The Tokyo Stock Exchange said on Friday it is looking into a spate of complaints about recent trades involving heavy short-selling ahead of new share issues.

A growing number of investors at home and overseas are asking it to take action on what they believe could be insider trading, said Kazuhiko Yoshimatsu, a spokesman for the bourse.

Allegations of insider trading could dampen investor appetite for the Tokyo market, where share prices have been lagging the performance of its overseas rivals.

The exchange declined to say if it had opened a formal investigation or to comment on which new share issues were the subject of the complaints.

The spokesman added that investors were concerned that information may have leaked when brokerages, acting on behalf of issuers, sounded out institutional investors to gauge demand for new shares.

The Financial Times reported that the Securities and Exchange Surveillance Commission, the Japanese government's securities watchdog, was also examining the issue.

"It is something we cannot allow to continue. We have no intention of leaving the problem unaddressed," Atsushi Saito, TSE chief executive, was quoted by the FT as saying.

SESC officials were not immediately available for comment.

Nicholas Smith, strategist at MF Global FXA Securities, said his research on 59 announcements of equity offerings in Japan this year showed those stocks underperforming the benchmark Topix by an average of 3.3 percent in the 14 days until the day before the announcements.

Similar data for U.S. companies shows them outperforming a benchmark by 0.3 percent.

"The data shows a strong trend toward underperformance ahead of announcements, suggesting the probability of information leakage is high," he said.

Smith's report cited Nippon Sheet Glass shares, which underperformed by 11 percent in the 14 days before the day prior to the announcement the firm was selling up to 49 billion yen ($604.7 million) of new shares to raise funds on August 24.

Nippon Sheet Glass stock's fall coincided with a jump in trading volume, which averaged about 20 million shares a day in the two weeks up to the announcement on August 24, nearly double the daily average for 2010.

Nippon Sheet Glass officials were not immediately available for comment.

So far this year, the Tokyo market's Nikkei benchmark has lost nearly 13 percent, while the Dow Jones Industrial Average has gained 6.6 percent and Britain's FTSE 100 is up about 5 percent.

"It is already tough to sell the Tokyo market to overseas investors given (Japan's) poor macroeconomic situation," Smith said.