Japan Exchange : Explanatory Material, Q4 FY2019

Overview of Earnings for FY2019

Total smart exchange

Japan Exchange Group, Inc.

April 30, 2020

© 2020 Japan Exchange Group, Inc.

C o n t e n t s

• Overview of Earnings for FY2019〔IFRS〕

• Reference Materials

© 2020 Japan Exchange Group, Inc.

I. Overview of Earnings for FY2019 〔IFRS〕

(April 1, 2019 - March 31, 2020)

* This document is not subject to the audit procedures required under the Financial Instruments and Exchange Act.

Please note that its contents have not been audited on a consolidated basis in accordance with the Act as of the time of disclosure.

© 2020 Japan Exchange Group, Inc.

Market Trends (Cash Equities)

Cash Equities Average Daily Trading Value (April 2017 - March 2020)

6.0(JPY tril.)

FY2017

FY2018

FY2019

5.0																												5.0
							4.3			4.3
								4.0					3.9
4.0							3.6		3.7				3.6	3.5											3.6
						3.3			3.4			3.5
		3.2	3.2		3.2				3.3	3.2	3.1		3.1	3.1		3.2			3.1		3.1
	3.0	3.0							2.9		3.0	2.9			2.9	2.6	2.9
3.0				2.8													2.5	2.5	2.7
2.0
				Cash Equities
1.0					1st Section
					(auction of domestic equities)
0.0
2017								2018							2019											2020
	Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar	Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

Daily Average Trading Value by Market Division (JPY)

			FY2017	FY2018				FY2019
			Annual Ave.	Annual Ave.			Annual Ave.		y/y
	1st Section Domestic Equities		2,572.6 bil.	2,461.3 bil.			2,249.9 bil.		(8.6%)
Auction	ETFs / ETNs		184.7 bil.	198 bil.		211.5 bil.		+6.9%
	Markets for Emerging Companies		194.4 bil.	155.4 bil.				135.9 bil.		(12.6%)
	(JASDAQ & Mothers)
	Off-auction		409.1 bil.	422.1 bil.		392.4 bil.		(7.1%)
Cash Equities (auction/off-auction) Total		3,446.2 bil.	3,306.8 bil			3,081.1 bil		(6.8%)

© 2020 Japan Exchange Group, Inc.	4

Market Trends (Derivatives)

Nikkei 225mini (April 2017 - March 2020)
(Trading volume : 10,000 contracts)															(Nikkei VI)
350					FY2017					FY2018					FY2019				60.0
300			Nikkei 225mini																	50.0
250			(Ref.) Nikkei VI (ave.)
																				40.0
200											168										187
							153 135													30.0
						137						133			131
150										110		127				116
	91					93	104	95	90	91	108	110 98105		99	92	95			20.0
100	83	84		84	84	87	84
73	84	86
			66					68							73
50																					10.0
0	2017						2018						2019							2020	0.0
	Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar	Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

Average Daily Trading Volume/Value of Major Products

		FY2017	FY2018		FY2019
		Annual Ave.	Annual Ave.		Annual Ave.		y/y
TOPIX Futures		105,287 contracts	103,896 contracts		121,034 contracts		+16.5％
Nikkei 225 Futures (Large)		102,167 contracts	99,939 contracts		110,041 contracts		+10.1％
Nikkei 225 mini		984,797 contracts	1,051,071 contracts		1,227,800 contracts		+16.8％
Nikkei 225 Options*		JPY 27.0 bil.	JPY 23.0 bil.		JPY 26.8 bil.		+16.5％
10-year JGB Futures		35,978 contracts	42,087 contracts		39,640 contracts		(5.8％)
Total Trading Volume for Financial Derivatives		353 mil. contracts	364 mil. contracts		412 mil. contracts		+13.1％
Total Trading Volume for Commodity Derivatives		25.37 mil. contracts	21.07 mil. contracts		21.42 mil. contracts		+1.7%
* Excluding Weekly Options.

© 2020 Japan Exchange Group, Inc.	5

Operating Revenue

• Revenues from trading services were consistent with the previous year, as while revenues from cash equities decreased, revenues from financial derivatives increased along with those from the new commodity derivatives consolidated from TOCOM.
• Revenues from clearing services, especially for OTC products, increased.
• Revenues from information services grew due to a) an increase in market data usage fees resulting from increased market data usage and b) an increase in index licensing fees resulting from the growth in ETF AUM.
• Other operating revenues decreased due to a decline in income from service provision such as for trading systems due to the consolidation of TOCOM.

