JPX Monthly Headlines

JPX-R held seminars for listed companies on "How to Prevent Corporate Scandals", on March 5 in Tokyo and April 2 in Osaka. Listed company representatives, investors, and experts such as lawyers were invited to take part in panel discussions on such topics as initiatives by listed companies to prevent corporate scandals based on the JPX-R publication "Principles for Preventing Corporate Scandals" published on March 30, 2018. Approximately 800 people, primarily directors and audit board members of listed companies, attended the two seminars in Tokyo and Osaka overall.

TSE started its ETF Market Making Scheme Version 2.0 on April 1, 2019. The new scheme is an updated version of the original scheme implemented on July 2, 2018. Version 2.0 aims to develop "Star ETFs" representing each asset class, by setting time-limited incentives and obligations for selected ETFs only and asking market makers to display continuous quotes of JPY 100 million to 1 billion for those ETFs. We expect that this scheme will further improve liquidity in the ETF market, allowing investors to instantly trade ETFs at a lower price even for relatively large transactions. TSE remains committed to creating greater convenience for investors in order to boost the ETF market.

JPX published JPX Working Paper Vol. 30: "Analysis of the Use of Distributed Ledger Technology (DLT) in the Post-Trade Process of Cross-Border Securities Transactions." The paper is the result of joint Proof of Concept (PoC) testing with Nihon Unisys, Ltd. and 10 financial institutions under the PoC Testing for Utilization of Blockchain/DLT in Capital Market Infrastructure framework. The paper is currently available only in Japanese.
This PoC tested whether adopting DLT technology in the transaction record sharing system could be an effective solution to the problems of preventing fails in cross-border securities transactions and improving the rate of pre-settlement matching, and confirmed that there is a certain level of feasibility. It also confirmed that the efficiency of blockchain/DLT in terms of systems and infrastructure is highly competitive with that of existing systems, and that it can be made good enough for practical use by limiting the scope of functions.
JPX has published five more Working Papers on blockchain technology: Volumes 15, 20, 22, 23 and 26.

JPX-R launched the "COMLEC Market Surveillance Course", an education program aimed at those in charge of market surveillance at brokers. The course will consist of ten sessions between now and December. In the first session, we discussed the importance of market surveillance and market surveillance related regulation.
Through supporting our brokers' personnel development in this way, JPX-R is contributing to the improvement of unfair trading prevention abilities in the securities industry as a whole.

JPX, Japan Securities Dealers Association, The Investment Trusts Association of Japan and others jointly hosted the first "Japan-China Capital Markets Forum" in Shanghai, China. During the forum, JPX and the Shanghai Stock Exchange (SSE) held a signing ceremony for a "Japan-China ETF Connectivity" agreement, with the aim of carrying out cross-listings of ETFs between the two countries in the very near future. In addition, there were discussions about improving co-operation between the Japanese and Chinese securities markets, innovation and the role of capital markets, and also break-out sessions held separately by Japanese and Chinese exchanges, securities dealers associations, and investment trust associations, which discussed realistic outcomes of co-operation between the Japanese and Chinese securities markets.
JPX will continue to contribute to the further development of the Japanese and Chinese capital markets through co-operation with the relevant bodies.

Taking into account the increase in new data and services ("content") with the potential to contribute to the development of the securities market, TSE launched a Proof of Concept (PoC) Program to test the possibilities of, and technical issues that may arise from, utilizing such content. Using the Program framework, JPX also launched a collaboration project with astamuse company, ltd., which will test the possibilities of utilizing fund inflow data and indicators on intangible assets created by astamuse. The two companies began recruiting participants on April 23, and following testing and improvement through the PoC, aim to launch as a commercial service this summer.
TSE aims to continue not only resolving technical issues related to new content, but also contributing to the creation of new investment opportunities and businesses, the efficiency of business operations, and cost reductions.

TSE and the Ministry of Economy, Trade and Industry (METI) jointly selected and announced the Competitive IT Strategy Companies 2019, which represent listed companies that proactively engage in efforts to utilize IT in management innovation. (Chairman of Selection Committee: Professor Kunio Ito, Director of CFO Education and Research Center & Adjunct Professor at the Graduate School of Business Administration, Hitotsubashi University.)
This year, out of the companies selected, the committee chose ANA Holdings, Inc. as the recipient of the first 'DX Grand Prize',awarded for an especially notable effort toward utilizing IT in management innovation.
TSE will continue to showcase the activities of listed companies from various angles, and hopefully expand the range of people interested in asset formation.

JPX released its consolidated financial results for FY2018.
Operating revenue was up JPY 0.4 billion (+0.4%) year on year to JPY 121.1 billion, due mainly to an increase in revenues from clearing and information services.
Operating expenses were up JPY 3.2 billion (+6.3%) year on year to JPY 54.1 billion, due in part to an increase in system maintenance and operation expenses.
As a result, operating income decreased JPY 2.2 billion (-3.1%) to JPY 69.5 billion, with net income (attributed to owners of the parent company) down JPY 1.4 billion (-2.8%) to JPY 49 billion. Thus, revenue increased but profit decreased compared to the previous year.
This fiscal year (2018-19), we achieved the final year profit target for the 2nd Medium-Term Management Plan, and in 2018 commemorated the 140th anniversary of the founding of Tokyo Stock Exchange Co., Ltd. and Osaka Stock Exchange Co., Ltd. (the predecessors of today's Tokyo Stock Exchange and Osaka Exchange). To express our appreciation for the support of our shareholders, JPX will give out a special dividend of JPY 15 per share for the fiscal year ended March 2019 in addition to the ordinary dividend.