Tokyo Stock Exchange

The Tokyo Stock Exchange, or TSE, is one of the largest stock markets in all of Asia,
with over 1 billion shares exchanging hands each trading day. The exchange supports the
trading of bonds and derivatives in addition to equities.
The largest stock exchange in Japan headquartered in its capital city of Tokyo. The Tokyo
Stock Exchange (TSE) was established on May 15, 1878. The exchange has more than 3
400 listed companies, with a combined market capitalization at end-2013 of $4.47
trillion, making it the third-largest in the world by this measure. The exchange is home to
the largest and best-known Japanese giants with a global presence, including Toyota,
Honda and Mitsubishi.

History
The history of the TSE dates back to the 1870's, when a securities system was
established in Japan and public negotiating for bonds first began. The Tokyo
Stock Exchange Co., LTD was established on May 15, 1878, and trading on the
exchange began in June of that same year.
Between August 10, 1945 and April 1, 1949, official trading on the exchange was
suspended due to the war. After several post-war reorganizations, the TSE
emerged as the largest of the five stock exchanges in Japan
On July 1, 1969, the TSE introduced the TOPIX (Tokyo Stock Price Index),
which is a composite index of all the domestic common stocks listed on the
exchange. The TOPIX is considered the best indicator of the financial condition
of the Japanese stock market.
Facts and figures
The latest report (October 2013) on the Tokyo Stock Exchange indicates there are
approximately 3 390 domestic and 11 foreign companies listed on the exchange.
Those same 3,401 listed companies have a total market capitalization of $4.47
trillion (USD).
Nearly 349.5 million trades of stock are exchanged annually on the TSE
(December 2013).
In October 2013, an average of 2.4 million trades, worth $20.8 million (USD) was
exchanged daily.
The most important index traded on the TSE is the TOPIX, which includes the
TOPIX, TOPIX 1000, TOPIX Small, TOPIX 500, TOPIX Mid, TOPIX Core 30,
and TOPIX Large 70.

 In addition to the TOPIX, the Nikkei 225 is recognized as one of the major
international stock indices in the world today.
In November 2011, the TSE launched the Tdex+ System, which is an options and
futures trading platform. This system claims to be able to process as many as
36,000 orders per second.
Organization
The Tokyo Stock Exchange is a stock corporation that provides an Exchange
Securities Market under authorization of the Prime Minister.
The Tokyo Stock Exchange was formerly a membership organization. However, a
revision of the Securities and Exchange Law allowed a stock exchange to
transform its organizational structure into a stock corporation so, on November
1st 2001; the Stock Exchange became a stock corporation.
The management of the Exchange Securities Market is required to be a highly
public matter. Therefore, the management aims are stipulated in the Tokyo Stock
Exchange's constitution as, "In order to contribute towards the protection of the
public interest and investors, the trading of securities must be carried out in a fair
and efficient manner." It is also clearly stated in the constitution that the TSE shall
continue to maintain a high level of publicity concerning its management, even
after the transformation into a stock corporation.
Name :
Officers :
Address :
Founding :
Capital :
Issued Shares :
Staff :

Tokyo Stock Exchange, Inc.

5 Directors, 4 Auditors, and 6 Executive officers
2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo
103-8220 Japan
April 1, 1949
11.5 billion yen
2,300,000 shares
418 people (current as of Jan. 1, 2013)

Major functions
Provision of a Market Place
o Trading which takes place on the Tokyo Stock Exchange progresses
continuously throughout each trading session using computerized trading
systems, in compliance with Exchange rules. Transaction prices are
available to the public.
Monitoring trading
o Real-time trading on the computer trading systems as well as completed
transactions are carefully monitored in order to keep trading in line with
Exchange rules and properly determine prices. Upon discovery of any rule
violation, improper conduct or unfair trading, appropriate measures are
taken.
Listing securities

