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Japan Exchange : Mar. 31, 2020 JPX Disclosure 3rd Medium-Term Management Plan Update for FY2020

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03/30/2020 | 11:13pm EDT

3rd Medium-Term Management Plan

Update for FY2020

FY2019 FY2021

March 31, 2020

Japan Exchange Group, Inc.

1

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

(Translation Disclaimer)

This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version prevails. Japan Exchange Group, Inc. ("JPX") and its subsidiaries accept no responsibility or liability for damage or loss caused by any error, inaccuracy or misunderstanding with regard to this translation. This translation may be used only for reference purposes. JPX and its subsidiaries maintain the right to claim compensation for any damage or loss it may suffer from the violation of these conditions.

(Forward-Looking Statements)

These materials contain statements that constitute forward-looking statements. Some of these statements express, for general management purposes only, group performance targets. Forward-looking statements are not a guarantee of future performance. These statements are based on assumptions, which may prove incorrect, and reflect our management's current views or expectations with respect to future events or results rather than historical facts. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those we currently anticipate. Potential risks and uncertainties include, without limitation, that: (1) because our operations are restricted by law, we may experience competitive disadvantages if we are unable to receive in a timely manner or at all regulatory approvals necessary to pursue new business opportunities and new regulations or the manner of application or interpretation of existing regulations could restrict our current business or limit future business opportunities; and (2) because our group revenues are significantly affected by the level of market activity, they could be materially adversely affected by a general economic downturn, particularly in Japan, resulting in a reduction in trading volumes and liquidity of TSE-listed products.

(No Offer of Securities)

These materials are not an offer for sale of our securities in the United States or anywhere else. Our securities have not been registered under the U.S. Securities Act of 1933, as amended ("the Securities Act") and may not be sold in the United States absent registration or an exemption from registration under the Securities Act.

2

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Review of the First Year (FY2019)

The first year saw steady implementation of measures based on the four core strategies

  • Launched cash equity trading platform "arrowhead 2.5" and shortened stock settlement cycle to T+2
  • Moved toward the comprehensive exchange by completing a business combination with Tokyo Commodity Exchange (TOCOM)
  • Developed new partnerships to work toward diversifying data services; carried out simultaneous ETF listings in Japan & China

Pursue "the shape of the market"

toward the next generation

  • Launched cash equity trading platform "arrowhead 2.5"
  • Shortened stock settlement cycle to T+2
  • Yearly IPO count reached 94
  • Carried out simultaneous ETF listings in Japan and China through Japan-China ETF Connectivity program

Diversify and propel data services

into the next generation

  • Launched proof-of-concept (PoC) and data sandbox programs to create new services and client bases
  • Made progress in developing new data services through these programs
    (launched 2 services; testing in progress for 5 services)

Launch and develop

a comprehensive exchange

  • Completed business combination with Tokyo Commodity Exchange (TOCOM)
  • Developed and announced specifications for product transfer and clearing house integration
  • Integrated administrative departments to help achieve business combination synergies
  • Promoted measures to boost markets with integrated promotion teams

Develop a foundation to support the future

of our business and the society

Promoted constructing Kansai backup center for BCP

Launched a new project to build infrastructure for utilizing Blockchain/Distributed Ledger Technology (DLT)

Publicly appealed about the importance of asset building in

the age of the 100-year lifespan

3

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

In Progress
Building Progressing

3rd Medium-Term Management Plan (2019-2021)

Progress Made in the First Year (FY2019)

  • Steadily progressed towards achieving primary targets based on core strategies, for the most part

Pursue "the shape of the market" toward the next generation

Launch and develop

a comprehensive exchange

Diversify and propel

data services into the next

generation

Complete trading platforms for cash products in FY2019

Achieved

and derivative products in FY2021

Development Started

Meet system requirements for trading platforms

Achieved

(for cash products)

