Exchanges Rocked by a Sea of Doubts - Ripples from the Coastal Exchange Incident (Early Showa Era to 1970s)

Exchanges Rocked by a Sea of Doubts - Ripples from the Coastal Exchange Incident (Early Showa Era to 1970s)

The Primorskai Exchange Incident is a case involving the illicit transactions and collusive structure that some of the exchanges, especially those established in coastal areas, had in Japan's financial and commodity futures markets that lasted from the prewar to the postwar period. Many coastal exchanges were established before World War II for the purpose of "revitalizing local economies" and "improving the efficiency of trading in marine resources," but the reality of their operations was often opaque, and collusion with influential local figures and political dealers was the norm.

This incident surfaced in the late 1950s and early 1960s. Along with the increase in speculative money due to rapid economic growth, the fact that some coastal exchanges were profiting from "ghost trading" and "price manipulation" was exposed. Particularly problematic was the normalization of "trading on the books," in which fictitious transactions were made for marine products that had not actually been landed, and profits were made from the price fluctuations.

At first glance, such transactions appeared to contribute to market revitalization and price stability, but in reality they resulted in unnatural price fluctuations and became a matter of life and death for small and medium-sized traders and fishermen's cooperatives. Behind such market manipulation lies a cozy structure with the political and government worlds, and the names of several lawmakers and bureaucrats were discussed in weekly magazines and newspapers. In particular, the involvement of local ruling party lawmakers in the approval of the establishment of the exchanges and the issue of descent from the government to exchange employees were accused and discussed in the Diet.

In the late 1970s, the consolidation of exchanges along the coasts with low trading volume was promoted, and "exchanges in name only" were closed one after another. The "exchanges in name only" were closed one after another.