Tokyo, London bourses agree to tie-up

TOKYO, Feb 23 (Reuters) The Tokyo Stock Exchange and the London Stock Exchange said on Friday they would work together to share technology information and possibly develop new products, marking the latest cross-border agreement between bourses in an increasingly competitive market.

Stock exchanges around the world have been joining forces through alliances and mergers to share the burden of investing in next-generation systems, as well as to keep up with global competitors.

''This is the first time that the two exchanges have agreed to work together, and it is expected the cooperation will bring benefits for investors, issuers and member firms,'' the exchanges said in a joint statement.

They are considering working together in operating markets for growth companies and the creation of jointly traded financial products, the statement said.

The scheme was eventually aimed at providing round-the-clock trading, it said.

The move is also seen as an attempt by the Tokyo exchange to improve its public image, which has been dented by trading errors and system faults.

''The (Tokyo Exchange) is in danger of being left behind by technology and investment trends,'' said Neil Katkov, manager of Asia research at consulting firm Celent.

Compared with other major stock exchanges, Tokyo offers investors relatively few financial products, Katkov said.

It has also been plagued by a series of system glitches. In one such incident last year, the exchange was forced to shorten trading hours for a full three months.

''I think a lot of it is knowledge transfer, they would really benefit greatly from greater interchange with other capital market centres and really learn those best practices that they seem to be lacking. In a word, governance,'' Celent's Katkov said.

The LSE, which has fought off four takeover attempts in two years, is now free to seek tie-ups after the failure of Nasdaq Stock Market Inc.'s 2.7 billion pound (.3 billion) hostile bid for it.

The Tokyo exchange, the world's second-largest, and New York Stock Exchange operator NYSE Group Inc. said last month they would form a strategic alliance to develop and study opportunities in trading systems and technology, investment products and governance.

REUTERS CS PM1619