-	Cash equities: (2,301)
-	Financial Derivatives: +996
- Effects from consolidation of Tokyo Commodity Exchange (TOCOM): +1,234	Information	(JPY mil.)
				Listing	Services
		Clearing	＋948
		Services	123,688
		Services
		+296
	121,134	＋1,638		Other
					(258)
	Trading
	Services
	(71)	-	Initial/additional listing fees: (29)		y/y
		-	Annual listing fees: ＋325		+2,253 (+2.1％)

FY2018	FY2019
(Full Fiscal Year)	(Full Fiscal Year)
© 2020 Japan Exchange Group, Inc.		6

y/y

+4,420 (+ 8.2％)

Operating Expenses

• System maintenance & operation expenses and depreciation & amortization increased due mainly to development of the Kansai backup center and upgrades to arrowhead.
• Depreciation & amortization and other operating expenses increased due mainly to the

start of accelerated amortization and posting of financial advisor fees in connection with

business integration with TOCOM.

Other

(JPY mil.)

System

Depreciation &

＋1,328

58,532

Amortization2

Maintenance &

＋1,170

Operation

Personnel

Real Estate-

Expenses2

related Expenses1

+657

Expenses

+927

＋336

54,111

Increased expenses due mainly to:

• Development of Kansai backup center
• Start of accelerated amortization in connection with business integration with TOCOM(Aug. 2019)
• Upgrades to arrowhead (Nov. 2019)

Increased expenses due mainly to:

• Posting of financial advisor fees in connection with business integration with TOCOM

FY2018	1. The new accounting standard for leases under IFRS is applied from Q1 FY2019. Under this new standard, a portion of these expenses should be	FY2019
(Full Fiscal Year)	included under depreciation; however, for ease of comparison, this portion is included under "Real Estate-related Expenses" in this figure.	(Full Fiscal Year)

2. In March 2019, the OTC clearing system was transferred from TOSHO System Service to Tokyo Stock Exchange. With that, a portion of the expenses that were previously recorded as system maintenance and operation expenses have been recorded as depreciation and amortization expenses. For ease of comparison, the expenses that correspond to the same category in the same period a year earlier have also been reclassified into depreciation and amortization expenses.

© 2020 Japan Exchange Group, Inc.	7

Highlights and FY2020 Forecast

• Operating revenue increased due mainly to increases in derivatives trading as well as increased revenue from OTC clearing and information services. However, net income decreased 3.0% year on year due to increases insystem-related expenses and those related to the consolidation of TOCOM.

（JPY mil.）Operating Revenue Operating Expenses	Operating Income	Net Income*1		EBITDA
140,000		121,134	123,688 121,500
120,000
100,000														82,568	85,683
80,000								69,535
					58,532	61,500	68,533	62,000
60,000					54,111			49,057	47,609
									42,500
40,000
	+ 2.1% (1.8%)	+ 8.2% + 5.1%	(1.4%) (9.5%)	(3.0%) (10.7%)	+ 3.8%
20,000
0		FY2018	FY2019	FY2020	FY2018	FY2019	FY2020	FY2018	FY2019	FY2020	FY2018	FY2019	FY2020	FY2018	FY2019
			（Forecast）		（Forecast）		（Forecast）		（Forecast）		（予想）

*1 Net Income attributable to owners of the parent company.

• Average Daily Trading Volume/Value of Major Products

		FY2018	FY2019		FY2020(Assumptions for forecasts)
			y/y		y/y
Cash Equities (trading value) *1	JPY 3,306.8bil.	JPY 3,081.1bil.	(6.8％)	JPY 3,000.0bil.	(2.6%)
TOPIX Futures (trading volume)	103,896 contracts	121,034 contracts	+16.5％	106,000 contracts	(12.4%)
Nikkei 225	Futures (trading volume) *2	205,046 contracts	232,821 contracts	+13.5％	210,000 contracts	(9.8%)
Nikkei 225	Options (trading value) *3	JPY 23.0bil.	JPY 26.8bil.	+16.5％	JPY 24.5bil.	(8.8%)
10-year JGB Futures (trading volume)	42,087 contracts	39,640 contracts	(5.8％)	39,000 contracts	(1.6%)

*1	Total value of daily averages of auction and off-auction trading of common stocks on 1st/2nd Sections, Mothers, JASDAQ, TOKYO PRO Market, and ETFs/ETNs, REITs etc.
*2	Contracts of Nikkei 225 mini are calculated using a factor of 1/10.	*3 Excluding Weekly Options.
© 2020 Japan Exchange Group, Inc.		8

Dividends, etc.

