Japan To Launch Exchange Traded Funds On Major Indices This Summer

by Philip Morton, InvestorsOffshore.com

25 April 2001

Japan is to dip its toe into the world of alternative investments if plans to launch exchange-traded funds (ETFs) on the Japanese market go ahead this summer. The country plans to amend regulations to allow the listing of ETFs from early June, according to Financial Services Agency Commissioner Shoji Mori.

Mori told a news conference earlier this week that a small number of ETFs would be launched initially, but they could not begin trading until the FSA and the Ministry of Finance decide what regulations should be adjusted to allow ETFs to trade. Mori said: 'We, the FSA, think the introduction of ETFs is a very important development and welcome it as something that could could bolster activity in the stock market.'

The FSA said in a statement that Japan's ruling coalition parties had agreed that taxation of ETFs should be equivalent to that on stocks. Japan is keen to introduce ETFs as a means of bolstering the financial sector, which it is hoped will lead to the recovery of the economy.

The government recently announced a raft of economic measures, many relating to structural reform in the securities markets, in which it highlighted the importance of bringing in ETFs linked to stock price indexes and based on "investment in kind of shares." The FSA said the creation of a system of ETFs should contribute to market activity by "enabling convenient and prompt investments in small amounts."

Japan is relatively late in bringing ETFs to its investors. These alterative investment vehicles which track major stock indices are already hugely popular in the US and are catching on fast in Europe too.

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