INTRODUCTION
This research is carried out in order to know the meaning, development, management and functions of the Tokyo Stock Exchange, showing which is the contact of the companies that work on the stock market, with the people who save, since it allows them to small savers have access to the capital of large companies, it also serves as an index of the evolution of the economy, determines the price of companies through listing, provides protection against inflation, as they normally obtain higher returns than other investments.
The resources invested through the Stock Exchanges allow both companies and governments to finance productive and development projects that generate jobs and wealth for a country. The holders of these resources receive in exchange the opportunity to invest in a basket of instruments that allows them to diversify their risk, optimizing their returns. It is important to highlight that the Stock Exchanges are complementary markets to the traditional Financial System.
JAPAN HISTORY
GOVERNMENT
The Japanese Constitution, in force since 1947, is based on three principles: the sovereignty of the people, respect for fundamental human rights and the renunciation of war. It also stipulates the independence of the three political powers: the legislative (the Diet), the executive (the ministerial cabinet) and the judicial (the courts).
The Diet, Japan's national parliament, is the supreme body of political power and the only state body with legislative power. It is made up of a House of Representatives and a House of Councilors. All Japanese citizens have the right to vote in elections once they are 20 years old.
The Japanese system of government is parliamentary. Members of the Diet elect their Prime Minister from among their own members. The Prime Minister, currently Junichiro Koizumi, forms and chairs the government's cabinet of ministers. The cabinet, exercising executive power, is responsible to the Diet. The judicial power rests with the Supreme Court and the other courts.
STORY OF THE STOCK EXCHANGE
The currency of Japan is the Yen whose symbol is ¥
The origin of the bag occurs at the end of the 15th century in the medieval fairs of Western Europe. At these fairs the practice of transferable securities and titles began.
In the year 1870, a value system was introduced in Japan and the negotiation began. This caused the demand for a public trade institution; » l The Tokyo Stock Exchange was founded in 1878 as a fixed-income market, similar beginnings to many exchanges. After World War II, in March 1947, the Japanese Securities and Markets Law was enacted, which is the current regulatory framework.
Based on this ordinance, »the Tokyo Stock Company» was established on May 15, 1878; and the trade started on June 1.
In March 1943, the Japanese authorities controlled the institution as they were at war and enacted the reorganization of the exchange.
This is why on June 30, 1943, 11 exchanges throughout Japan were unified into a quasi-public corporation.
With worsening war conditions and airstrikes on the main island of Japan, they forced the stock market to suspend trading sessions on all stock markets from August 10, 1945; however, the trade was started again by unofficial group transactions in December 1945.
On April 1, 1949, three exchanges were established: Tokyo, Osaka, and Nagoya. Trading on these changes began on May 16. In July of that same year, five additional exchanges were established in Kyoto (combined with Osaka in March 2001), Kobe (dissolved in October 1967), Hiroshima (combined with Tokyo in March 2000), Fukuoka, and Niigata (combined with Tokyo in March 2000), and Sapporo established in April 1950, therefore Japan now has five exchanges.
On October 1, 1966 after the Second World War the government began to take an active part for the first time.
In 1971, the Tokyo Stock Exchange adopted the system of book entries for shares, in 1973 the foreign share section was determined and in 1982, it introduced the CORES system, which began the transformation of the corros market into the computer market that we know today, uniting the eight Japanese markets in a modern continuous market.
Total transaction volume in 2004 reached 378.7 billion shares with a daily average of 1.54 billion shares.
These values respectively have reached 343.1 trillion yen and 1,394 trillion yen.
It is the second stock market in the world by market capitalization, its well-known Index is the Nikkei, name of Kabuto Cho., It represents 95% of the market in Japan.
It is the most important stock market in Japan and the first world stock market for its volume of transactions. It is the second, after the New York Stock Exchange, in terms of market capitalization, with great influence on the development of international stock markets.
There are ten exchanges with an integrated trading system through the exchange of information in real time and a communications network that allows operations to cross between agents from different markets.
On the other hand, there are other countries in which a single exchange has been implemented that has eliminated practically all the others.
THE 10 MOST ACTIVE SHARES IN 2004 WERE:
- Mizuho Financial Group 12,449 ¥ blls.SOFTBANK 12,065 ¥ blls.UFJ Holdings 9,332 ¥ blls.Sumitomo Mitsui Financial Group 7,705 ¥ blls.TOYOTA MOTOR 6,312 ¥ blls.Mitsubishi Tokyo Financial Group 6,297 ¥ blls.NTT DoCoMo 5,198 ¥ blls.S.CANON 3,895 ¥ blls.Nomura Holdings 3,405 ¥ blls
PURPOSE OF THE STOCK EXCHANGE
Contribute to the development, promotion, support and organization of regulated and secure markets to meet the capital needs of world markets
They meet every autumn to discuss topics of common interest to the capital markets of the member countries, adopt recommendations and provide solutions to possible problems.