• Since FY2015, JPX has raised its target dividend payout ratio from approx. 40% to approx. 60%.
• Between July 2016 and May 2017, JPX acquired approx. JPY 20 billion worth of its own shares (approx. JPY 12.5 billion in FY2016 and approx. JPY 7.5 billion in FY2017).
• In FY2019, JPX will pay an ordinary dividend of JPY 54 per share in line with its target dividend payout ratio of approx. 60%.

（JPY・％）		Interim dividend		Year-end dividend	Total return ratio
100
90
80				Commemorative	Special
70				dividend	dividend
60					10	15
50
40			29	26	33	28	30	24
30
20	13.5	16			24	27	24	24
10	21	21
9
0	8	JPY 50
JPY 21.5	JPY 25	JPY 47	JPY 67	JPY 70	JPY 54	JPY 48
	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019	FY2020
								(Forecast)

*1	Voluntary use of IFRS applicable as of fiscal year-end settlement for FY2014. The total return ratio for FY2013 was calculated based on IFRS.
*2	The figure for dividend per share accounts for the 5-for-1 stock split which was conducted effective October 1, 2013 and the 2-for-1 stock split which was
conducted effective October 1, 2015.
© 2020 Japan Exchange Group, Inc.	9

II. Reference Materials

© 2020 Japan Exchange Group, Inc.

Referential Financial Data

Quarterly Business Performance							(JPY mil.)
			FY2018				FY2019
		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
	Operating Revenue	29,562	29,668	32,788	29,114	29,069	28,867	29,496	36,254
	Operating Expenses	12,917	13,284	13,455	14,453	13,643	13,839	14,535	16,514
	Operating Income	17,413	16,942	19,947	15,232	16,246	15,623	16,306	20,356
	Net Income *1	11,623	12,296	14,510	10,626	10,711	10,862	11,744	14,292
	EBITDA	20,412	20,429	23,257	18,468	20,228	19,556	20,807	25,091
Annual Business Performance							(JPY mil.)
		FY2013	FY2014	FY2015	FY2016	FY2017		FY2018	FY2019	y/y
	Operating Revenue	113,846	106,167	114,776	107,885	120,711		121,134	123,688	+ 2.1%
	Operating Expenses	59,244	52,863	50,925	50,185	50,902		54,111	58,532	+ 8.2%
	Operating Income	53,343	53,529	66,271	59,377	71,791		69,535	68,533	(1.4%)
	Net Income *1	33,304	34,427	44,877	42,124	50,484		49,057	47,609	(3.0%)
	EBITDA	68,296	65,743	77,791	71,595	82,505		82,568	85,683	+ 3.8%

*1	Net income attributable to owners of the parent company.
*2	Voluntary use of IFRS applicable as of fiscal year-end settlement for FY2014 and applied retroactively to figures for FY2013.
© 2020 Japan Exchange Group, Inc.	11