  • Shorten stock settlement cycle to T+2 in FY2019 Achieved

Aim for IPO count of approx.100/year

Achieved

(Made TOCOM a wholly-owned subsidiary; integrated

Achieve early integration with TOCOM

Achieved

administrative departments and the HR system)

Achieve integration of clearing houses

(Published outlines of trading & clearing rules

In Progress

for product transfer and clearing house integration)

Raise trading volume through synergies

In Progress

(Integrated promotion teams to improve trading volume)

  • Diversify channels incorporating API, etc. in FY2020 Development Started

Create 10 new services and attract 150 new clients In Progress

(Launched and began utilizing a platform for creating new services and client bases)

Develop a foundation to

support the future of our

Launch Kansai backup center in phases starting in FY2021

Build industry-shared Blockchain/DLT infrastructure in FY2021

  • Contribute to 10% annual increase in the number of users of Tsumitate (installment-type) NISA

business and the society

& iDeCo via initiatives to raise financial literacy Achieved

No. of Tsumitate NISA Accounts : 1.7 mil. (as of Sep. 30, 2019; up 34% from the end of FY2018)

No. of DC pension plan subscribers: 1.46 mil. (as of Dec. 31, 2019; up 21% from the end of FY2018)

4

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Basic Policy for Updates

and Core Strategies

5

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Policy for Updates Starting from the Second Year

Our most important mission is to securely provide market infrastructure that satisfies users,

while properly responding to various risks stemming from environmental uncertainties and unknowns

It is important to continue stabilizing and strengthening our finances, so as not to excessively rely on revenues impacted by the market condition of Japanese equities.

It is important to make a more active

contribution to building a "sustainable society"

in our role as a responsible infrastructure operator supporting Japanese financial and capital markets.

While maintaining the overall framework of the 3rd Medium -Term Management Plan, we will:

  • Review concrete measures, flexibly managing costs in response to changes in the environment and the progress of the plan.
    As part of this, actively develop ways to further diversify the revenue stream, such as by invigorating the comprehensive exchange and creating new data services.
  • As ESG becomes an important topic around the world, further strengthen measures to promote sustainability by encouraging the spread of ESG investment and ESG disclosure, as well as improving JPX's ESG disclosure and ESG ratings as a company.

6

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Management Policy and Core Strategies

Management Policy

Sail to the future.

Keep the market secure.

Under rapid innovation and global dynamics, we aim to evolve into a total smart exchange, where anyone can trade any product in a secure and easy way, by further cooperating with stakeholders and entering new partnerships. We will also make a more active contribution to building a "sustainable society" in our role as a responsible infrastructure operator. UPDATED

Four Core Strategies

Pursue "the shape of the market" toward the next generation

Raise global competitiveness while working on enhancing the appeal of the Japanese market in the pursuit of "the shape of the market" toward the next generation.

Diversify and propel data services into the next generation

Explore our new business model as an exchange by creating highly convenient data services emerging from an open and innovative framework.

Launch, invigorate, and develop the comprehensive exchange

UPDATED

Invigorate the Japanese derivatives market and evolve it into a leading global derivatives market, while swiftly generating synergies from the business combination.

  • Developsociety a foundation to support the future of our business and the

Keep our markets robust as a market infrastructure by means such as developing and managing reliable IT systems and enforcing appropriate

self-regulations. Strengthen cyber security measures and improve

7

preparedness for the risk of natural disasters.

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021) Initiative Highlights

Promoting Sustainability

  • Sustainability Committee set up in July 2018 with CEO as Chair, to strengthen/speed up initiatives
  • Sustainability made a top priority for improving the attractiveness of the Japanese market, in step with global trends
  • Working towards more ESG disclosure among listed companies
  • Encouraging wider ESG investment and promoting ESG-related investment products
  • Improving and enhancing JPX company information disclosure
  • Implementing ESG as a company and research of ESG ratings

Listed company ESG disclosure

Joining the global conversation

Expressed support for Financial Stability Board's TCFD Recommendations

Corporate Governance Code (excerpts)

(Oct. 2018)

Principle 2.3 Sustainability Issues, Including Social and Environmental Matters

Companies should take appropriate measures to address sustainability issues, including social and environmental matters.

