Tokyo Stock Exchange calls for new rules to prevent insider trading
- Backs rule for underwriters to disclose stock allocations
- Lack of disclosure “at the root” of trading problems-CEO
- TSE will dissolve JV with London, take 100 pct of AIM
TOKYO (Reuters): The head of the Tokyo Stock Exchange said an insider trading case unveiled by authorities last week was a blow to the reputation of Japan’s capital markets and called for new disclosure rules and other measures to combat the problem.
“For this to happen as Japan touts its reputation globally as a trustworthy market, a market in Asia with a 130-year history and a strong set of rules, it’s a real shame,” said Exchange CEO Atsushi Saito.
Last week Japan’s securities market regulator recommended Chuo Mitsui Asset Trust and Banking be fined, saying the fund manager traded on a tip from a broker about a planned share offering by energy firm Inpex in 2010.
The fine, while small at 50,000 yen ($600), marked the first action taken by authorities in a high-profile probe triggered by accusations of insider trading around a series of stock offerings including the Inpex case.
The Securities Exchange and Surveillance Commission has not named the brokerage involved. However, sources with knowledge of the matter have told Reuters that an employee of Nomura Holdings, a lead underwriter on the Inpex offering, was the source of the leaked information. Nomura has not commented on whether its employee was the source of the tip-off, only that it was cooperating with the investigation by the SESC.
Saito, himself a former Nomura executive, put his weight behind a new rule being pushed by a securities industry association to make it mandatory for underwriters to disclose to whom they are allocating stock in the company issuing shares.
“The lack of disclosure is at the root of all securities-related incidents. If a wide range of people are given access to information and there is transparency, then we would rarely see such cases occurring,” Saito said.
The exchange also announced on Tuesday that it would dissolve its joint venture in Japan with the London Stock Exchange and run the struggling market for professional investors on its own.
The two bourses launched the Tokyo AIM market in June 2009 with the aim of attracting start-up companies with less stringent listing and disclosure requirements than on the main Tokyo bourse.
The venture, owned 51 per cent by the TSE and 49 per cent by the LSE, has only managed to list one company due in large part to the lack of enthusiasm from securities firms towards taking on the risk of vetting applicants and monitoring them after listing.