The securities market is a part of the financial market where securities, such as stocks and bonds, are traded. The market is divided into the primary market and the secondary market. On the primary market, companies and governments issue securities and sell them to investors to raise funds. On the secondary market, investors can trade securities between themselves.
Securities firms and key players
The over two hundred securities firms operating in Japan generated operating revenues of 4.19 trillion yen in the fiscal year 2022, up from 3.86 trillion yen in the previous year. Five of the largest conventional Japanese players in the industry are Mitsubishi UFJ Morgan Stanley Securities, Mizuho Securities, and SMBC Nikko Securities, which operate as securities units of large financial groups, and independent brokerages like Nomura Securities and Daiwa Securities. In addition, online brokers, such as SBI Securities and Rakuten Securities, have specialized in providing services to private investors online. In Japan, securities firms play an important role in investment banking. Since commercial banking and securities business activities must be separated by law, regular banks cannot conduct securities-related business.
Tax incentives for private investors
Japanese consumers are known for being risk-averse when it comes to investments. Households in Japan hoarded a record 2.1 quadrillion yen in financial assets in 2023. At over 54 percent, however, a comparably large proportion of financial assets were held in cash and deposits. Equities, investment trusts, and debt securities only accounted for 17 percent of the financial assets of households.
To encourage more people to invest their savings and boost participation in the equity and bond market, an amended version of the tax-exempt investment scheme for small investments, Nippon Individual Savings Account (NISA), was introduced in January 2024.