Principle 2.4 Ensuring Diversity, Including Active Participation of Women

Companies should recognize that the existence of diverse perspectives and values reflecting a variety of experiences, skills and characteristics is a strength that supports their sustainable growth. As such, companies should promote diversity of personnel, including the active participation of women.

Notable activities

Dec. 2017Joined Sustainable Stock Exchanges Initiative

Jan. 2018Established Green and Social Bonds Platform on

TOKYO PRO-BOND MARKET

Sept. 2018Began publication of S&P/JPX Carbon Efficient Index.

Index selected as Global Environmental Stock Index by GPIF*

Jun. 2019Published Japanese translation of Model Guidance for Companies on Reporting on ESG Information

Jan. 2020Announced calculation of new Infrastructure Fund Index (April)

Feb. 2020First ETF based on S&P/JPX Carbon Efficient Index listed

  • GPIF: Government Pension Investment Fund
    © 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

SASB/CDSB "TCFD Implementation Guide" seminar (Oct. 10, 2019)

Seminar held with Sustainability Accounting Standards Board (SASB) and Climate Disclosure Standards Board (CDSB) to introduce the Japanese translation of their "TCFD Implementation Guide"

ESG-related products

  • ESG-relatedindices (10 indices)

ESG-related indices calculated and published, including governance-focusedJPX-Nikkei Index 400 and S&P/JPX Carbon Efficient Index

  • ESG ETFs (21 ETFs)

Various ESG-related ETFs listed, including those based on the above ESG-

related indices as well as those following women's participation and other themes.

  • Infrastructure funds (7 funds)

Funds listed that invest in renewable energy such as solar power.

Green and Social Bonds (7 bonds)

Green and social bonds listed and information posted on the Green and

8

Social Bonds Platform.

Core Strategy I

Pursue "the shape of the market"

toward the next generation

R a i s e g l o b a l c o m p e t i t i v e n e s s w h i l e w o r k i n g o n e n h a n c i n g t h e a p p e a l o f t h e J a p a n e s e m a r k e t i n t h e p u r s u i t o f

" t h e s h a p e o f t h e m a r ke t " t o w a r d t h e n e x t g e n e r a t i o n .

9

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Core Strategy I - Initiatives

  • Implement the "Action Program for Strengthening the Functions of the Cash Equity Market" in order to appropriately respond to changes in the market environment
  • Implement the market structure reforms and aim for a smooth transition, taking into account the final report from the Expert Study Group on Capital Markets in Japan of the Financial System Council

1

3

Strengthen the functions of the cash equity market and

UPDATED

work to develop a next-generation platform for cash products

  • Implement the Action Program for Strengthening the FunctionsUPDAT of the Cash Equity Market
    (Introduce market access rule, respond to regulations on dark pools, optimize tick sizes, address various execution needs in the ToSTNeT market, etc.)
  • Formulate plans for the development of a next-generation platform for cash products

Improve clearing services for better global competitiveness UPDATED

  • Boost activity in the ETF market via introduction of clearing services for the creation/redemption of ETFs
  • Refine margin rules and framework for listed derivatives
  • Improve OTC clearing services to encourage more usage
  • Prepare for global interest rate benchmark reforms, review the loss compensation rules and systems for listed derivatives, and renovate the system and increase the convenience of clearing services for OTC JGB transactions

2

Develop TSE's market structure and enhance corporate UPDAT

governance at listed companies for a more appealing

UPDATED

Japanese market

Carry out the following to enhance the investment appeal of the Japanese market and encourage listed companies to raise corporate value:

  • Implementation of the market structure reforms and creation of an environment to ensure a smooth transition
  • Further enhancing substantial aspects of corporate governance at listed companies and cultivating an environment conducive to more dialogue between investors and listed companies