FUNCTIONS OF THE TOKYO STOCK EXCHANGE
Tse (tokyo stock exchange) is a central institution in the secondary market and its important functions are.
- Provision of a market, the trading that occurs on the tokyo stock exchange progresses continuously through each session, using automated systems, in accordance with exchange rules. Transaction prices are publicly available. Trading supervision, trading is real-time and computer-driven, and completed transactions are carefully monitored to keep trading in line with exchange rules and correctly determine prices. Upon discovery of any violation of the rules, incorrect conduct or dishonest negotiations, regulatory measures are taken.It continuously monitors the companies and securities mentioned to maintain high listing standards. These negotiations can be suspended, to ensure investor protection and fair and transparent transactions, accurate, fast, and fair access to corporate and security information is required. The rules regarding access to corporate information are indicated in the securities and the exchange law.tse maintains the guidelines for the timely access of corporate information. The tse also provides a file system to facilitate investor access to documents.Exact, fast, and fair access to corporate and security information is required. The rules regarding access to corporate information are indicated in the securities and the exchange law.tse maintains the guidelines for the timely access of corporate information. The tse also provides a file system to facilitate investor access to documents.Exact, fast, and fair access to corporate and security information is required. The rules regarding access to corporate information are indicated in the securities and the exchange law.tse maintains the guidelines for the timely access of corporate information. The tse also provides a file system to facilitate investor access to documents.
6. Supervision of trading participants
Trading participants are those who conduct transactions in the tse market. To guarantee the security of transactions and to fully satisfy the public purpose of the TSE, a high level of quality and a deep sense of trust must be maintained.
To achieve this, research is being introduced into the exchange to determine the state of the participants' businesses and assets.
CONFORMATION OF THE BAG
Name: Tokyo Stock Exchange, Inc.
President & CEO: Takuo Tsurushima
Officers: 12 directors, 4 auditors, 9 executive officers (5 who also sit on the board of directors)
Address: 2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo 103-8220 Japan
Publication: May 16, 1949
Capital: 11.5 Billion Yen
Published Parties: 2,300,000 shares
Personnel: 737 people
Board of Directors
Tse introduced an official executive system to streamline the decision-making process and clarify the authority and responsibility of its operational and administrative functions. The board of directors is responsible for:
The royal management of tse
The number of directors is set at 12 or less to allow efficient decision making.
Increase transparency and accountability of management.
Raise the legitimacy of operations
The board of directors decides basic policies, management and other important issues, oversee business operations in accordance with corporate policies.
Advisory committees
To represent a wide range of opinions in tse's operations, and to advise the board of directors, tse has established:
Market structure committee, this is in charge of deliberating the issues associated with transactions, establishments, and listed companies.
Self-regulation committee
Discusses transaction investigations and lien issues
Discipline committee.
Deliberates issues associated with disciplinary actions and penalties for market violations.
Appointment and remuneration committee
The board of directors has established this committee which is made up of:
Six directors, of whom four are members of the external board; This committee is responsible for determining directors' appointments and remuneration, and submits its decisions to the Board of Directors for discussion after extensive discussions.
Indices
On July 1, 1969 the Tokyo market introduced the TOPIX change (which refers to the market price index).
Indices are basically a measure of adding change to the market.
The basis for calculating each of the market price indices is the aggregate market value.
The market component of a new index is determined by market capitalization and liquidation.
THE NIKKEI
The Nihon Keizai Shimbun newspaper is responsible for calculating and publishing this index, which reflects the average price of the 225 most representative stocks on the stock market.
Among the other Nikkei indices it is worth highlighting the ISE-Nikkei 50, which reflects the price of the 50 stocks listed at the same time in the London and Tokyo stock markets.
NEGOTIATING INSTRUMENTS
Almost 20 years of investment diversification history has been presented at the Tokyo Stock Exchange, due to new products and systems that regulate and review operations:
Investors
Insurance
companies Long-term credit
Financial institutions
Commercial corporations Foreign
Individuals
Specifications for future market contracts
The contract
The months of the contract
The value
The minimum fluctuation
The value of the minimum movement
Business day
The trading system Trading
hours
Trading methods
In the TSE there are 3 different types of negotiations:
- Regular: (the most used)
Transactions made on the third business day of the contract
- Cash:
Transactions carried out the same day of the contract or the following day in its absence
- When Issued:
Transactions made according to specific agreements between the parties when published
Negotiation mechanism
The market works as a continuous auction, where buy and sell orders interact directly with each other, all orders can be limited by market orders, are placed by a broker / dealer and adjusted according to rules. on price priority and time priority.
