Osaka Securities Exchange Co., the operator of Japan’s second-largest bourse, will offer an exchange-traded fund for start-ups as early as October, aiming to increase its lead over markets in South Korea and Hong Kong.
“We want to start listing an exchange-traded fund this year for the Jasdaq market,” Michio Yoneda, president of Osaka Exchange, said this week in an interview. Exchange-traded funds are index-based investment products that let buyers own a basket of stocks that trade as an individual security. The exchange also aims to offer Jasdaq futures trading “within three years,” Yoneda said.
Osaka Exchange, which purchased Jasdaq Securities Exchange Inc. for 7 billion yen ($82 million) last year, plans to integrate the Jasdaq bourse with its Hercules market for start-ups on Oct. 12.
Exchange-traded funds are mainly bought by individual traders and are usually priced at several tens of thousands of yen per unit, Yoneda said. The funds, based on the average price of around 100 companies, offer returns that are “generally higher” than those tracking the value of a regular index like the Nikkei 225, he said.
More than 1,000 companies will be listed on the new Jasdaq, making the Osaka exchange home to more than 80 percent of Japan’s publicly traded start-ups, Yoneda said.
After expanding its base in Japan, the Osaka exchange should look to other parts of Asia to compete with the region’s major venture markets, he said. The Jasdaq’s market capitalization of $99 billion is about 10 percent more than the combined value of its two main competitors, South Korea’s Kosdaq and Hong Kong’s Growth Enterprise Market.
“There’s a lot of private capital in Japan, and we should use this to tap growth in Asia,” Yoneda said. “Financial products such as exchange-traded funds and futures will enhance our visibility.”