4

Create new communication channels with retail investors and

enhance support for global investors

  • Improve marketing to attract more retail investors
  • Improve marketing and strengthen ties to attract more global investors
  • Revamp outreach to global investors to attract more investment in Japanese equities

5

Boost ETF market activity and develop new methods or

UPDATED

channels for new investors

  • Enhance the market making scheme to boost activity in the ETF market and consider an RFQ function*
  • Consider development of new methods or channels for new investors, such as diversifying trading participants and small-lot investments using

assets held in trust

*RFQ: Request For Quote - i.e. a market driven by customers' requests for quotes

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

6

Expand lineup of high-quality listed companies and

products with high investment appeal

UPDATED

  • Attract a greater variety of enterprises to the market
  • Boost support for IPOs with mind to the market structure reforms
  • Create a greater variety of investable products such as ETFs and ETNs

Underlinesindicate additions/revisions to individual initiatives.

10

3rd Medium-Term Management Plan (2019-2021) Initiative Highlights

Raising the Appeal of the Japanese Cash Equity Market

Action Program for Strengthening the Functions

of the Cash Equity Market

(Published on Jan. 30, 2020)

Changes in the environment surrounding the cash equity market

Increasing automation and speed of trade executions, shift toward passive investment, more diverse execution needs, increasingly sophisticated services offered by securities firms, emergence of new securities ventures

We will respond swiftly and flexibly to the constantly changing market environment, so that the Japanese cash equity market remains attractive to investors

Improving the reliability and safety of the market

  1. Introducing market access rule
  2. Introducing self-trade prevention function
  3. Implementing sophisticated trade monitoring and market surveillance
  4. Responding to regulations on dark pools

Developing an environment that facilitates investment

  1. Vitalizing the ETF market
  2. Promoting the appeal of investment in individual stocks to retail investors
  3. Developing new methods or channels for new investors
  4. Optimizing tick sizes
  5. Enriching information for investors
  6. Enhancing the convenience of margin transactions
  7. Addressing various execution needs in the ToSTNeT market

Considering the trading rules for the future in light of

changes in the market environment

  1. Assessing the trading rules amid the shift toward passive investment
  2. Conducting a study on the next-generation market

Market Structure Review (Published on Feb. 21, 2020)

Restructuring of market segments

Our mission is to contribute to the realization of an affluent society, and through restructuring of the Cash Equity Market with a clear market concept, incentivizing sustainable growth and mid-tolong-term corporate value creation of listed companies that further attracts various types of investors, both domestic and foreign, we aim to promote the sustainable development of the Cash Equity Market.

Published an overview of the market structure reforms in February, with the aim of transitioning to new market segments in April 2022

Plan to gradually phase in rule revisions from FY2021

Review of TOPIX

  • Transition to new TOPIX that functions properly as an investable index and a benchmark representing wide investment opportunities
  • Implement measures to further strengthen index governance

(Introduce Index Consultation function and establish Index Advisory Panel)

  • Start using new rules for index calculation after restructuring the market segments

(Phased changes to minimize impact on the market, etc.)

11

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

Core Strategy II

Launch, invigorate, and develop

UPDATED

the comprehensive exchange

I n v i g o r a t e t h e J a p a n e s e d e r i v a t i v e s m a r k e t a n d e v o l v e i t i n t o a l e a d i n g g l o b a l

d e r i v a t i v e s m a r k e t , w h i l e s w i f t l y g e n e r a t i n g s y n e r g i e s f r o m t h e b u s i n e s s c o m b i n a t i o n .