o Securities which are traded on TSE adhere to listing criteria established

and approved by the TSE.
Monitoring listed securities
o TSE continuously monitors listed companies and securities in order to
maintain high listing standards. TSE can suspend the trading of, or delist,
a security if listing criteria are not met.
Supervision of Trading Participants
o Trading participants are those who conduct transactions on the TSE
market. In order to guarantee the safety of transactions and to fulfil to the
utmost the public purpose of the TSE, they must maintain a high level of
quality and a deep sense of confidence. In order to achieve this, an
examination system is being introduced at the Exchange whereby strict
investigations are carried out to assess the state of prospective participants'
businesses and assets at the time of their application for trading
permission.
Market structure data
Cash equity market
o The average daily trading value for the 1st Section in January 2014 was
JPY 2.8526 trillion, reaching a new high since May 2013.
o The trading value for the ETF market in January 2014 was JPY 2.9626
trillion, the second highest historically after December 2013.
o The trading value for the 2nd Section in January 2014 was JPY 695.7
billion, the highest level in approximately 7.5 years.
Derivatives market
o The trading volume of the JPX derivatives markets in January 2014 was
26,948,865 contracts.
o The trading volume in the night session in January 2014 was 7,346,620
contracts. The ratio of night session to day session trading volume was
44.3%.
o The trading volume for Nikkei 225 VI Futures in January 2014 was 8,302
contracts, the second highest historically.
Trading
Trading Hours
o The morning trading session: 9:00 - 11:30 a.m.
o The afternoon trading session: 12:30 - 3:00 p.m.
Kinds of Stock transactions
o These transactions shall be made during the period from the ex-rights date
(or the day following the last day of subscription period) until a TSEdesignated date, occurring on and after the day before the issuance of
stock certificates. A margin deposit (30% of transaction value) is required.
o "Regular" transactions
Settlement shall be made on the third business day after the day of
transaction (T+3);

o "Cash" transactions
Settlement shall be made on the day of transaction. "Cash"
transactions are available to cross trading only.
o "When issued" transactions
"When issued" transactions are used for new shares issued by
companies in capital increases and stock splits.
Types of Orders
o Market orders
o Limit orders
Special Bid/Ask Quotes
o When there are bids or offers which are outside the reasonable price range
from the standpoint of price continuity, TSE indicates a "special bid
quote" or a "special ask quote" in order to notify the public of the
existence of such orders. The special bid/ask quotes maybe renewed at
intervals of 3 minutes or more as deemed appropriate by TSE within the
price parameters (*1) set out by TSE.
Sequential trade Quotes
o In the case of continuous increase / decrease in execution prices of a single
order that exceeds twice the range of the special quote parameters from the
previous price, a "sequential trade quote" will be displayed at the said
price, and it shall be subject to the Itayose method.
Daily Price Limits
o TSE has established daily price limits (*2), based on stocks' previous day's
closing prices, beyond which prices may not swing. These limits protect
investors from distorted price formation as a result of a speculative market
or when the supply/demand balance is broken.
Transaction method
o Auction market principles: "price priority" & "time priority"
o "Itayose" method: for opening trades;
It is a form of auction market in which the time of order entry is
not distinguished (there is no time priority), and an opening price is
derived on the principle of price priority (Bids and offers are
matched at a single price according to the principle of price
priority) requiring that the following occurs:
1. All market orders are executed first.
2. Next, all limit orders are executed to sell/buy at prices
lower/higher than the execution price.
3. Finally, the following amounts of limit orders to sell or buy are
at the execution price:
- the entire amount of all either sell or buy orders, and
- at least one trading unit from the opposite side of the order
book.
o "Zaraba" method: continuous trading
A method of matching orders that involves using an auction-like
process to trade securities. The orders are organized by both their

prices and the time that they were taken. As soon as an order for a
security is delivered, it is compared and matched with orders
already in the order book. When a bid comes in that matches the
price requested by another order, the two orders are executed and
taken out of the order book.
Off-Market transactions in Listed Securities
o Securities firms (including non-trading participants) are prohibited from
executing any customer orders for listed securities off the exchange market
unless specifically instructed by customers to do so.
o When executing customers' orders off the exchange market, securities firms
are required to observe the price parameters set forth by the Japan
Securities Dealers Association during the trading hours of the exchange
specified by customers.