1987 Colum. Bus. L. Rev. 419 (1987)
Indider Trading in Japan: A Challenge to the Integration of the Japanese Equity Market into the Global Securities Market

handle is hein.journals/colb1987 and id is 431 raw text is: INSIDER TRADING IN JAPAN: A
CHALLENGE TO THE INTEGRATION OF
THE JAPANESE EQUITY MARKET INTO
THE GLOBAL SECURITIES MARKET
LARRY ZOGLIN*
Recent highly publicized insider trading cases in the United
States have provoked a great deal of debate, both in the U.S. and
Japan, over the appropriate level of enforcement of insider trading
laws. The growth and gradual internationalization of Japan's equity
market has added to the external pressure on the Japanese to take a
more active role in prohibiting insider trading. The character and
history of the Japanese securities market, however, resist the impo-
sition of strict enforcement policies. Because of the size of the Japa-
nese securities market, the disparity between Japanese and foreign
enforcement of insider trading represents a significant challenge to
the successful globalization of the world's securities markets.
The regulation of insider trading in Japan offers a surprisingly
good point of comparison to the U.S. for two reasons. First, the To-
kyo Stock Exchange is the only stock market in the world whose size
rivals that of the United States. In terms of the market value of all
listed shares, the Tokyo Stock Exchange is nearly equal in size to
the New York Stock Exchange. The next largest national exchange,
in London, is less than one-sixth the size of the New York Stock
Exchange. As of December 1986, fifty-two foreign companies were
listed on the Tokyo Stock Exchange, compared to fourteen two
years previously. In 1986, the Tokyo Stock Exchange formally
opened its membership for the first time to foreign brokerage com-
panies. Six foreign firms became regular members of the Exchange:
Merrill Lynch, Goldman Sachs, Morgan Stanley, Vickers Da Costa,
Jardine Fleming, and S.G. Warburg. In addition, as of December
* Larry Zoglin is an associate in the Washington, D.C. office of Paul, Weiss,
Rifkind, Wharton & Garrison, New York. Mr. Zoglin recently conducted a study of
the Japanese securities market with the support of a grant from the Fulbright Ex-
change Program.

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