12

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Core Strategy IIInitiatives

  • Invigorate the derivatives market by developing new platforms and attracting diverse order flows through integrated market operations
  • Deploy new measures for market development, such as introducing derivatives trading on national holidays and nurturing the energy market

1 Launch the comprehensive exchange

UPDATED

  • Launch the comprehensive exchange with the product transfer
  • Integrate the clearing houses and provide commodity clearing functions via JSCC
  • Swiftly generate synergies from the business combination
  • Enhance market operations to be fit for the comprehensive exchange and strengthen BCP structures in the Tokyo and Osaka bases

2

Develop the next generation derivatives platform

"J-GATE3.0"

UPDATED

  • Develop trading rules and frameworks and consider creation of new products in connection with J-GATE3.0
  • Construct a system that enables timely addition of new products with the primary concept of "Launch Timely"
  • Work to enhance information services
  • Attract flow from the OTC market by utilizing and improving the J-NET Portal

3

Invigorate the derivatives market

by attracting diverse investment flows

UPDATED

4

Drive new initiatives to enhance the derivatives

NEW

market

Invigorate the markets through reinforcing sales and promotion

Develop rules and frameworks for derivatives trading on national

activities

holidays

Attract more flow from retail investors and global investors

Work on broadening investor base for the electricity futures

Boost trading of Flexible Options and non-flagship

market and facilitate market entry by commercials

products such as TSE Mothers Index Futures

Develop rules and frameworks for listing LNG Futures

  • Attract flow to the commodity market from financial institutions and maintain existing flow

Realizing our medium- to long-term vision

Drive initiatives in such areas as relationship building and R&D to evolve into an "exchange where anyone can trade any product"

Underlinesindicate additions/revisions to individual initiatives.

13

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021) - Initiative Highlights

Launching and Invigorating the Comprehensive Exchange

  • Focus on completing the launch of the comprehensive exchange through a smooth product transfer and clearing house integration (Scheduled for July 27, 2020)
  • Boost the market by operating OSE and TOCOM as a single derivatives market

▼Mar. '19: Basic agreement toward business combination

▼Jul. '19: Published draft rules, etc. for product transfer & clearing house integration

▼Aug. '19 : Commenced tender offer for TOCOM shares

▼Nov. '19: Made TOCOM a wholly-owned subsidiary

▼Dec. '19: Integrated administrative departments

◆Apr. '20: Scheduled integration of operations departments and the HR system

Operated as a Single Derivatives Market

(Market Operations, Planning & Business Development , Trading Platform)

Comprehensive exchange launched with unified regulations made possible through product transfer (Jul. 27, 2020)

TOCOM

Precious

OSE

Nikkei 225

Metals

Futures

Electricity

Rubber

TOPIX Futures

Oil, LNG (planned)

Agricultural

JGB Futures, etc.

Products

Commodity derivatives clearing through JSCC

Inflows from commercials, etc.

Inflows from financial institutions,

including global and retail investors

  • Attract investment flows from financial institutions, such as overseas market makers, and retail investors
  • Enhance inflows from domestic and overseas business, such as commercials
  • Strengthen efforts to invigorate the market, such as introducing trading on national holidays and LNG Futures, etc.
  • Enhance promotion activity using the launch of the comprehensive exchange 14

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

Core Strategy III

Diversify and propel data services

into the next generation

E x p l o r e o u r n e w b u s i n e s s m o d e l a s a n e x c h a n g e b y c r e a t i n g h i g h l y c o n v e n i e n t d a t a s e r v i c e s

e m e r g i n g f r o m a n o p e n a n d i n n o v a t i v e f r a m e w o r k .

15

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Core Strategy IIIInitiatives

  • Diversify and propel data services into the next generation through two programs that will help forge new partnerships
  • Renovate TOPIX into a properly functioning investable index, taking into account the report from the Expert Study Group on Capital Markets in Japan of the Financial System Council

1

Create new information services by utilizing innovations

and partnerships

UPDATED

  • Create new services and develop new customer bases by utilizing open and innovative frameworks

A Proof of Concept program with the aim of providing new contents (from Apr. 2019)

A data sandbox program to develop new customer bases (from Aug. 2019)

  • Research investor needs and tailor data/information services to meet the needs

3

Develop indices & enhance operations in response to

needs & external changes

  • Strengthen ties and partnerships and leverage TSE brand in developing indices
  • Raise robustness and efficiency of operation of an index calculation system by improving IT infrastructure for calculating indices and for managing basic data

