Nasdaq Japan 1 Case 1-2 NASDAQ Japan
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Nasdaq Japan 1
Case 1-2NASDAQ Japan
Nasdaq Japan 2
The Players
NASDAQ Softbank Corporation Osaka Stock Exchange (OSE) Three limited partners 10 strategic investors Indigo Markets
Nasdaq Japan 3
The Business Goal
Japanese stock market planned to become the link to allow 24-hour trading in combination with NASDAQs around the world
Global standards to be applied Do the benefits outweigh the costs?
Nasdaq Japan 4
The Plan
To shift the financial assets of Japanese investors from safe low growth categories (80% is in cash, savings, insurance) to more high risk and high growth equity markets (currently only 5%).
An efficient, transparent global market would enable Japanese investors to move more of their personal wealth outside the country– much riskier
Nasdaq Japan 5
The Environment
Existing Japanese stock exchanges use an Auction securities model that does not perform efficiently enough to network with other country’s stock exchange systems.
A hybrid market model is proposed to ease the change
Nasdaq Japan 6
The Issues
What kind of market is this? What role does culture play? How should the business be structured? Technology: build or buy? Support systems: own, rent, outsource? Can the US model work in Japan?
Nasdaq Japan 7
Basic Market Model
Buyer SellerBuyer Seller
Market
Intermediation services arise
as needed; fees arise from
services
Nasdaq Japan 8
Auction Market Model
Buyer Seller
Market conducts auction
Fees arise from auction services
Can be completely automated
Nasdaq Japan 9
NASDAQ US Model
Entrepre-neurship
ListingMarket-Making
Clearing/Settling
Fin’lMgmt
NASDAQ
Issuers
Issuer SupportService
Providers
Investors
Investor SupportService
Providers
Market Makers
Regu-lators
SettlementAgents
Nasdaq Japan 10
Hybrid Market Model
Buyer Seller
Market maker buys and sells as principal
Profit is made on difference
between buy and sell prices; fees
may also be earned for
services
Nasdaq Japan 11
A Bit of Chronology
June 1999-JV signed between NASDAQ and Softbank Corp
October 1999- NASDAQ Japan Club April 2000-Agreement signed with OSE June 19, 2000-Initial launch of NJI June 19, 2001-Beta version of hybrid model
running on NJ servers
Nasdaq Japan 12
A New Market Model
Improvements in Phase 2 over Phase 1 Change of Market Model
Indigo market Network
Implementation of ATM (Asynchronous Transfer Mode) in addition to TCP/IP (Real time)
Nasdaq Japan 13
Technology Architecture
Network
Data Center
Trading Engine
RegulatorySystem
J-Net
DisclosureClearanceSettlement
Market Data
Website Corporate
Member Firm
Nasdaq Japan 14
Technology Changes
Changes in Phase 2 from Phase 1 Data center
Moved from Osaka to Tokyo Managed by NJI (was managed by OSE)
Trading Engine & Regulatory Systems Operated by NJI (was operated by OSE)
Networks Managed by NJI (was managed by OSE)
Nasdaq Japan 15
Analysis-1 NASDAQ and NJI tried create a market that
would totally transform the Japanese way of thinking.
Because they wanted to do this quickly they worked with established Japanese Corporations
For example Softbank and OSE. Most other corporations acted as limited
partners or strategic investors.
Nasdaq Japan 16
Analysis-2
The end result was an extremely complicated entity and this complexity could have contributed to their demise.
Another issue was the decline in the economy in both Japan and the U.S. that started in early 2001
The company is running out of cash
Nasdaq Japan 17
Question 1
How did market structure and relationships change with the introduction of the NASDAQ Japan Market in June 2000?
Nasdaq Japan 18
Question 2
What impact will the launch of the NJM hybrid market model have on market structure and relationships in Japan?
Nasdaq Japan 19
Question 3
What are the strengths and weaknesses of the approach that has been taken to building a global securities market? Would you have done anything differently?
Nasdaq Japan 20
Question 4
What challenges do NASDAQ Japan executives face in the summer of 2001? What advice would you give?
Nasdaq Japan 21
Prescription
The goals of NJI were too aggressive for the conservative Japanese market; technology might not be so portable after all.
Plan to introduce the Phase II model gradually over a period of time instead of having to compromise with two tiered system
Raise awareness of technology.
Nasdaq Japan 22
Outcome
Announced end of joint venture August 16, 2002.
Alliance ended on October 15, 2002. NASDAQ wrote off 20 million dollars. Lost
money for two years and U.S. exchange did not predict that would change.
Softbank had to add 1.7 billion dollars to its growing list of failed investments
Related Documents
