The Tokyo Stock Exchange will begin talks with its smaller domestic rival, the Osaka Securities Exchange , on a possible merger aimed at surviving a wave of industry consolidation, a source said. A flurry of mergers and alliances among global exchanges has focused attention on how the TSE will compete, with bourses such as the Singapore Exchange and Australia's ASX looking to grow bigger by combining operations.
Pressure on the Tokyo bourse to act intensified last month when Deutsche Boerse unveiled a deal to take over NYSE Euronext and create the world's largest exchange operator. "They must be feeling a sence of crisis that they will be swallowed by the wave of overseas consolidation," said Tsutomu Yamada, market analyst at Kabu.com Securities.
The Tokyo and Osaka exchanges would look to build on their respective strengths in a merger, according to the source, speaking on condition of anonymity because the plan to start negotiations has not been made public. The TSE is dominant in cash equities trading while the OSE is strong in Nikkei futures and other derivatives. The OSE said in a statement that it had no plans to merge with the TSE or any other exchange, although its president Michio Yoneda was quoted by Jiji news agency on Thursday as saying it would aim to reach a merger wtihin three months if talks proceed.
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