Tokyo Stock Exchange (TSE)

The stock trading floor has attracted attention as a symbol of the securities and financial markets of our country for more than 120 years since floor trading began at the former Tokyo Stock Exchange, the predecessor of the current Tokyo Stock Exchange, on June 1, 1878.

However, the stock trading floor was closed on April 30, 1999 in an effort to accelerate the speed and reduce the cost of transactions by member securities companies, and seek further efficiency in the Tokyo market.

At the site of the stock trading floor, "TSE arrows" was opened on May 9, 2000 as a new symbol of the Tokyo market.

Corporate Philosophy of TSE

This corporate philosophy represents goals and a sense of value which TSE and TSE Group should aim for in order to conduct corporate activities. In addition to laying a foundation for development of management plans and decision making of management, the corporate philosophy also serves as a basic guideline that is a cornerstone for all the executives and employees of TSE so as to perform its operations.

Specifically, this corporate philosophy asserts that "TSE will fulfill the social responsibilities that it has been charged with by ensuring trustworthiness and fairness of the market, establishing infrastructure for trading and clearing & settlement with a high level of convenience and efficiency, and operating the TSE market on a sustainable basis through confidence of a large number of market users including investors, listed companies and trading participants".

In addition, "Basic Management Policy", "Management Objectives", and "Business Strategy" will be developed in "Mid-Term Management Plan" in a timely manner under this permanent "Corporate Philosophy".

Charter of Corporate Behavior

Tokyo Stock Exchange (TSE) provides an efficient, convenient, fair and reliable marketplace and carries out corporate activities in line with the trust that is placed in us from society.

In order to develop a positive relationship with the society and to clarify the social responsibility as an openly-managed company, TSE has established the charter of corporate behavior as a statement of universal values based on the standpoint of corporate ethics. TSE will continue to fulfill its role in society by carrying out fair and transparent corporate activities in accordance with the principles of this charter.

All executives and employees of TSE shall observe and exercise this charter, make contributions to the wider society, and continue to develop as a corporation.

Basic Principles

We fully acknowledge the social responsibility of Tokyo Stock Exchange, Inc.(TSE) and our mission of working for the public interest, and we will fulfill the expectations upon us as a stock exchange to strictly comply with all laws and regulations. We will strive to gain further confidence and respect from the public by improving our relationship with members of society at large. To increase TSE's corporate value, we shall engage in various activities with stakeholders such as investors, and we will be an integrated part of society.

Compliance Report

A variety of investors - individuals, institutions, securities companies, etc - have participated in the markets established by Tokyo Stock Exchange, placing orders according to their own needs and preferences. The supply and demand of orders assembled in the market in this manner are integrated, from which appropriate securities values are formed. The TSE is therefore expected to be a free and open market, where sound securities investment can be made. It is also expected to conduct appropriate management in full consideration of conditions not only within Japan, but also overseas. To respond to such expectations, our most important task is ensuring fairness and transparency in trading. Were unfair transactions to be left unchecked, fair price formation would be distorted, unexpected damage would be suffered by investors, and the overall credibility of securities markets would be lost.

As a securities exchange market operator, we have managed the TSE market for fair and smooth securities transactions. This pamphlet will help investors understand how our market's fairness has been maintained by explaining how we prevent and detect unfair trading, how we maintain market fairness, and how investors participate in the market without the danger of unfair trading.

Business Continuity Plan (BCP)

Tokyo Stock Exchange, Inc (TSE) has compiled a BCP defining the basic policy, system, procedures, etc. for continuing business in situations where it becomes difficult for TSE to continue operations, based on a recognition that in response to a diversifying amount of risks, there is an increasing necessity to establish a basic plan for business continuity that addresses the occurrence of all emergencies, including disasters, terror, etc.

TSE believes that it is advantageous for the BCP to be widely known by trading participants and other market-related institutions for the purpose of maintaining a business continuity system for the Japanese securities market as a whole, and has now decided to publicize the BCP to the extent that it does not raise any security issues, etc.

TOPIX Characteristics

1. Comprehensive

Including all First Section listed shares, TOPIX provides a more comprehensive measure of stock price changes than other indices based on stock samples.

The TSE domestic stock market is divided into two sections - the First and Second Sections. In simple terms, the First Section is the market place for stocks of larger companies, and the Second Section is for those of smaller and newly listed companies. Second Section stocks are reviewed at the end of each business year to assess whether or not they meet the criteria for transfer to the First section. Conversely, First Section stocks may be relegated to the Second Section. Close to 1,600 companies are now listed on the First Section, and over 500 companies on the Second Section.

2. Weighted

TOPIX is a weighted index, the market price of each component stock is multiplied by the number of shares listed. Accordingly, a price change in a stock exerts influence on the index in proportion to its relative market importance, in other words, a price change in a large, widely held stock has a greater impact on TOPIX than that of a less widely held stock.

3. Readily Available

TOPIX is computed and published every 15 seconds via TSE's Market Information System. It is reported to securities companies across Japan and is available worldwide through computerized information networks.

4. The Most Appropriate Benchmark

As a comprehensive, weighted and readily available index, TOPIX is the most appropriate benchmark for evaluating portfolio performance. This is especially true for institutional investors who construct and manage diversified portfolios containing a wide range of Japanese stocks.

Source - Tokyo Stock Exchange

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