Second, there’s clearing. Regulation designed to create more transparency and reduce systemic risk has routed trading activity away from opaque over-the-counter markets managed by banks and into clearinghouses, most of which are owned by stock exchange companies. Japan’s primary clearinghouse – Japan Securities Clearing Corporation (JSCC) – is a subsidiary of Japan Exchange Group Inc, operator of the Tokyo Stock Exchange. It currently clears around 70% of yen interest-rate swaps globally and, as yen-based activity ramps up with changes to monetary policy imminent, JSCC’s role in global markets is sure to be enhanced.
The top of the capital markets pecking order includes not just banks and asset managers, but stock-exchange companies. Quiet and unassuming compared with the traditional masters of the universe, they are no less powerful. Nowhere is this more apparent than Japan.
First off, stock-exchange companies operate many of the indexes that increasingly drive global capital flows. London Stock Exchange Group Plc, for instance, owns and manages the UK’s FTSE gauges alongside a suite of other benchmarks under the Russell brand. While the Japanese exchange’s best-known index is owned by local newspaper group Nikkei Inc, it has the more useful market cap-weighted Topix, which is tracked by over ¥83 trillion of assets ($750 billion).
