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  5. Exchanges' "Quality Control Center"

Outline of Self-Regulatory Operations

In January 2013, Japan Exchange Group (JPX) was formed through a merger between Tokyo Stock Exchange Group and Osaka Securities Exchange. On July 16 of the same year, the markets for trading stocks and other cash equities were integrated into Tokyo Stock Exchange (TSE), and on March 24, 2014, the markets for trading futures and other derivatives were integrated into Osaka Exchange (OSE).

TSE, which operates the cash equity market, is one of the world's leading exchanges. It lists the shares of over 3,900 domestic and foreign listed companies (as of December 31, 2023) as well as ETFs and other products. An average of 1.9 billion shares, or JPY 4.1 trillion, is traded there each day (daily averages are for domestic stocks in 2023). OSE, which operates the derivatives market, is the central exchange for derivatives trading in Japan, including futures and options trading on stock indices such as the Nikkei 225 and TOPIX, government bonds, precious metals, rubber, and agricultural products.

In this way, TSE and OSE under JPX cover an overwhelming share of the domestic market with a wide range of listed products including both cash and derivatives, and so can arguably be referred to as "the Japanese market" in themselves.

Japan Exchange Regulation (JPX-R) is entrusted with self-regulatory operations by both exchanges, and protects the fairness and reliability of Japan's capital markets as the "quality control center" of the exchanges.

Specifically, JPX-R works to maintain the quality of the market and enable investors to trade with confidence through several types of operations: "listing examination," which involves examining the listing eligibility of companies and financial instruments wishing to list; "listed company compliance," which involves examining already listed companies' and financial instruments' eligibility for listing by checking their information disclosure and corporate behavior; "inspection," which involves examining the legal compliance and financial soundness of trading participants (note) such as securities companies to ensure the reliability of their operations; and "market surveillance," which involves monitoring the market to examine whether there is unfair trading such as market manipulation and insider trading.

(note)
  • ･Market intermediaries such as securities companies that connect investors to the exchange