tokyo (Bloomberg) — Bermuda-based MF Global Ltd., the securities firm spun off from the largest publicly traded hedge-fund manager, is opening a brokerage in Japan to take advantage of a void left by rivals exiting the world's No. 2 equity market.

The firm will start in Tokyo this month with 25 employees including about seven analysts and 10 employees in sales and trading, Graham Elliott, the managing director of the new venture, said in an interview. Japan will be the fourth market in which MF will offer equity research, he said.

"There's a real gap right now, especially with the withdrawal of a few key competitors due to a lack of faith in Japan, or restructuring, or even just corporate cost cutting," said Elliott, the previous chief executive officer of Jefferies Japan Ltd. "The feedback we've gotten from our clients is that it's harder and harder to get quality research they can rely on from current providers."

MF Global is expanding into Japan after HSBC Holdings Plc and Jefferies Group Inc. shuttered research operations this year as losses and write-downs from the seizure in global credit markets rose to $1.6 trillion. Financial institutions worldwide cut 329,000 jobs since 2007, data compiled by Bloomberg show.

Mitsubishi UFJ Financial Group Inc. and Morgan Stanley agreed in March to merge their Japanese securities units. Citigroup Inc. put its brokerage up for sale in April. Nine of the largest foreign banks operating in Japan trimmed payrolls by 12 percent in the year through March, according to data compiled by Bloomberg.

"Relative to the size of the market, Japan is very undercovered," said Ed Rogers, CEO of Rogers Investment Advisors Y.K., a Tokyo-based fund of hedge funds. "If you are a global investor based out of London or New York, you are receiving a lot less English-language coverage than you used to."

MF is entering a market where the benchmark Nikkei 225 Stock Average has surged 46 percent from a 26-year low on March 10 through yesterday's close of 10,320.94. The gauge may rally to 11,500 by the end of October, strategists at Nomura Holdings Inc., the country's largest brokerage, forecast last month.

An average of 2.2 billion shares have changed hands daily on the main board of the Tokyo Stock Exchange this year, up from 2.1 billion in 2008.

MF won't have a proprietary trading or investment banking business, which it hopes will lure overseas institutions searching for "independent" views, Elliott said. MF has offices in 14 countries and currently conducts equity research in the US, Europe and India.

The new venture will be called MF Global FXA Securities Ltd. in Japan, combining the name of MF with the firm's Tokyo- based foreign-exchange trading business that's been operating for nine years.

MF has hired Jay Defibaugh, formerly of Credit Suisse Group AG, to cover consumer electronics, Nicholas Smith of HSBC for cyclical shares and strategy, and Joel Scheiman from KBC Groep NV to head chemicals research. Former Jefferies analysts Benjamin Wedmore and David Rubenstein will cover commodities and industrial technology respectively.

Ken Taheny, who previously worked at HSBC, Lehman Brothers Holdings Inc. and Nomura, will work on the sales and trading team, as will Bob Jameson and Rui Okamoto from Jefferies.