The Tokyo Stock exchange is one of the
more important world exchanges, trading an average of 1,540 million shares per
day. It is one of five exchanges in Japan, but with 2,276 companies listed, the
Tokyo Stock Exchange is by far the largest. Most of the TSE's listings are
domestic, although it also trades shares for 30 international companies.
The Tokyo Stock Exchange uses an
electronic, continuous auction system of trading. This means that brokers place
orders online and when a buy and sell price match, the trade is automatically
executed. Deals are made directly between buyer and seller, rather than through
a market maker. The TSE uses price controls so that the price of a stock cannot
rise or fall below a certain point throughout the day. These controls are used
to prevent dramatic swings in prices that may lead to market uncertainty or
stock crashes. If a major swing in price occurs, the exchange can stop trading
on that stock for a specified period of time.
Stocks listed on the TSE are assigned
to one of three markets: the First Section, Second Section, or Mothers (market
of the high-growth and emerging stocks). The highest listing criteria must be
met for the First Section and all newly listed stocks begin on the Second
Section, with less strict requirements. Stocks for high growth, emerging
companies are listed on the Mothers market. The exchange undergoes a review at
the end of each year, where the decision of whether any stocks will be moved either
up or down is made. The First Section currently has the most companies, with
1,595 listings.
The Tokyo Stock Exchange also has a
significant market for derivatives, which has been operating for twenty years.
The TSE lists futures and options in indexes, equities, and Japanese government
bonds.
For more information, consult the TSE website:
http://au.advfn.com/StockExchanges/about/TSE/TokyoStockExchange.html