2

Build a next-generation system for disseminating

information that employs API* & the cloud

  • Build a next-generation system for disseminating information that incorporates the use of API* and cloud computing
  • Tap into new user segments with diverse services generated from next-generation systems
    • API = Application Programming Interface

4

Renovate TOPIX into properly functioning

NEW

investable index

  • Renovate TOPIX into a properly functioning investable index and a benchmark representing wide investment opportunities

Realizing our medium- to long-term vision

Drive initiatives in such areas as relationship building and R&D to evolve into an exchange where anyone can trade in a secure and easy way

Underlinesindicate additions/revisions to individual initiatives.

16

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021) - Initiative Highlights

Diversifying and Propelling Data Services into the Next Generation

  • Work together with a wide range of partners to create new data and services
  • Create new data services together with partners by utilizing their expertise, technologies, data, and networks

Diversifying and propelling data services into the next generation

Sustainable Development of the Market through creation and provision of sophisticated data services

Resolve technical issues, create investment opportunities, streamline operations, reduce costs

Initiatives aimed at distribution of new contents

#

Project

Project Owner

Schedule

1

J-GATE Derivative

Osaka Exchange,

Service Launched

Trading Information

Inc.

in Jul. 2019

J-GATE Derivative

Osaka Exchange,

Service Launched

2

Trading System

Inc.

in Jul. 2019

Information

Enormous data assets

New

Value

Network infrastructure

connecting investors and

Creation

financial institutions

Innovation Partners

to support start-ups

Expertise, technologies, data and network that bring innovation tothe market

Data Partners who have data assets

New

Partners

3

Detail Breakdown Trading

Tokyo Stock

Service Launched

Data

Exchange, Inc.

in Apr. 2020

Corporate investor event

SCRIPTS

PoC Started in

4

transcripts and their

Asia, Inc.

Oct. 2019

English translations

5

Intangible Asset Data

astamuse

PoC Started in

(IP/IT, HR, network, etc.)

company,Ltd.

Apr. 2019

6

Mid/Small Cap Analyst

Nowcast Inc.

PoC Started in

Reports in English

Oct. 2019

7

Symphony Bot for Timely

Tokyo Stock

PoC Started in

Disclosure

Exchange, Inc.

Mar. 2020

Platform which openly recruits new partners

Initiatives aimed at distribution of new contents

  • Proof of Concept Program for Utilizing Securities Data (from Apr. 2019 )
    • Users can utilize data assets of JPX and Partners free of charge
    • Services may be commercialized, with data content and distribution methods designed based on users' needs

Initiatives to attract new information services users

  • Data Sandbox Program (from Aug. 2019)
    • Provides data from JPX, information vendors, and financial institutions to start-up companies
    • Supports creation of market services of start-ups in partnership with incubation organizations and industry associations

Data Sandbox Partners

17

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

UPDATUPDAT

Core Strategy IV Develop a foundation to support the future of our business and the society

K e e p o u r m a r k e t s r o b u s t a s a m a r k e t i n f r a s t r u c t u r e b y m e a n s s u c h a s d e v e l o p i n g a n d m a n a g i n g r e l i a b l e I T

s y s t e m s a n d e n f o r c i n g a p p r o p r i a t e s e l f - r e g u l a t i o n s .

S t r e n g t h e n c y b e r s e c u r i t y m e a s u r e s a n d i m p r o v e p r e p a r e d n e s s f o r t h e r i s k o f n a t u r a l d i s a s t e r s .

18

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Core Strategy IVInitiatives

  • Accelerate actions for new value creation through digital transformation (DX)
  • Strengthen cyber security measures and advance construction of the Kansai backup center in preparation for the risk of natural disasters

1 Bolster system bases, promote digital transformation, and develop highly-skilled IT personnel UPDATED

  • Develop and manage IT systems that are secure and reliable for users (IT Master Plan)
  • Promote digital transformation and utilize fintech in business

Educate/train human resources on digitalization, etc.