Referential Financial Data

		Quarterly Operating Revenue											(JPY mil.)
					FY2018				FY2019				FY2018		FY2019
				Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
				Ratio		Ratio		y/y
	Trading services revenue	11,941	11,737		13,684	11,296	11,057	10,908	11,399	15,224		42%	48,660	48,589	39%		(0.1%)
		Transaction Fees	9,622	9,413		11,236	8,974	8,735	8,607	9,045	12,729		59%*1	39,248	39,118	66%*1		(0.3%)
		Cash Equities	7,231	6,829		7,612	6,410	6,141	5,907	6,187	7,521		28,084	25,757		(8.3%)
		Financial Derivatives	2,391	2,584		3,624	2,563	2,593	2,700	2,448	4,513		35%*1	11,163	12,255	31%*1		+ 9.8%
		TOPIX Futures	464	492		584	489	493	543	521	695			2,031	2,254			+ 11.0%
		Nikkei 225 Futures (incl. mini)	946	1,064		1,483	1,028	1,038	1,072	966	2,024			4,523	5,101			+ 12.8%
		Nikkei 225 Options *2	500	504		994	564	559	556	493	1,279			2,563	2,888			+ 12.7%
		10-year JGB Futures	442	498		553	451	467	475	426	441			1,945	1,811			(6.9%)
		Others	37	24		8	29	34	52	40	72		5%*1	99	200	3%*1		+100.5%
		Commodity Derivatives	-	-		-	-	-	-	410	694		-	1,104		-
		Basic Fees	257	254		253	251	249	247	262	261			1,017	1,020			+ 0.3%
		Access Fees	1,188	1,179		1,268	1,163	1,149	1,139	1,128	1,284			4,800	4,701			(2.0%)
		Trading System Facilities Usage	851	866		898	883	901	889	937	918			3,499	3,646			+ 4.2%
		Fees
			22	23		27	22	21	23	24	31			95	101			+ 6.5%
		Others
		Clearing services revenue	6,072	5,994		7,051	5,670	6,157	6,177	6,450	7,641		21%	24,788	26,427	21%		+ 6.6%
	Listing services revenue	3,254	3,594		3,575	3,600	3,290	3,356	3,507	4,168		12%	14,025	14,322	12%		+ 2.1%
		Initial/Additional Listing Fees	773	1,017		1,115	1,089	734	933	825	1,472			3,994	3,965			(0.7%)
		Annual Listing Fees	2,481	2,576		2,460	2,511	2,556	2,423	2,681	2,695			10,030	10,356			+ 3.2%
	Information services	5,300	5,164		5,263	5,299	5,345	5,282	5,406	5,942		16%	21,029	21,977	18%		+ 4.5%
	revenue
	Other		2,993	3,177		3,212	3,247	3,218	3,142	2,733	3,277		9%	12,630	12,371	10%		(2.1%)
		arrownet Usage Fees	796	811		819	833	837	829	828	816			3,261	3,311			+ 1.5%
		Co-location Usage Fees	943	957		994	992	1,019	970	965	962			3,887	3,917			+ 0.8%
		Others*3	1,253	1,408		1,399	1,420	1,360	1,342	939	1,499			5,481	5,142			(6.2%)
		Total		29,562	29,668		32,788	29,114	29,069	28,867	29,496	36,254		100%	121,134	123,688	100%		+ 2.1%
*1	Figures are indicate percentage of Transaction Fees.
*2	Excluding Weekly Options.
		*3 Including Proximity Usage Fees.
© 2020 Japan Exchange Group, Inc.																	12

Referential Financial Data

Annual Operating Revenue						(JPY mil.)
		FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019
	Trading services	54,155	48,698	52,471	45,703	51,766	48,660	48,589
	revenue
	Clearing services	20,334	20,092	23,140	21,454	23,473	24,788	26,427
	revenue
	Listing services	12,308	12,249	13,250	12,903	14,547	14,025	14,322
	revenue
	Information services	16,116	16,311	17,706	18,112	19,878	21,029	21,977
	revenue
	Other	10,931	8,815	8,208	9,711	11,045	12,630	12,371
	Total	113,846	106,167	114,776	107,885	120,711	121,134	123,688

* Voluntary use of IFRS applicable as of fiscal year-end settlement for FY2014 and applied retroactively to figures for FY2013

© 2020 Japan Exchange Group, Inc.	13

Referential Financial Data

Quarterly Operating Expenses													(JPY mil.)
		FY2018				FY2019*3					FY2019
													IFRS 16 Leases applied
	Q1	Q2	Q3	Q4		Q1	Q2	Q3		Q4		Q1	Q2	Q3	Q4
Personnel expenses	3,884	4,009	3,828	4,861		4,117	4,047	4,064		5,282		4,117	4,047	4,064	5,282
System maintenance &	3,051	2,883	2,981	2,981		2,935	2,987	2,931		3,216		2,935	2,987	2,931	3,216
operation expenses
Depreciation &	2,782	2,919	3,049	2,947		3,018	3,140	3,423		3,772		3,801	3,922	4,205	4,555
amortization
Real estate-related	978	982	987	990		1,066	1,070	1,072		1,067		283	287	289	284
expenses
Other	2,219	2,489	2,608	2,672		2,505	2,593	3,044		3,175		2,505	2,593	3,044	3,175
Total	12,917	13,284	13,455	14,453		13,643	13,839	14,535		16,514		13,643	13,839	14,535	16,514
Annual Operating Expenses													(JPY mil.)
	FY2013	FY2014	FY2015	FY2016	FY2017		FY2018	FY2019*3 *4	y/y
Personnel expenses		15,101	15,265	16,437	15,614	16,329		16,584	17,512	+ 5.6%
System maintenance &		11,642	9,947	11,923	10,813	12,100		11,413	12,071	+ 5.8%
operation expenses
Depreciation & amortization		13,413	10,803	9,973	10,983	9,431		12,184	13,354	+ 9.6%
Real estate-related		5,900	5,959	4,620	4,062	3,904		3,939	4,275	+ 8.6%
expenses
Other		13,185	10,888	7,970	8,711	9,136		9,989	11,318	+ 13.3%
Total		59,244	52,863	50,925	50,185	50,902		54,111	58,532	+ 8.2%

*1 Voluntary use of IFRS applicable as of fiscal year-end settlement for FY2014 and applied retroactively to figures for FY2013.

