Tokyo Stock Exchange OKs Expansion

The Tokyo Stock Exchange announced plans Wednesday for its first membership expansion in nearly four decades, a move that could seat foreign firms for the first time and ease trade friction with the United States.

The exchange said the expansion measure--which would boost the number of seats to 93 from 83--was adopted by a membership committee as part of a wider plan to revise the exchange’s articles of association.

The expansion would be the first since the exchange resumed trading in 1949 after the end of World War II.

All seats on the world’s second-largest stock exchange are held by Japanese securities houses. Although the exchange changed its rules in April, 1982, to allow foreign members, overseas firms claim that restrictive policies and high prices for seats have effectively shut them out.

Nearly a dozen U.S. and British securities concerns have established branch offices in Tokyo as foreign investment in Japan has expanded, but they must deal through Japanese firms and are barred from the exchange floor.

U.S. Firms Seek Access

The United States and other countries have been demanding access to the Tokyo exchange as part of a broad campaign to press Japan to liberalize its financial and capital markets.

Foreign stock traders were buoyed by the announcement but said they were awaiting details of the decision before making a final assessment.

“We are very pleased,” said Tetsundo Iwakuni, chairman of Merrill Lynch of Japan. “We haven’t got all the details yet, but it looks like a very positive, constructive and fair proposal.”

Kyodo News Service quoted exchange sources as saying that the expansion would be approved at a members’ meeting Sept. 26 and be instituted by November.

Exchange officials said the price of membership would be fixed at $4.2 million to $4.9 million, depending on the assets of new participants.

Foreign firms complained last year that prices were being forced too high after Merrill Lynch lost its chance at a seat despite offering $5 million. A Japanese firm, Utsumiya Securities Co., outbid the American firm with a $6.6-million offer.

Iwakuni said Merrill Lynch, which is trying to set up a 24-hour world trading system through the exchanges in New York, London and Tokyo, would reapply for a seat as soon as possible.