Japan Sets Timetable for Opening Markets

The Finance Ministry announced a timetable Thursday for admitting more foreign members to the Tokyo Stock Exchange, letting foreigners underwrite more government bonds and taking other steps to widen access to its financial markets.

“We are certainly making progress,” Isao Kubota, assistant vice minister for international affairs, told reporters. “We are positively working toward liberalization and internationalization with clear transparency (openness).”

He said the plan was “more than an estimate--it’s a timetable.”

The announcement came one day after Japan said it would allow 10 more foreign companies, including four U.S. banks, to enter the securities business here in response to strong foreign pressure to open up its securities industry.

That move will bring to 46 the number of foreign companies allowed to operate securities businesses in Japan.

A preliminary translation of the Japanese timetable issued to reporters Wednesday announced that the Tokyo exchange, the world’s largest stock market in terms of market value of its listed stocks, would decide on new members “by the end of this year.”

Toyoo Gyohten, vice minister for international affairs, said the Tokyo Stock Exchange would amend its charter this autumn to increase its membership and that he expected to see new members begin operating on the exchange by next May.

The United States and European countries have been increasing pressure on Japan to open its financial markets wider, saying that although progress had been made, Japan must act more quickly.

Six foreign firms were allowed to purchase seats on the Tokyo exchange in late 1985, becoming its first foreign members.

The timetable also said that sometime this fall, the ministry would switch to an auction method for underwriting all of its 20-year government bonds and for 20% of its 10-year issues, the government’s major method of financing.

Currently, Japan issues such bonds to a syndicate controlled by Japanese banks and securities firms. The syndicate managers, in turn, allocate securities to other members. Banks and insurance companies are awarded 74% of an underwriting and securities firms 26%.

Recently, the ministry raised the share that foreign firms could underwrite for any issue to 5.7% from 1.2% and raised membership in the syndicate to 23 from 17 foreign securities firms and to 29 from 25 foreign banks.