The Japan Exchange Group Working Paper on the "Origin of the Tokyo Stock Exchange: Path Dependence of Trading Systems" is now available in English translation. The histories of certain stock exchanges suggest that stockbrokers were already versed in the rules and methods of existing trading types prior to the foundation of these exchanges. This paper addresses the establishment of the Tokyo Stock Exchange (TSE) during the 19th century in Japan, with a focus on the extent to which the TSE’s adopted system resembled rules and methods already familiar to brokers. The majority of the primary brokers at the TSE had dealt with yogin trading, which involved the foreign exchange of Mexican and Japanese silver currencies. This paper finds that the evolution of the stock trading systems in the TSE is a case of path dependence in that it originates from yogin trading, and that the narrative that regards futures trading at Osaka Dojima in the 18th century as the prototype of stock trading is an case of the invention of tradition that has exaggerated historical facts.
