9/85 TOKYO STOCK EXCHANGE - Foreign Stock Broker Members

There is expected to be a record breaking 40 new listings

on the Tokyo Stock Exchange this year. This is in part due to

new listing standards that were adopted in 1983 that lowered

the standards for listing, such as 6 million shares instead of the

previous 10 million shares. This includes expected

foreign listings of 7-8 foreign firms. This includes the shares of 3M and Philip Morris.

The Tokyo Stock Exchange, in order to help foreign firms list

their shares on the Tokyo Exchange, has published 4000 copies of

a manual in English explaining the procedures for listing.

The securities industry has also decided to adopt new uniform

procedures and commissions for dealings in foreign shares. The

floor trading time in the stock exchange for foreign securities

is expected to be lengthened as well. This is expected to go into

effect early next year. At present commissions for trading in

foreign stocks are nearly twice as high as trading in Japanese

stock.

The Tokyo Stock Exchange has also decided to permit foreign

securities firms to join the exchange as members. It has decided

to increase the number of members of the stock exchange by 10 to

91. The cost of membership will be 1-1.1 billion yen, depending

on the size of the firm, and including a 500 million yen trading

rights fee. This compares to the 1.6 billion yen paid for the

purchase of a membership in December, 1984 by

Utsumiya Securities Co. In considering applications

for membership in the exchange, an examination will be

made of the applicants management conditions and its business

such as its trading volume in stocks and bonds,

brokerage commission income and operating profits, In

the case of foreign applicants, their Japan operations will be

examined in addition to their consolidated performances. In

opening membership to foreigners the exchange agreed that it

would even permit British applicants, even though it was pointed out that

it was almost impossible for Japanese securities firms to become members

in the London Stock Exchange. Four to six foreign

securities firms are expected to make applications for

membership. These include Goldman Sachs,

Vickers Da Costa, Morgan Stanley, W.I.Carr & Sons, Smith Barney

Harris Upham, Jardine Fleming and Merrill Lynch.

THE JAPAN LAWLETTER, September 1985. By Roderick Seeman