Financial institutions are under constant pressure to reduce costs, improve operational efficiency, adapt to regulatory changes and grow their business. NRI believes that a combination financial knowledge and information technology are crucial to the industry’s growth and development. Through our lakyara reports, NRI identifies the various capital markets and IT issues impacting our clients and the future of their business.
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The Osaka Securities Exchange and Jasdaq have merged and plan to launch a new Jasdaq market in October 2010. Japan’s venture equity markets have continued to languish since the Livedoor scandal of 2006, but the OSE/Jasdaq merger and pending market consolidation is likely to lead to improvement in market fairness, partly through sharing of know-how regarding market supervision and screening of IPO applicants.
The persistent downward pressure on prices in Japan may be attributed in part to the inefficient allocation of economic resources. Industrial policy could be utilized as a second-best measure if there is insufficient governance by the capital markets and banks (via lending). This would also be in line with the changes in policy philosophy since the financial crisis. Although the traditional view is that central banks' role is to keep interest rates low in order to mitigate the costs of resource allocation, it may be time for them to consider further measures. Such measures should (1) be part of government-led industrial policy, (2) incorporate a mechanism for automatic deactivation such that usage naturally declines as the need for it diminishes, and (3) coexist well with existing monetary policy.
On Thursday, May 6, 2010, the US equity market experienced a major dislocation. The day unfolded against a backdrop of mounting uncertainty surrounding the situation in Europe, with Britain holding a general election as Greece's fiscal crisis dragged on. Additionally, the US equity market had sold off in response to doubts about the domestic economic outlook. At 2:00pm EDT, the Dow Jones Industrial Average (DJIA) was down 161 points (approx. 1.5%) from its previous day's close of 10,868.12.