The purpose of the MOU is to set forth a framework for performing activities in which the two Exchanges will cooperate with each other in developing and fostering a favourable environment for the facilitation of cross-border capital flow between Japan and Korea. Those activities may include supporting promotional activities for both TSE and KRX markets, IR activities of companies from both countries, continuous feasibility studies on co-trading arrangements between TSE and KRX, etc.
As a follow-up measure for the 'Memorandum of Intent' regarding market linkage discussion signed in August, 2005, the MOU is initiated for both exchanges to collaborate more specifically on the market alliance. By implementing cooperative activities in a more specific manner, the two exchanges look forward to building a closer partnership with each other and advancing the cross-border capital movement in the Asian region.
TSE President & CEO, Mr. Taizo Nishimuro, commented "This collaboration with KRX, one of the major exchanges in Asia, provides an excellent opportunity to enhance further cross-border capital flow in our region. I strongly hope that this initiative will lead to a strategic alliance among the stock exchanges in North-Eastern Asia, which would provide investors and other market participants with greater value and more diverse services."
Mr. Young-Tak LEE, KRX Chairman & CEO, commented "I expect that it will lead our two exchanges to provide customer-oriented value with tangible benefits. Moreover, I hope that this initiative between the two exchanges will further develop to jointly cope with the drastic changes of business environments such as strategic partnership and M&A's among exchanges around the world.”
About Tokyo Stock Exchange, Inc.:
Tokyo Stock Exchange, Inc. is the premier exchange for Japanese cash equities and derivative products from the perspective of investors both in Japan and abroad. In 2005, stock trading volume on TSE reached 558 billion shares, an increase of 48 percent from the previous year. This has positioned TSE as the central market of Japan, accounting for 91.3 percent of the total volume of stock trades in the country. Also in 2005, TSE recorded an average daily trading volume of 2,281.2 million shares, and daily average trading value of JPY 2,007.2 billion. At the end of April 2006, the number of listed Japanese companies was 2,345, with a market capitalization reaching JPY 560.6 trillion. In addition to its core Japanese equity market, TSE provides markets for derivatives products such as long-term Japanese government bond futures and TOPIX index futures. Japanese Government Bond (JGB) futures trading, the cornerstone of TSE's fixed income derivatives market and the benchmark of the Japanese bond market, continues to thrive on investor demand from across the globe. The JGB futures contract is one of the most active long-term interest rate futures contracts in the world, with average daily trading volume reaching approximately 40,000 contracts in 2005. The TOPIX futures contract, which is actively traded by institutional investors, is the leading stock index futures product in Japan, with the largest open interest among Japanese stock index futures products. The average daily trading volume rose to approximately 52,000 contracts in 2005, an increase of about 25% over 2004. With respect to these cash and derivative products, the TSE, as a self regulatory organization, continuously makes every effort to provide a fair, transparent, and efficient market.
About Korea Exchange, Inc.:
Korea Exchange, Inc. (KRX) is the sole exchange in Korea which was established in January 2005 through the merger of Korea Stock Exchange, KOSDAQ and Korea Futures Exchange. KRX operates the markets for equities, bonds, and various derivatives products including equity index futures and options, commodities, currency and interest rates. KRX has over 1,600 listed companies ranging from the large, well-known "blue-chips" to young, high-growth enterprises. The combined total market capitalization was a KRW 726 trillion and the daily average trading value was about KRW 4,950 billion in 2005. Among the various derivatives products listed on KRX, KOSPI 200 index futures and options have been the most actively traded products in the world. The equity linked warrants (ELW) market, introduced in Dec. 2005, has been so successful with over 831 listed ELWs and daily average trading value of over KRW 152.5 billion as of the end of June 2006. KRX has made efforts to transform itself to the major financial market by featuring diverse products, improving the operating efficiencies and forming the strategic alliances with other major exchanges both in the Asian region and in other parts of the world.
