JPX Monthly Headlines

On March 31, TSE published "TSE Listed Companies White Paper on Corporate Governance 2017" in Japanese. Based on data in corporate governance reports disclosed by listed companies, the white paper provides a comprehensive analysis of the corporate governance situation of TSE listed companies. It is issued once every two years. New items have been added such as: the data of companies with the audit and supervisory committee introduced in the revised Companies Act (May 2015); how listed companies addressed Japan's corporate governance code; and how they disclosed it. The structure of the white paper has also been revised.

On April 5, the 9th Japan ETF Conference hosted by S&P Dow Jones Indices was held at Imperial Hotel Tokyo with 780 participants from Japan and abroad. At seminars and panel discussions, respected people in the ETF industry talked about the current situation of the ETF market and new horizons of further development. TSE took part in the event as a sponsor with President Miyahara as the keynote speaker and three other TSE members as panelists. In the Second Medium-term Management Plan, we regard ETFs as an investment product to help "satisfy diverse investor needs and encourage mid- to long-term asset building". We will continue to strive to enhance the convenience of the ETF market.

JPX-R held "Seminars for Inspection-related Personnel" for personnel in charge of compliance at securities companies on Monday, April 17 in Tokyo, Wednesday, the 19th in Osaka, and Thursday, the 20th in Nagoya. The seminar in Nagoya was hosted by Nagoya Stock Exchange. A total of 180 people, including mainly officers and employees from compliance department in securities firms, participated in the seminars. JPX-R introduced its inspection plan for FY2017 and cases of inappropriate trading surveillance and credit maintenance, which lead to disciplinary actions by TSE in the last fiscal year, and provided comments on management required for securities companies. JPX-R also explained key elements on order management systems related to high speed trading that was also discussed at the Working Group on Financial Markets of the Financial System Council.

On April 28, JPX released its consolidated financial results for FY2016. Operating revenue was down JPY 6.8 billion (-6.0%) year on year amounting to JPY 107.8 billion due mainly to a decrease in revenues from trading services. Operating expenses were down JPY 0.7 billion (-1.5%) year on year amounting to JPY 50.1 billion due to a decrease in system maintenance and operation expenses. As a result, operating income decreased JPY 6.8 billion (-10.4%) amounting to JPY 59.3 billion with the net income (attributable to owners of the parent company) down JPY 2.7 billion (-6.1%) amounting to JPY 42.1 billion. The dividend will be JPY 48 per share (year-end dividend will be JPY 26).

JPX has compiled a Business Continuity Plan (BCP) that defines its procedures when it becomes difficult to continue business operations. There have been significant changes in the market environment in recent years. The Great East Japan Earthquake prompted the government to review damage estimates for wide-area disasters, and shares of trading activity among the different trading participants changed. In light of these changes, JPX conducted a review with a focus on the (1) backup systems at JPX and (2) its contingency plans at a meeting of the Technical Committee on Exchange Transactions, a framework to discuss BCP of the overall securities market, and compiled the review into a second report in April. In response to the report, the JPX group will revise the BCP system over the next few years.