Japan 's Stock Market Analysis Essay

Japan 's Stock Market Analysis Essay

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Japan has one the most advanced economies in the world, with an advanced economy comes an advanced equity market. As other advanced equity markets are, the Japanese market is similar to the U.S. in its essential functions and its operation by the exchanges that allow its existence. The Japanese stock market is third largest in the world by market capitalization, surpassed only by the United States and China. Market participants trade over the Tokyo Stock Exchange and the Osaka Securities Exchange which combined to form the Japan Exchange Group (JPX) in 2013 (JPX.com). As of November 2015 there were 3500 companies listed as part of the JPX and over $400 billion dollars of shares traded in 2014 (World Federation of Exchanges).
The role of Japan’s stock market is very similar to that of the U.S. and other stock markets in that it has four functions. The first, in our modern day, is to facilitate the market for trading activities, this function is done through the existence of exchanges. The JPX provides an infrastructure where buyers and sellers of Japanese equity can trade with each other easily, the exchanges it operates are the meeting place where they come to exchange money for equity. The second is to provide listing services for Japanese companies. In days past stock markets were primarily places were companies went to raise capital by offering ownership in the form of shares to the public. Even though trading services have surpassed that of IPOs, it is still a major function of the Japanese market. The third function is clearing and settlement services. Since buyers and sellers never actually meet face-to-face a clearing organization is necessary to ensure that buyers and seller are guaranteed settlement for their transaction...


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...s instructions to settlement facilities in the third phase of clearing. Settlement is where the seller is paid and the buyer receives the stock. The Central Securities Depository, in this market the Japan Securities Depository Center transfers the shares of stock and payment will be handled by the banks that the participants choose.
Data Services
Data plays a big role in the Japanese stock market. The JPX collects, reports, and offers comprehensive data services to its market participants. The JPX collects mass volumes of data on trading activities such bid and ask prices, volume, and time and sales. They make data like this to give the market transparency, a more transparent market gives investors confidence in so they invest and trade frequently without fear. Transparency In world where information rules the market advanced data is available to traders in Japan.

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