The Cabinet approved a plan Friday to allow the formation of a one-stop platform where investors could buy equities, futures and commodities, even as regulators review a proposed tieup between the country's two biggest stock exchanges.
If the legislation is passed by the Diet, the Financial Services Agency would become responsible for oversight of stock, commodity and grain exchanges. Oversight is currently divided between the FSA, and the trade and agriculture ministries. The bill was to be submitted to the Diet on Friday, said Tatsuyoshi Otobe, deputy director general at the FSA.
The proposal comes as the Fair Trade Commission reviews the merger planned between Tokyo Stock Exchange Group Inc. and Osaka Securities Exchange Co. Friday's legislation lays the groundwork for a comprehensive unification of Japan's bourses as part of a three-year-old government strategy to help the country regain its position as Asia's top financial hub.
"Each of the companies will have to make their own decisions" about whether the exchanges actually merge, FSA minister Shozaburo Jimi said Friday after the Cabinet approved the bill.
The new rules categorize commodity futures as financial products that would be traded as derivatives and supervised by the FSA.
In addition to five bourses where investors trade equities, Japan has four exchanges dealing in commodities and currencies. The Tokyo Commodity Exchange handles metals and oil. Rice, soybeans and other farm products are traded on the Tokyo Grain Exchange and on the Osaka-based Kansai Commodities Exchange. The Tokyo Financial Exchange deals in currencies.
"With trading volumes falling as they are, there's a need to consolidate," said Tamami Ota, an analyst at Daiwa Institute of Research Holdings Ltd. in Tokyo. "These legislative reforms will help the exchanges survive."