*2 From FY2015, a portion of subsidiary Tosho System Service expenses are now included under "System maintenance & operation expenses" rather than "Other".

*3 New accounting standards for leases under IFRS are applied from Q1 FY2019, and an amount previously included under of "Real Estate-related Expenses" is now included under depreciation. For the purpose of comparison, this portion is included under "Real Estate-related Expenses" in these columns.

*4 In March 2019, the OTC clearing system was transferred from TOSHO System Service to Tokyo Stock Exchange. With that, a portion of the expenses that were previously recorded as system maintenance and operation expenses have been recorded as depreciation and amortization expenses. For ease of comparison, the expenses that correspond to the same category in the same period a year earlier have also been reclassified into depreciation and amortization expenses.

© 2020 Japan Exchange Group, Inc.	14

Referential Financial Data

• Consolidated Statement of Financial Position

(JPY mil.)

		As of Mar. 31,2019	As of Mar. 31,2020
Assets
	Current assets	63,891	71,883
	Cash and cash equivalents
	Trade and other receivables	11,402	16,686
*1	Clearing business financial assets	49,886,377	60,329,672
*2	Specified assets for deposits from	3,795,086	6,549,099
clearing participants
*3	Specified assets for legal guarantee	490	762
funds
	Income tax receivables	6,311	5,922
	Other financial assets	113,100	117,400
	Other current assets	1,979	1,837
	Total current assets	53,878,639	67,093,263
	Non-current assets	7,293	14,798
	Property and equipment
	Goodwill	67,374	67,374
	Intangible assets	33,435	35,045
	Retirement benefit assets	5,872	5,642
	Investments accounted for using the	12,474	14,703
	equity method
*5	Specified assets for default compensation	27,948	27,948
reserve funds
	Other financial assets	26,634	18,156
	Other non-current assets	6,071	6,049
	Deferred tax assets	3,661	3,321
	Total non-current assets	190,766	193,039
Total assets	54,069,405	67,286,302

*1 Assets and liabilities assumed by Japan Securities Clearing Corporation (JSCC) and Japan Commodity Clearing House (JCCH) for derivatives trading, etc. as of the end of the fiscal year and the quarter.

*2 Deposits from clearing participants required by JSCC and JCCH for covering the risk of clearing participants defaulting on their obligations.

*3 Deposits from trading participants required by Tokyo Stock Exchange (TSE), Osaka Exchange (OSE), and Tokyo Commodity Exchange for covering the risk at parties who have entrusted securities trading, etc. with trading participants defaulting on their obligations.

*4 Deposits from trading participants required by TSE and OSE for covering the risk of trading participants defaulting on their obligations.

*5 Reserve funds for compensating losses incurred by JSCC in clearing operations.

*6 Including reserve funds for compensating losses incurred by JSCC in clearing operations.

				As of Mar. 31,2019	As of Mar. 31,2020
Liabilities and equity
	Liabilities
		Current liabilities	4,421	6,643
			Trade and other payables
*1		Bonds and loans payable	32,500	32,500
	Clearing business financial liabilities	49,886,377	60,329,672
*2		Deposits from clearing participants	3,795,086	6,549,099
*3		Legal guarantee funds	490	762
*4		Trading participant security money	8,384	8,248
			Income tax payables	9,676	10,289
			Other current liabilities	7,136	10,062
			Total current liabilities	53,744,073	66,947,278
		Non	-current liabilities	19,946	19,953
			Bonds and loans payable
			Retirement benefit liabilities	7,964	8,866
			Other non-current liabilities	2,914	2,162
			Deferred tax liabilities	3,055	2,665
			Total non-current liabilities	33,882	33,648
		Total liabilities	53,777,955	66,980,926
	Equity	11,500	11,500
		Share capital
		Capital surplus	39,716	39,716
		Treasury shares	(1,213)	(1,548)
*6	Other components of equity	7,688	5,602
Retained earnings	227,317	242,958
		Total equity attributable to owners of the parent	285,009	298,228
		company
		Non-controlling interests	6,441	7,146
		Total equity	291,450	305,375
	liabilities and equity	54,069,405	67,286,302
Total

© 2020 Japan Exchange Group, Inc.	15

Referential Financial Data

Sale of SGX Shares(thou. shares, JPY mil.)

