Mitsui & Co., DLJdirect SFG Securities Inc. and other brokerages are currently in talks concerning jointly establishing Japan's first after-hours market for trading of stocks, or electronic communications network (ECN).
A spokesman for DLJdirect SFG, an online brokerage joint venture of Donaldson Lufkin & Jenrette Inc. and the Sumitomo Group, said his company was in talks with Mitsui & Co., one of Japan's largest general trading companies, over the formation of an ECN. Mitsui & Co. is leading the drive to establish the after-hours market and also talking to other brokerages regarding participation in the system. Among those also currently in discussion is Monex Inc., an online brokerage formed by Sony Corp.
He said the group was currently beginning serious discussions regarding the venture and timing and said a report in the Nihon Keizai Shimbun, which said a joint venture would be established by March with operations beginning in June this year, was premature.
The formation of an ECN would provide another platform on which to trade shares and would further threaten the dominance of the Tokyo Stock Exchange. Internet investment company Softbank Corp. announced plans late last year to establish a local Nasdaq market with the National Association of Securities Dealers (NASD) and said last month that it will open in the market in mid-2000 using the infrastructure of the Osaka Securities Exchange [See "Nasdaq Japan Aims for Mid-2000 Launch With OSE," Dec. 24, 1999].
Japan's stock markets are open daily from 9 a.m. to 3 p.m. and break for lunch between 11:30 a.m. and 1 p.m., leaving investors just four and a half hours in which to trade stocks. The DLJdirect SFG spokesman said more than half of the orders received by the online brokerage currently come in the evening and, for this reason, his company is considering participating in the network.
DLJ already has experience in the field of ECNs. In July 1999 it announced plans with Charles Schwab, Fidelity Investments and market-making firm Spear Leeds & Kellogg to launch an ECN [See "The Street Plugs Into New Trading Network," July 29, 1999].
DLJdirect SFG, in Tokyo, can be found online at http://www.dljdirect-sfg.co.jp .