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Japan market profile
13 September 2007
How fares the Eastern giant?
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securities financing
asia
japan
repo
hedge funds
Japan is Asia's biggest securities financing market, and the world's second biggest. It is the closest market in Asia to the US in size, development and the way business is processed. But as Japan differs in culture and economy from the US, so too do its own particular securities financing nuances make business different – limiting some opportunities, and creating others.
With securities lending for stock, a prominent division exists in Japan between the domestic supply of securities to borrow and the offshore supply, much more so than in the US. This is because the large majority of Japanese beneficial owners lend their stock callable, while offshore lenders lend non-callable.
Japanese stock-holders prefer to recall stock during company annual general meetings to vote, and participate actively in issues of corporate governance. There is also a historic preference in Japan to have stock back in their accounts to register for ownership.
The...
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