		FY2018			FY2019		Total
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Shares sold	2,947	4,421	4,421	4,421	4,421	4,421	4,421	4,421	33,894
(% of shareholding)*	(5.6％)	(8.3％)	(8.3％)	(8.3％)	(8.3％)	(8.3％)	(8.3％)	(8.3％)	(63.9％)
Total value sold	1,766	2,691	2,554	2,728	2,603	2,812	3,116	2,946	21,220

• Percentage of shareholding of 53,051,000 shares as of Mar. 30, 2018
• Assets, Liabilities, and Equity

For assets and liabilities of JPX Group, "clearing business financial assets and liabilities*1" assumed by JSCC and JCCH as clearing organizations and "deposits from clearing participants*2" deposited by clearing participants as collateral are included under both assets and liabilities. "Clearing business financial assets and liabilities*1" and "deposits from clearing participants*2" have a large impact on the amount of assets and liabilities of JPX Group due to their sizable amounts and daily fluctuations subject to changes in clearing participants' positions. In addition, "legal guarantee funds*3", "trading participant security money*4", and "default compensation reserve funds*5" based on the rules for securing safety of financial instruments transactions and commodity futures transactions are included under assets and liabilities or equity. The figures shown in parentheses in the table below are those calculated by excluding "clearing business financial assets*1", "deposits from clearing participants*2", "legal guarantee funds*3", and "default compensation reserve funds*5" for total assets, and by excluding "default compensation reserve funds*6" for total equity and total equity attributable to owners of the parent company.

		Total assets	Total equity	Total equity attributable to	Ratio of total equity
				owners of the parent	attributable to owners of
				company	the parent company to total
					assets
		JPY mil.	JPY mil.	JPY mil.	%
	FY2019	67,286,302 (378,820)	305,375 (277,427)	298,228 (270,280)	0.4 (71.3)
	FY2018	54,069,405 (359,502)	291,450 (263,502)	285,009 (257,060)	0.5 (71.5)
* The footnotes from the previous page also apply in those the contents of this page.
© 2020 Japan Exchange Group, Inc.					16

Operating Income Margin and ROE of Overseas Exchanges

Margin Income Operating

80%

70%

60%

50%

40%

JPX

【2020.3】 OIM 55.4% ROE 16.3%

30%

20%

0%

5%

10%

15%

20%

25%

30%

35%

40%

ROE

* Values for other exchanges are current figures aggregated by JPX for reference.

© 2020 Japan Exchange Group, Inc.	17

ETF / ETN and REIT Trends

• Average daily trading value of ETFs/ETNs and REITs more than doubled in Q4 compared to the same period last year, and increased 17.6% over the fiscal year.
• ETF AUM increased up to Q3, but settled down in Q4 to the level seen at the end of the previous fiscal year.

ADV of ETFs/ETNs and REITs

ETF / REIT AUM

500	(JPY bil.)	ETFs / ETNs	J-REITs	Share			14%	60
450								12%
400								50
350								10%	40
300
							8%
250									30
200								6%
150								4%	20
100								2%	10
50
0	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019	0%	0
	Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

(JPY tril.)
REIT	Other ETFs	JPX 400-linked ETFs	TOPIX-linked ETFs

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019

Q1 Q2 Q3Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2Q3 Q4

• Share indicates the percentage of trading value of ETFs, ETNs, and REITs out of overall cash equities trading value.

* Excludes foreign ETFs and REITs, as well as certain ETFs with different creation structures.

© 2020 Japan Exchange Group, Inc.	18

IPO / PO Trends

• The number of IPOs at TSE in FY2019 was 94, maintaining the high levels seen since FY2014.
• Financing by listed companies and REITs increased slightly year on year amid an increase in offerings to shareholders and private placements.

• IPOs at TSE

(Number of companies)

• Financing by Listed Companies and REITs

(JPY tril.)

