The successful merger of the Tokyo and Osaka stock exchanges into the Japan Exchange Group (JPX) last year established one of the world's largest exchanges. The significance of the integration, however, goes beyond size. It created synergies that could make Japan the most preferred capital investment destination in Asia. "We are very much on track with expectations," says Atsushi Saito, JPX's group CEO. "The merger has been a triumph, and international investors are realising the benefits." JPX combines Tokyo Stock Exchange's experience in cash equity or stock transactions and Osaka Securities Exchange's expertise in derivatives trading. The integration has also significantly reduced costs as participants have to deal with only one exchange. With the following wind of Abenomics, such wider coverage and cost advantages have boosted equity trading value from about 1 trillion yen (HK$76 billion) in 2012 to about 3 trillion yen last year. To expand its product range, JPX will offer more exchange-traded funds and derivatives. It is also planning to develop an infrastructure fund market for construction projects across Asia. One of JPX's most interesting initiatives, however, is to promote a professionally oriented bond market. It offers issuers a flexible regulatory framework that allows for English disclosure and the use of global accounting guidelines such as the International Financial Reporting Standards and the United States Generally Accepted Accounting Principles. JPX hopes the depth of the market will form a robust platform for its development and allow JPX to become a centre for financing activities in the region. The market has seen bond issuance offering programmes by Asian entities such as India's ICICI Bank, the Asian Development Bank and Maybank. Setting its sights beyond Japan, JPX is supporting the launch of a securities exchange in Myanmar by 2015. "We are opening the door all the way for collaborations with our neighbours," Saito says. "We will gladly address any barriers they may find in working with us." Japan Exchange Group www.jpx.co.jp/en
