The Tokyo and Osaka exchanges appear close to competing details of a plan to merge.

The Tokyo Stock Exchange and Osaka Securities Exchange could merge as early as next fall, according to a report by Japan’s Nikkei news service.

The possibility of a merger first arose in March, as Japan was suffering through the after-effects of its earthquake.

The Tokyo exchange would become the majority owner of the Osaka exchange. The Tokyo stock market handles roughly 20 times the dollar value of trades that the Osaka exchange does, according to statistics kept by the World Federation of Exchanges.

The Tokyo exchange would take more than a 50 percent stake, but less than a two-thirds share. If it crossed that mark, the Osaka exchange could not continue to operate as a listed, public company.

The Tokyo exchange is not a listed company.

A final agreement to merge could be reached by the end of this month, the TBS network said.

The Tokyo exchange’s president, Atsushi Saito, likely would become the chief executive of the combined company.

Michio Yoneda, president of the Osaka exchange, likely would be chief operating officer.

The merger would give the venues more heft in competing for listings in Asia with rivals such as the Singapore Exchange.

"I believe direction-wise, such a move is a good one," Tokyo Stock Exchange President Atsushi Saito said in March. "For Japan to compete in Asian and global markets, I believe it necessary to cooperate in a positive manner."

When the two Japanese exchanges first started to talk, four other exchange mergers were on the table. These were of the Singapore and Australian exchanges; the London Stock Exchange Group and the TMX Group in Canada; NYSE Euronext and Deutsche Borse; and BATS Europe with Chi-X Europe.

Only the last two remain on the table, with completion scheduled for the turn of the year. 

-- This article first appeared on Securities Technology Monitor.





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