival the Jasdaq system operated by the Japan Securities Dealers' Association, which has 900 listed firms.

As well as building up a thriving market for entrepreneurs in Japan, Nasdaq's motives in setting up the venture also reflected its ambitions to provide a seamless 24-hour trading global trading structure. These plans will also have to go on hold.

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