Nasdaq Says Sayonara To Japan

After two years of losing money, the Nasdaq Stock Market said Friday it was pulling out of Japan because the fledgling market is not economically viable and will instead concentrate on strengthening its presence in Europe.

"A review of our strategic options going forward led us to the conclusion that due to economic and market conditions this was the only option remaining," Nasdaq Stock Market President Rick Ketchum said.

The decision by U.S.-based Nasdaq is viewed by some as a sad ending to efforts to create a vibrant market for start-ups in a nation long criticized as protecting established companies while being overly cautious about funding young companies.

Tokyo Internet company Softbank and Nasdaq each owned 43 percent of the venture, which began trading in June 2000 on the Osaka Securities Exchange in central Japan, with much fanfare as well as excitement about the potential of Japan's start-ups.

Despite the promising start, Nasdaq Japan failed to attract a large number of domestic and global investors. Japan has been struggling in a slowdown for years, and its stock markets have lagged lately.

Although Nasdaq has not disclosed figures for its Japan losses, its cumulative losses here are estimated at more than 5 billion yen ($43 million) as the tech bubble burst even before it fully blossomed in Japan.

Earlier this month, Nasdaq said it was taking a $20 million charge on its losses from its Japan investment.

Friday's decision, which came at a Nasdaq Japan board of directors' meeting, is also a major setback for Nasdaq's hopes for round-the-clock equity trading.

Ketchum stressed, however, the decision did not mark a switch from its commitment to an international strategy.

"We will continue to leverage market opportunities particularly in Europe," he said. Nasdaq runs a London-based exchange called Nasdaq Europe.

The Osaka Securities Exchange said it was terminating its agreement with Nasdaq Japan effective Oct. 15.

The market will continue under a new name - tentatively Japan New Market - with the companies, now totaling about 100, remaining on the market, and the rules for listings also unchanged.

Softbank, which had invested 1.2 billion yen ($10 million) in Nasdaq Japan, called Nasdaq's decision "truly regrettable" because the market had been built on strong hopes to foster stock trading and ventures in Japan.

The Nasdaq brand will continue in Japan for the rest of the year, and all efforts will be made to ensure a smooth transition to avoid any confusion for companies or investors, Nasdaq Japan said.

"This was a truly difficult decision for all members of the board," said Yoshihisa Katsuya, Nasdaq Japan president.

By Yuri Kageyama