Japanese Securities Group to Review IPO Pricing Process

A passer-by wearing a protective mask stands in front of a blank price screen on a stock quotation board after the Tokyo Stock Exchange temporarily suspended all trading due to system issues, amid the pandemic disease in coronavirus (COVID-19), in Tokyo, Japan October 1, 2020. REUTERS / Issei Kato / File Photo

TOKYO, Sept. 15 (Reuters) – A Japanese brokerage industry group on Wednesday said it would review the pricing process for initial public offerings (IPOs), in response to criticism from startups that IPO prices were often too low and had surged into the market. beginnings.

The Japan Securities Dealers Association said it will set up a panel of academics, investors and executives of major brokerage houses and startups this month to review the process.

In the Tokyo Stock Exchange’s Mothers Market for Start-ups, it’s common to see large discrepancies between IPO prices and the prices they get early on, which some startups attribute to brokerage firms that set prices. excessively low IPO.

Brokerages say the large spreads are a result of the high volatility in the mother market, where the stock prices of companies with very small market caps tend to fluctuate wildly.

“We hope to look at the process from different angles,” Toshio Morita, managing director of the industry group and former head of the main securities arm of Nomura Holdings (8604.T), said at a press conference.

He said prices on a company’s debut in the market are expected to increase due to a tight supply, although he said the process had not been fully explored and greater flexibility. could be introduced.

Reporting by Makiko Yamazaki; Editing by Edmund Blair

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