U.S.-based Nasdaq OMX Group
The two stock market operators opened the Nasdaq Japan market for start-ups in 2000 but closed it two years later after its order-matching system failed to find favor with Japan's No. 1 broker Nomura Securities and other major players.
Analysts said the recent move is a more conservative route than Nasdaq's first foray into Japan and mirrors other financial services companies using joint ventures to gain a foothold in large Asian markets.
Hopefully there's some lessons learned from last time, but this is a relatively safer way to enter the market, said Chris Brendler, an analyst with Stifel Nicolaus & Co Inc.
The new exchange could open as early as January 2012 and would offer night and small lot trading to facilitate participation by a broad variety of investors, the Yomiuri newspaper reported. Kyodo news agency said the new market may also allow trading of stocks listed on the Tokyo Stock Exchange.
The Osaka Securities Exchange, Japan's No. 2 market, and Nasdaq declined to comment on any specifics.
We have been in touch with Nasdaq as we are cooperating on various projects including the planned use of Nasdaq's derivatives system at the OSE, but the OSE cannot say if the reported plan has been discussed, spokesman Masahiro Yada said.
Nasdaq would join companies like Bank of America Corp and Morgan Stanley which have invested overseas to gain a foothold in foreign markets, rather than expanding organically.
Bank of America, for example, owns an 11 percent stake, or 25.6 billion shares, in China Construction Bank.
Brendler said Nasdaq will increasingly focus its growth efforts overseas, as its U.S. exchange business has been slowed in recent months by sluggish trading volumes, with investors still rattled from the global financial crisis and recession.
The OSE merged with Japan's biggest market for start-ups, the Jasdaq, this year. Jasdaq later absorbed the Nasdaq Japan successor, the Hercules market. The Tokyo Stock Exchange also has a section for start-ups, the Mothers market.
While the Tokyo Stock Exchange dominates Japanese stock trading, the Osaka Securities Exchange dominates derivatives trading.
OSE shares dropped 1.2 percent to 417,500 yen on Tuesday morning, underperforming a 0.4 percent decline for the Nikkei stock average <.N225>.
Nasdaq OMX Group shares declined 0.33 percent, or 8 cents, to $23.86 in late morning trading on the company's own exchange.
(Reporting by Yumiko Nishitani and Joe Rauch; Editing by Edwina Gibbs, Dave Zimmerman and Gunna Dickson)