Table Speech

Initiation Speech

October 15, 2008

Mr. Minoru Masubuchi,
Mr. Kenjiro Horikawa

Initiation Speech
“The Tokyo Stock Market as Seen from Security Finance”

Mr. Minoru Masubuchi,
Japan Securities Finance Co., Ltd.

 Unfortunately, the recent Tokyo stock market is lacking in strength. Aside from the current problem of a simultaneous global decline in stock prices under the situation of the financial crisis, the international position of the Tokyo stock market has been on a decline.

 Around the end of 1989, at the peak of the economic bubble, the market capitalization of the Tokyo Stock Exchange (TSE) exceeded that of the New York Stock Exchange and held the position of largest in the world. However, now the market capitalization of the TSE is $3.4 trillion, a level that falls below that prevailing at the end of 1989.

 In contrast, the current market capitalization of the New York Stock Exchange is roughly $13 trillion, over four fold its value at the end of 1989. The London Stock Exchange has also roughly tripled, and the Hong Kong Stock Exchange and Clearing has grown almost 20 times in size.
For Japan, bringing back vitality to the Tokyo stock market is an essential issue in its economic growth strategy.

 The conditions to bring this about can be summarized into three points as follows.

 First and foremost is to realize steady growth of the Japanese economy.
Second is the enhancement of the attractiveness of equities and financial instruments traded on the exchange. Quality corporate governance in addition to growth of high profits must to be realized. The increasing number of listing by foreign companies with high growth potential and issues of listed investment trusts is also needed.

 Third, the funds flowing into the stock market need to be expanded. In particular, it is important to attract personal financial assets. In Japan personal financial assets exceed \1,500 trillion. Most of these are invested in the form of bank savings and only about 11% are invested in stocks. More efforts to increase the proportion of personal financial assets that are invested in securities are needed.

 With efforts such as those noted above, if the attractiveness of stocks and financial instruments that are traded on the Tokyo Stock Exchange can be elevated, money flowing into the market should increase. Having a strong financial capital market is the hallmark of a truly advanced country. The restoration of the Tokyo stock market is a test that Japan will need to overcome in order to become a truly advanced country.

Initiation Speech
“Financial Information Driving Global Money”

Mr. Kenjiro Horikawa,
 It is said that whoever controls the information controls the world. This statement is truly appropriate to the financial markets.

 Users of financial information vendors are banks, securities companies, asset management companies, investment advisory companies, institutional investors, hedge funds, and also departments in general business companies that require financial information. Recently, individual investors have also been users via securities companies.

 The number of stocks traded has been increasing significantly across the exchanges in the world. Automated trading using computers, referred to as algorithm trading, with the objective of minimizing the impact on market prices by making the size of each order smaller is one of the causes for this increase. Financial information vendors receive, without omission, all trading information at ultra high speeds and instantaneously pass the information onto the screens that they provide for users.

 Outside of the stock market, financial information vendors cover many markets including bonds, foreign exchange, funds, commodities, and various futures. We also cover news items and distribute daily, on average, 8,000 items excluding those on market conditions.

 Since the 1990’s the number of users of enormous portal sites over the internet has increased and the world where “information is free” has been expanding. However, this information does not go beyond providing reference.
The enormous amounts of money that race through the world cannot move without the information provided by financial information vendors. That is why the financial information vendors are referred to as the infrastructure that underpins the financial markets.

 The size of the global financial capital market has expanded quickly over the past several years and equities, bonds, derivatives, and commercial banking capital have reached an astronomical figure of over $200 trillion in total. Furthermore, this makes up four fold of world GDP, which indicates the scale of the real economic growth, and \2,000 trillion or more in terms of yen.
We must recognize our responsibility for this and desire to contribute to the vitalization of the financial markets and the development of the economy.