JPX developing frontier market partnerships

With various Asian bourses busy developing trading links, the Japan Exchange Group (JPX) is looking at collaborating with more partners in Asia, and aims to attract issuers from frontier markets to list on its platforms in the process.

Mitsuo Miwa, JPX’s director business development for Asia, told AsianInvestor that the exchange has been focusing on Central and Southeast Asia.

“We would like to extend the success of our collaboration model with the central bank of Myanmar in establishing the Yangon Stock Exchange [YSE] to other Asian countries,” said Miwa. Working with Daiwa Securities, JPX is helping Myanmar set up YSE, which is scheduled for launch in October.

JPX has also shared its know-how with the Tashkent Republican Stock Exchange of Uzbekistan.

The group’s approach contrasts with that of some other Asian exchanges, which often favour cross-border tie-ups, such as the Asean Trading Link and the planned Shanghai-Hong Kong Stock Connect.

That said, it lacks the kind of natural partner that Hong Kong has in the form of mainland Chinese bourses or Singapore has in, say, Bursa Malaysia or the Stock Exchange of Thailand.

Rather than licensing its own trading technology, JPX advises its Asian partners on exchange trading, clearing and settlement rules. By sharing its experience and engaging in the regulatory process in frontier markets, the group aims to raise awareness of market practices in Japan, said Miwa.

“Our ultimate goal is to encourage more foreign companies to list on our own market, so that our domestic investors can also, for example, trade foreign issuers’ bonds through JPX’s Pro-Bond board,” he said.

Only eight bond issuances have listed on Pro-Bond, which launched in 2011 as a platform for medium-term notes and bonds from both domestic and foreign issuers.

Meanwhile, JPX plans to launch an infrastructure fund board by the end of March 2015. Recent research from the Asian Development Bank puts the region’s overall infrastructure investment needs at $8 trillion over the decade from 2010.

Other exchanges in the region operate such boards, including the Australia Securities Exchange, Singapore Exchange and Stock Exchange of Thailand.