Fair Play In Japan's Financial Markets

Finance is one of the areas where the U. S. still has an edge over Japan. Reflecting that, Japanese banks and brokerage houses have rushed to Wall Street to set up large units to trade options, futures, and other complex financial instruments. Their goal is not only to make money but to export Wall Street's techniques to Japan, where they are still in their infancy.

The trouble is, Wall Street arrived in Tokyo first. Salomon Brothers, Morgan Stanley, and other U. S. securities houses are already making major inroads in Tokyo with innovative strategies. What's more, they are cutting corporate financing costs and wooing underwriting business away from the country's four major brokers.

Faced with such advances, the Tokyo brokers and their government regulators have begun dragging their feet on earlier pledges to Washington that their financial markets will remain open to foreign competition. They have sought to slow the introduction of new products until the Japanese banks and brokers get their own high-tech trading units up to speed. And they have also attempted to limit Wall Street's inroads into corporate finance.

In the 1988 Trade Act, Congress demanded that Japan widen American access to its financial markets or face retaliation in the U. S. If that legislation means what it says, Washington must press hard to ensure that all players are afforded equal opportunity when financial techniques are put to use in Japan.

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