UPDAT

  • Increase efficiency/sophistication of operations by replacing information systems and incorporating the latest technologies

2

4

Strengthen cyber security measures and launch the Kansai backup center in preparation for the risk of natural UPDATED disasters

  • Strengthen cyber security measures
  • Advance construction of the Kansai backup center
  • Improve stability of market operations with higher quality BCP

Raise financial literacy to achieve stable asset building

and strengthening of market functions

UPDATED

  • Implement more active efforts toward promoting the appeal of investment in individual stocks to retail investors
  • Raise financial literacy and enhance education on economics/finance in response to aging population
  • Promote education on investment in derivatives for asset-building

3 Exercisechanges optimal self-regulation that adapts to external

  • Conduct appropriate listing examinations in ways that reflect external changes and maintain/improve the depth of such examinations
  • Steadily implement listed company compliance and enhance listed companies' awareness of corporate scandal prevention
  • Inspect trading participants optimally to reflect external changes
  • Make market surveillance more sophisticated through strengthening system functions and adopting advanced methods
  • Implement appropriate trading participant inspections and market surveillance to suit a comprehensive exchange

UPDAT

5 Strengthen business foundations

Develop human resources and

Strengthen corporate

advance work style reforms

communications, PR, and IR

Research global trends of

Promote cooperation with

regulations, etc. and take strategic

foreign markets

steps

Support Yangon Stock Exchange

19

Improve R&D, etc.

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

Underlinesindicate additions/revisions to individual initiatives.

3rd Medium-Term Management Plan (2019-2021) Initiative Highlights

Utilizing Digital Technology and Action for New Value Creation

  • Transform the business with digital technology in order to respond to environmental changes (Digital Transformation: DX)
  • Work to introduce digital technology and transform IT systems for the creation of new services and transformation of existing ones

New service creation to provide new value for customers

Successful combination of stable market operations

and new value provision through DX

Digital Technology

Adopt digital

Create new value

technology for

utilizing digital

existing business

technology

Structure for promoting DX with top-level commitment

Direct commitment from management for

action on DX

Management including CEO

DX Promotion Team

Business operations

Existing Technology

Carry out stable

Reach new client

bases through

operation of exchange

business

business

departments

IT departments

transformation

Existing Business Model

New Business Model

Business operations and IT departments

communicate and work together

Further action aimed at digitalization of JPX's business

Increase the speed further on action to create new value through DX

Aim to enhance the user experience through a service provision structure combining business

operations and IT departments

Implement agile development and automated testing to support rapid system development

20

Develop highly-skilledIT personnel with thorough knowledge of digital technology and digital business

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Initiatives in Global Strategy

  • Promote initiatives aiming for a more appealing Japanese market and better global competitiveness in all business areas
  • Aim to continue being a leading market in the world as a pivotal trading venue in the APAC region

Take measures to yield flow and investment in Japanese equity from global investors getting influence in the world

Improve reputation of listed companies among investors through better corporate governance and enhancement of dialogue

Promote global cooperation with foreign exchanges, primarily in Asia, such as Japan-China ETF connectivity

Advance the development of a next-generation cash trading platform that adapts to global trends and innovation

Improve clearing services for better global competitiveness

Stockholm

Moscow

Develop Japan's derivatives market into a globally competitive one

Edinburgh

through launching and invigorating the comprehensive exchange

London

Amsterdam

Brussels

Frankfurt

Almaty

Paris

Ulaanbaatar

Zurich

Madrid

Beijing

Seoul

Gibraltar

Tunis

Jerusalem

Shanghai/Shen

Improve connectivity of

zhen

Dubai

Hong Kong

investors with arrownet global

Riyadh

Yangon

Taipei

connect

Mumbai

Bangkok

Vietnam

Manila

Kuala Lumpur

Singapore

Toronto

Chicago

Boston

San Francisco

Silicon Valley

New York

L.A.

