Press Conference by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services

(Excerpt)

(Friday, January 14, 2022, 12:06 pm to 12:17 pm)

[Questions and answers:]

Q.

My question is about the reorganization of the Tokyo Stock Exchange that was announced recently. The Financial System Council Capital Market Working Group published a report in December 2019 and states that the purposes of this reform are mainly sustainable growth and corporate value creation of listed companies and start-ups, thereby creating a market that is attractive to both domestic and foreign investors. However, at present, out of approximately 2,100 companies listed on the First Section of the Tokyo Stock Exchange, 1,841 companies, or nearly 80%, wish to be listed on the Prime Market, the new top section. Of those 1,841 companies, 296 do not satisfy the listing criteria for the Prime Market at present but wish to be listed there by the transitional measures. This invited the criticism that the intended purpose of the reform, as pointed out by the report, has already been undermined and that the reform may actually adversely lead to the overall deterioration of the Japanese market rather than make it more attractive. Could you explain your opinion as the minister in charge of financial sector with regard to the reform and the future direction of the FSA's initiatives for making the Japanese market more attractive in competition with foreign exchanges and improving the convenience of listed companies?

A.

I understand that the market reorganization has originated from the awareness that the concept of the conventional market categorization is not clear and the current structure is not convenient for many investors and has not succeeded in  incentivizing listed companies to make efforts for sustainable corporate value creation. It is important that the market reorganization squarely meets those challenges. What matters is the content of the reform and it is not appropriate to make evaluations only focusing on the number of companies listed on respective markets. I know that strict listing criteria are applied to companies that wish to be listed on the Prime Market, such as being required to have high governance levels and to ensure constructive dialogues with investors in the aspects including disclosure of information related to climate change. If many companies, including those to which transitional measures are to be applied, choose to be listed on the Prime Market and make efforts to have dialogues with global investors and enhance their corporate value, I think this will contribute to improving the quality of business management of Japanese companies as a whole. Regarding the future direction of the reform, the FSA considers it very important to have the capital market fulfil its roles to collect funds for investment broadly from inside and outside Japan, promote the growth of companies and reconstruction of their businesses, and thereby achieve economic growth. We expect the Tokyo Stock Exchange to steadily implement measures for the market reorganization, and at the same time to make preparations for the extension of trading hours scheduled in FY2024 or otherwise make efforts constantly toward making the Japanese market more attractive. From the perspective of restoring Japanese companies' dynamism and facilitating the fund procurement of start-ups, the FSA will proceed with reconsideration of the process for initial public offering and other measures, based on the new economic policy measures compiled recently.