Japan Association Of Securities Dealers Automated Quotation (Jasdaq) Defined

What Is the Japan Association of Securities Dealers Automated Quotation (Jasdaq)?

The Japan Association of Securities Dealers Automated Quotation (Jasdaq) is a stock exchange that forms part of the Japan Exchange Group (JPX). It is focused on emerging venture companies and, like the Nasdaq exchange, is a fully electronic trading platform.

How the Jasdaq Works

The precursor to the Jasdaq was an over-the-counter stock trading platform created by the Japan Securities Dealers Association in 1963. In 1991, this system was converted to an electronic market and rebranded as the Jasdaq Securities Exchange in 2004. This transition was pivotal for the Jasdaq, as it marked its formal recognition as a stock exchange. Prior to 2004, the Jasdaq facilitated OTC trades but did not hold a formal stock exchange license from the government.

Today, the Jasdaq forms part of a robust ecosystem of stock exchanges operating in Japan, which include the Osaka Securities Exchange (OSE), the Nagoya Stock Exchange, the Sapporo Stock Exchange, the Fukuoka Stock Exchange, and the so-called Mothers exchange, which focuses on small and emerging companies and owes its name to the phrase "Market of the high-growth and emerging stocks."

As has been true in many countries, Japan's stock exchanges have undergone a series of consolidations in recent years. The OSE acquired the Jasdaq in 2010.In 2013, the OSE and Tokyo Stock Exchange (TSE) merged to form the Japan Exchange Group. Today, the JPX is the world's third largest exchange behind the New York Stock Exchange and Nasdaq.

Real World Example of the Jasdaq

Companies must meet several criteria to list on a stock exchange in Japan, including a minimum number of shareholders, market capitalization, net assets and years of operation. Because of its focus on early and venture-stage businesses, the Jasdaq's listing requirements are more lenient than the TSE, which hosts more established businesses.

Within the JPX, there are four sections: the TSE First Section, the TSE Second Section, the Jasdaq, and the Mothers exchange. Among these, the TSE First Section has the strictest listing criteria, followed by the TSE Second Section. The Jasdaq and Mothers exchanges are more accommodating in their listing requirements.