PRICE PRIORITY RULE
The purchase or sale order takes precedence with the lowest at the highest price
Time priority rule, the earlier an order comes out, this will be preferred over others that have the same price.
The TSE market is a market for directed purchase and sale orders, which avoids the existence of “market makers.
TRANSACTION METHODS
ITAYOSE:
It is used to decide the opening and closing of prices, in that the rule of priority of time does not act and numerous orders are placed before being opened.
ZARABA:
In this method the price and time priority laws apply and the purchase and sale orders are applied continuously.
The TSE applies unique measures to prevent abrupt short-term fluctuations that do not help to have a continuous price but in effect act as an emergency short circuit.
SPECIAL OFFERS AND QUOTES
When there are major differences between the purchase orders and the prices, they are disseminated in the TSE information system. If they enter the market, the shares are withdrawn. However these are reviewed between upper and lower parameters at intervals of five minutes, until the difference is resolved.
DAILY PRICE LIMITS
The TSE applies individual price limits for stocks to prevent abrupt changes in prices and risks of spikes and price declines. These price limits are established in yen according to the price range of each share, this avoids applying special offers and quotes outside the daily price limits.
NEGOTIATION UNITS
They are the minimum amount of each individual share that will be traded, companies decide their trading unit according to the 2001 commercial code that seeks that companies with high prices of their shares have large trading units this allows to reduce the weight of the share and increase accessibility for individual shareholders.
Margin transactions
They are the purchase, sale or other transactions with extended credit to the client with an insurance company.
For this, clients must make a deposit as a guarantee of 30% of the transaction value or ¥ 300,000 if it is very large with the insurance company.
AUCTIONS
It was introduced on November 14, 1997 to facilitate the trade of large blocks of shares or securities, the trading price is restricted with a certain range based on the auction price, this type of trading is open for domestic stocks.
To facilitate this task, an electronic trading system called ToSTNeT-1 (Tokyo Stock Exchange Trading Network System - 1) was established and operated from June 29, 1998.
In response to the various transactions made, ToSTNeT-2 was created, which allows the price of the securities to be modified 15 minutes before the closing of each of the first 2 sessions that take place between 8:20 - 9:00 AM and 11:00 AM - 12:30 PM. In the third session held from 3:00 PM to 4:30 PM it is possible to modify the price 30 minutes before.
CONCLUSIONS AND RECOMMENDATIONS
1. The crisis is also an opportunity to buy cheaper
The downward correction in prices can also become an opportunity to go public. According to one of the classic principles of the market, those who buy in times of crisis usually do better business than those who do so in full expansion.
2. Watch your operator and don't go into debt to invest
The small saver is at a disadvantage compared to large investors, who react immediately to the slightest movement in any market, from Tokyo to New York.
One way to guarantee your rights, especially in times of panic, is to condition all your operations to a minimum price if you have ordered a sale or maximum if you want to buy.
Do not use bank credit or any type of loan to invest. For more profitability expectations that this operation offers a priori, a crisis like this week will dramatically reduce your investment and you will still have to repay the credit.
3. Review your investment criteria, because the market has changed
Strong profitability (such as that experienced in the Stock Market in recent years) always generates a strong risk. It is a market law that seemed forgotten after years of constant increases. Now, in the face of an instability scenario for the near future, it is convenient to rethink the investment criteria and, eventually, modify the composition of its portfolio.
The most conservative option for your money is money or fixed income investment funds. The most risky is to stay in variable income and allocate two thirds of the investment to solid values (telephone, endesas, repsoles…).
All the money that runs away from one market tends to go to another. The collapse of this week and the expectations of instability will take part of the money that until now was placed almost automatically on the Stock Market to new markets: real estate, art, currency…
All of them, especially real estate, have already passed their purge and are recovering from the crisis they entered at the beginning of this decade. Stock market collapse can serve as a refuge for money fleeing the Stock Market. And those who can foresee the destination of these investment flows will buy now cheaper than in a few months.
4. Japan continues to produce approximately 70% of the Gross Product of the entire Asian continent
(3), 6 times what the People's Republic of China produces. It has a national income equivalent to two thirds of that of the United States and double that of Germany.
5. Train large, medium and small entrepreneurs:
On the benefits and investment alternatives that are obtained by participating in the operations of the Stock Market, thus promoting the stock market culture that is a cultural change that must occur in society, if you really expect significant growth in the stock market.
BIBLIOGRAPHY
- Hernández Sampieri, Roberto Research Methodology. Editorial MC Graw-Hill. 2nd. Edition. Mexico DF, Mexico. 1998. 501 Pages. http://www.elmundo.es/sudinero/noticias/act-97-04.html
