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  4. Outline of Self-Regulatory Operations
  5. Organizational Structure that Ensures Neutrality and Effectiveness

Outline of Self-Regulatory Operations

In order to properly carry out self-regulatory operations, it is essential to have an organizational structure that provides a high level of autonomy and manages operations from a fair and neutral standpoint, with the main focus on public interest and investor protection. At the same time, the execution of self-regulatory operations requires prompt and appropriate responses to various market events, as well as a high level of expertise and familiarity with market functions and characteristics. For this reason, across the world, self-regulatory operations have often been carried out by exchanges themselves.

At the same time, however, as trading increasingly crosses borders and international competition between markets progresses, it is becoming increasingly important for exchange organizations to respond flexibly to changes in the environment and to promote greater efficiency and convenience.

In order to achieve both the required results, i.e., the neutrality and effectiveness of self-regulation and the business strategy and profitability of the exchanges, Japan Exchange Group has chosen to establish a self-regulatory organization specializing in self-regulatory operations as a separate entity within the same corporate group as the exchanges. In other words, the purpose is to realize highly effective business execution from a neutral standpoint, independent of the exchanges, while demonstrating a high level of expertise from a position close to the market. There is also an independent governance system in place for decision making, as the Board of Governors, which is the highest decision-making body of JPX-R, is composed of a majority of outside governors.

Within JPX-R's day-to-day operations, it and the exchanges work together and share necessary information at all times, but JPX-R conducts its examinations independently and neutrally, and the exchanges grant approval or take measures such as imposing penalties based on the results of those examinations.

In the United States, there is an integrated self-regulatory organization (FINRA) that is separate from the exchanges, and in the United Kingdom there is a unified regulator (FCA), while in Asia, it is still normal for each country's exchange to carry out self-regulatory operations. Self-regulation has a variety of forms depending on the history of market development, legal systems, and practices, and it can be said that each country or region has developed its own unique organizational structure.

JPX-R's organization and business execution structure is rooted in the changing international environment surrounding exchanges and Japan's history, and is unique even from a global perspective.

JPX-R will continue to conduct highly effective self-regulatory activities in line with the market environment and legal framework to ensure fairness in the market and to earn the trust of investors.