					103
100		TSE 1st/2nd	89	95	94
			88
		Mothers
				83
		JASDAQ
80

7

6

REITs

Offerings to shareholders and Private placements

Public Offerings (excluding IPOs)

		TOKYO PRO Market
60	56
	52

4037

25 23

2017

0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(FY)

5		IPOs

4

3

2

1

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(FY)

© 2020 Japan Exchange Group, Inc.	19

Major Products Data

• Trading Volume/Value

				FY2018			FY2019		FY2018	FY2019
Trading Value of Cash Equities (JPY mil.)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Total	Total	y/y
		TSE 1st/2nd Section *1	182,376,015	173,240,502	195,305,096	154,509,689	147,178,363	147,629,790	155,138,128	186,786,898	705,431,303	636,733,181	(9.7%)
		Mothers *1	5,811,987	5,887,333	5,640,875	7,572,736	6,963,647	4,982,179	5,395,576	5,030,963	24,912,933	22,372,366	(10.2%)
)		JASDAQ *1	4,218,451	3,243,736	4,059,871	2,814,694	2,563,385	2,275,480	3,366,223	3,646,753	14,336,753	11,851,843	(17.3%)
		ETFs/ETNs and REITs etc. *2	13,318,008	14,662,962	20,354,508	13,833,484	13,416,948	14,851,259	14,412,209	28,906,192	62,168,964	71,586,610	15.1%
Financial Derivatives Trading Volume (contracts) (Trading Value for Nikkei 225 Options)
	TOPIX Futures	5,777,114	6,020,798	7,295,570	6,257,036	6,279,228	6,991,769	6,817,513	9,080,694	25,350,518	29,169,204	15.1%
	Total Nikkei 225 Futures/mini *3	10,465,860	11,406,268	16,198,484	11,960,671	11,726,944	11,820,069	10,777,275	21,785,462	50,031,286	56,109,751	12.1%
		Nikkei 225 Futures	5,250,091	5,567,199	7,658,827	5,909,045	5,642,599	5,709,714	5,265,831	9,901,626	24,385,162	26,519,770	8.8%
		Nikkei 225 mini	52,157,697	58,390,696	85,396,578	60,516,269	60,843,454	61,103,555	55,114,443	118,838,361	256,461,240	295,899,813	15.4%
	Nikkei 225 Options (JPY mil.) *4	1,280,840	1,034,822	2,000,571	1,305,059	1,265,336	1,173,048	1,033,791	2,998,660	5,621,294	6,470,837	15.1%
	10-year JGB Futures	2,333,374	2,632,417	2,920,196	2,383,133	2,469,865	2,510,187	2,248,328	2,324,740	10,269,120	9,553,120	(7.0%)
	Commodity Derivatives Trading Volume (contracts)	*5
	Gold Futures (Total standard/mini/rolling spot) *6	2,027,419	1,989,899	1,951,839	1,943,135	2,075,592	2,986,310	1,649,335	713,684	8,654,374	10,179,005	28.6%
	Platinum Futures (Total standard/mini/rolling spot)	725,587	803,470	591,323	723,638	893,064	871,815	722,679	346,668	3,211,197	3,596,782	26.5%
	*7
		1,250,518	1,019,659	1,278,500	735,975	650,005	692,751	601,035	241,376	2,679,766	2,971,272	(30.7%)
	Crude Oil Futures
	Rubber Futures (RSS3)	411,564	397,816	412,340	344,446	286,194	303,906	264,243	94,960	1,198,789	1,136,089	(27.5%)

• Average Daily Trading Volume/Value

			FY2018				FY2019		FY2018	FY2019
Trading Value of Cash Equities (JPY mil.) *8		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Total	Total	y/y
	3,318,138	3,178,002	3,634,845	3,081,562	2,883,430	2,737,763	2,876,003	3,868,463	3,306,769	3,081,107		(6.8%)
Financial Derivatives Trading Volume (contracts) (Trading Value for Nikkei 225 Options)
TOPIX Futures	93,179	97,110	117,670	107,880	106,428	112,770	109,960	156,564	103,896	121,034		16.5%
Total Nikkei 225 Futures/mini *3		168,804	183,972	261,266	206,218	198,762	190,646	173,827	375,611	205,046	232,821		13.5%
Nikkei 225 Futures		84,679	89,794	123,529	101,880	95,637	92,092	84,933	170,718	99,939	110,041		10.1%
Nikkei 225 mini		841,253	941,785		1,377,364	1,043,384	1,031,245	985,541	888,943	2,048,937	1,051,071		1,227,800		16.8%
Nikkei 225 Options (JPY mil.) *4		20,659	16,691		32,267	22,501	21,446	18,920	16,674	51,701	23,038		26,850		16.5%
10-year JGB Futures	*5	37,635	42,458		47,100	41,089	41,862	40,487	36,263	40,082	42,087		39,640		(5.8%)
Commodity Derivatives Trading Volume (contracts)
Gold Futures (Total standard/mini/rolling spot) *6	32,700	32,095		31,481	33,502	35,180	48,166	26,602	59,789	32,427		42,237		30.3%
Platinum Futures (Total standard/mini/rolling spot)		11,703	12,959		9,537	12,477	15,137	14,062	11,656	19,125	11,656		14,924		28.0%
*7
Crude Oil Futures		20,170	16,446		20,621	12,689	11,017	11,173	9,694	17,715	17,560		12,329		(29.8%)
Rubber Futures (RSS3)		6,638	6,416		6,651	5,939	4,851	4,902	4,262	4,858	6,419		4,714		(26.6%)

