Tokyo Stock Exchange Vision For The New Year - Letter From The TSE President

My best wishes to you for this New Year and the new millennium. The Japanese 'Big Bang' has brought about dramatic changes in the Japanese financial market. At the same time, competition between domestic and international markets is ever intensifying. With our deep pool of liquidity, the Tokyo Stock Exchange is the central domestic market, and plays a key role in the international capital market. In order to consolidate our unshakeable position, we have forged ahead with a variety of reforms and new initiatives balancing the opposing themes of competition and cooperation. Examples of these are the creation of the Mothers market for emerging companies, the planned alliance with the New York Stock Exchange, revisions to listing criteria and the creation of disclosure regulations. We hope to be the architects of the new millennium by actively pursuing a range of policies as set out below. The first of these is pressing for the Securities Exchange Law to be revised to allow the possibility of demutualisation by the Tokyo Stock Exchange. Demutualisation would allow us greater flexibility and speed when responding to industry developments and changes. In addition, we are working towards cementing further international alliances, towards strengthening our competitive position and maximising convenience for users. As part of our drive to energise the market, and in response to user demand, we are increasing our range of attractive investment products by introducing derivatives based on new indices and company-type investment trusts. In tandem with measures to increase market activity, we are taking steps to maintain our high standards of security and reliability by reducing settlement risk. We are introducing DVP settlement, reducing the settlement period, and enhancing the trading supervision system to handle increasingly diverse and sophisticated investment tools. As we enter a new era of popular retail investment, the warning caveat emptor becomes increasingly relevant. Investors must take responsibility for their investment decisions. To allow them to do so timely and appropriate corporate disclosure is of the essence. Being aware of this, the Tokyo Stock Exchange continues to strengthen the requirements and mechanisms involved. We expect our listed companies to actively join us in the pursuit of this goal. As a key factor in the vitality and competitive power of our exchange on the international stage, the fair and impartial taxation of financial products is a major concern. We will continue to lobby the relevant bodies for the complete removal of double taxation on dividends, and a review of the capital gains tax on securities. These are just some of the concepts we will be pursuing in the coming year. In the spring the former trading floor will make its debut as TSE Arrows, our new information centre and the new face of the Japanese financial market. Reforms at the Tokyo Stock Exchange will continue as we work towards our rebirth, in 2001, as an organisation ready and able to respond to the needs of the 21st century. We will devote ourselves to the creation of a highly efficient and transparent market, upon which users and the nation can rely. I hope that once again we may count on your support and cooperation for this coming year. Mitsuhide Yamaguchi, President & CEO, Tokyo Stock Exchange.