A new "self-regulatory" firm set up during the reorganization of the Tokyo Stock Exchange began operating Thursday with the aim of ensuring fair trading on the troubled bourse, which is preparing to list its own shares.
Tokyo Stock Exchange Regulation is tasked with monitoring trade and screening applications from companies that want to list their shares. It was established to improve corporate governance and credibility at the TSE, which has suffered heavily from system failures, a lack of trading capacity and the appearance of harboring double standards.
The Tokyo Stock Exchange reorganized into a holding company in August in preparation to go public in 2009. The holding company, Tokyo Stock Exchange Group, will serve as the umbrella firm for Tokyo Stock Exchange Regulation and Tokyo Stock Exchange Inc., which manages the exchange.
The holding firm divided the tasks of management and regulation into two companies to ease concern about conflicts of interest presented by a single entity handling the regulation of existing listed companies, including decisions on delisting, while simultaneously pursuing profit from new company listings.
The president of TSE Regulation is Masakazu Hayashi, a former vice finance minister. The president of the TSE Group and TSE Inc. is Atsushi Saito, former president of the Industrial Revitalization Corp. of Japan.
The new regulatory company may later cooperate with other bourses, TSE officials said.
New rule changes for TSE-listed firms also took effect the same day.
For example, firms that engage in misconduct but manage to avoid delisting, such as Nikko Cordial Corp., formerly Japan's third-largest brokerage, will be placed on a new post for special attention.