Atlanta

Mexico City

Nairobi

Boost activity in the ETF market by improving Jakarta

Promote the variety of listed funds based on

liquidity and efficiency of settlement

overseas assets

Conduct marketing in foreign offices and develop HK office

Take steps concerning global regulations, regimes, and competitiveness, and formulate strategic measures on them

Support for global issuers to capitalize on Japanese

Rio de Janeiro

markets (PRO-BOND market, cross-border listings

San Diego

Sydney

Respond appropriately to international financial regulations

Wellington

(i.e. those of IOSCO and EU on clearing houses and index providers

Support development of Myanmar's capital market

21

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Primary Targets

22

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Primary Targets on Core Strategies (Starting from the Second Year)

  • We have set new targets for developing a next-generation cash trading platform and implementing reforms of the cash equity market structure
  • We will focus on launching and invigorating the comprehensive exchange, first aiming for enough trading volume to make the commodity derivatives business profitable

Pursue "the shape of the

  • market" toward the next
    generation

Next-generation cash trading platform

Finalize concept in FY2020

NEW

Start development in FY2021

Implement reforms of cash equity market structure Phased implementation in FY2020 NEW

  • Aim for IPO count of approx. 100/year

Launch, invigorate, UPDATED

  • and develop the
    comprehensive exchange
  • Launch the comprehensive exchange through smooth

product transfer and clearing house integration

Complete in FY2020

Boost the commodity derivatives market through synergies

Raise trading volume

Next-generation derivatives trading platform J-GATE3.0

Launch in FY2021

Diversify and propel

  • data services into the
    next generation
  • Diversify channels incorporating API, etc. Complete in FY2020
  • Create 10 new services and attract 150 new clients (by end of FY2021)

Develop a foundation to

  • support the future of our business and the society
  • Launch Kansai backup center in phases starting in FY2021
  • Build industry-shared Blockchain/DLT* infrastructure in FY2021
  • Contribute to 10% annual increase in the number of users of Tsumitate (installment- type) NISA & iDeCo via initiatives to raise financial literacy
    • Distributed Ledger Technology

23

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Financial Policies

24

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

3rd Medium-Term Management Plan (2019-2021)

Financial Targets and Capital Policy

  • Maintain the financial targets. Flexibly manage costs, while monitoring the impacts of market conditions on financial performance
  • Aim to further strengthen a business model not heavily reliant on stock market conditions in Japan such as by invigorating the comprehensive exchange

Financial targets for the final fiscal year

Operating

JPY 130.0 bil.

Revenue

Net Income

JPY 50.0 bil.

(attributable to owners

of the parent company)

ROE

15.0%+

Assumptions

Capital policy

Support the sustainable development and evolution of the market by making constant investment while keeping a balance between shareholder returns and financial resilience for stable market operations

Maintain ROE of 10% in the mid- to long-term,

that is above capital cost, regardless of market conditions

Return to shareholders

  • Dividend payout ratio of approx. 60%
  • Flexibly implement further shareholder returns in consideration of future investments, etc.

Average Daily Trading Value

JPY 3.45 tril.

[Ref.] Historical records of total return ratios &

value of return to shareholders

for cash equity products

Annual Trading Volume for

400 mil. contracts

Total return ratio

Ordinary dividend

derivative products

Buy-back

Commemorative dividend, etc.

(%)

(bil.yen)

* Deviation from the assumptions may emerge depending on external factors such as

100

90.4%

60

market condition

85.9%

76.4%

50

CAPEX

80

61.2%

40

60

For replacing core systems, building Kansai backup center, and

39.6%

39.9%

30

taking forward-looking measures

40

20

Total CAPEXs for 3 years

Approx. JPY 45.0 bil.

20

10

25

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

0

0

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

26

© 2020 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.

Disclaimer

Japan Exchange Group Inc. published this content on 31 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2020 03:12:07 UTC

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