JPX's Nasdaq Takeover Idea Still Runs Into Structural Barriers

2026-08-14

Concept of a Joint Japan-U.S. Market

Shortly after the 2013 merger of the Tokyo and Osaka stock exchanges, Japan Exchange Group (JPX) seriously considered acquiring Nasdaq. Atsushi Saito, then CEO of the group, had also told Ryutaro Hatanaka, then head of the Financial Services Agency, about the plan, but it fell apart before any formal proposal was made.

The aim was to create a mechanism that would let Japanese investors easily trade U.S. tech stocks. Nasdaq and the Tokyo Stock Exchange had envisioned a new joint Japan-U.S. market by bringing together 100 leading stocks, but a review by a U.S. consulting firm concluded that 'stock exchanges cannot cross borders'.

The Age of Smartphone Trading

At the time, Saito said that 'the day would eventually come when investors could trade every stock in the world on the screen of the smartphone in their hands'. That forecast became reality sooner than expected. Even without exchanges rushing to acquire overseas markets, conditions are being created that could draw in global investors through longer trading hours.

Nasdaq and the New York Stock Exchange (NYSE) will extend trading hours to 23 hours a day from Dec. 6. The goal is to attract investors in Asia, where the time zone is reversed, especially those in Japan, into U.S. stocks. U.S. stocks, led by Big Tech, are also part of the U.S. soft power that appeals to Japanese retail investors.

Limits of Longer Trading Hours

In Japan, some argue that trading hours for individual stocks should be extended substantially. Similar debates have been repeated in the past, mainly among online brokers. The Korea Exchange has announced plans to expand trading hours from 9 a.m. to 3:30 p.m. to 12 hours, while the Hong Kong Exchanges and Clearing is also discussing ending the lunch break and introducing night trading.

Even so, extending trading hours for individual stocks carries a burden. Unlike stock index futures or exchange-traded funds (ETFs), individual stocks are the listed companies themselves. About 3,700 listed firms could be tied up with timely disclosures and investor relations, potentially increasing operating hours. It needs to be carefully judged whether the extra trading would be worth the cost.

Moreover, simply lengthening trading hours without improving corporate value or investment appeal could end up merely scattering trading volume more thinly. What the Tokyo Stock Exchange and listed companies should rather work on is revising Japan's distinctive unit share system, under which stocks can only be traded in lots of 100 shares. If conditions expand so that shares can be bought from one share, as with U.S. stocks, there is also a risk that younger investors in particular will drift away from Japanese stocks.

Saito once advocated what he called the 'greengrocer theory of exchanges'. The idea was that the customers of an exchange are investors, not listed companies, and that the exchange should improve the lineup and quality of the companies on its shelves. With Japan's unit share system still in place, the Tokyo Stock Exchange is closer to a wholesaler selling vegetables in lots of 100 than to a greengrocer selling single items. If Nasdaq were to come in and line up overseas vegetables that can be bought one by one, it would be clear what needs to change.

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