*1 Value of auction and off-auction trading of common stocks. *2 Total value of auction and off-auction trading. *3 Nikkei 225 mini contracts are calculated using a factor of 1/10.

*4 Excluding Weekly Options. *5 Including cash-settled contracts. *6 Mini and rolling spot contracts are calculated using a factor of 1/10. *7 Mini and rolling spot contracts are calculated using a factor of 1/5. *8 Total value of daily averages of auction and off-auction trading of common stocks on 1st/2nd Sections, Mothers, JASDAQ, TOKYO PRO Market, and ETFs/ETNs, REITs, etc.

© 2020 Japan Exchange Group, Inc.	20

Major Products Data

Trading Value for Cash Equities

Trading Volume for Derivatives

(JPY tril.)	(JPY tril.)				(mil. contracts)				(mil. contracts)
800	60				30					300
700	50				25					250
600
40				20					200
500
400	30				15					150
300	20				10					100
200
10				5					50
100
0	0				0					0
TSE 1st/2nd	Mothers	JASDAQ	ETFs/ETNs	J-REITs		TOPIX	Nikkei 225	Nikkei 225	JGB Futures	Nikkei 225
			■ FY2018	■ FY2019	Futures	Futures	Options		mini
					(JPY tril.)

• Number and Amount of Assumption of Obligations (Interest Rate Swaps)

(JPY tril.)	(transactions)
140	12,000
120	10,000
100	8,000
80
6,000
60
4,000
40
20	2,000
0	0

		Amount of Assumption of Obligations	Number of Assumption of Obligations
© 2020 Japan Exchange Group, Inc.		21

Number of Listed Companies, ETFs, ETNs, and REITs

• Number of listed companies (issues)

（Companies/Issues）

	Number of listed companies (issues)
	As of	As of
	March 31, 2019	March 31, 2020
			Change
TSE 1st/2nd Section	2,634	2,650	16
Mothers	283	326	43
JASDAQ	715	703	(12)
TOKYO PRO Market	31	33	2
Total	3,663	3,712	49
ETFs / ETNs	251	245	(6)
REITs	63	63	0

© 2020 Japan Exchange Group, Inc.	22

JPX Stock Price

JPX Stock Price (JPY)
Nikkei 225 (JPY 10)	Trading Volume
TOPIX (points)	(mil. shares)

3,000

2,500

2,000

1,500

3/24/2014

Integration of derivatives markets

7/16/2013 Integration of cash equity markets 10/1/2013

Stock split (5-for-1)

1/1/2013 Launch of JPX

1/31/2018

Announcement of Cancellation

of Treasury Shares10/1/2019

TOCOM becomes a subsidiary

7/28/2016 Announcement of acquisition of own shares

70

60

50

40

30

1,000

500

10/1/2015

Stock split (2-for-1)

2/26/2013

Announcement of cancellation of treasury shares

1/30/2017 Announcement of acquisition of own shares

Trading Volume	Nikkei 225
TOPIX	Stock Price

20

10

0 0

Listed on both the TSE1st Section and JASDAQ from January 1 to July 15, 2013. Prices above are prices on the TSE1st Section. Trading volumes above are the total of those on TSE1st Section and JASDAQ. Two stock splits were conducted separately with respective effective dates of October 1, 2013 and October 1, 2015. Stock prices and trading volume before said stock splits were converted to reflect both events.

© 2020 Japan Exchange Group, Inc.	23

Japanese Stock Market

Nikkei 225 (JPY 10)

TOPIX (points)(JPY/USD) JPX-Nikkei400 (10 points)

2,600

2,400

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

Nikkei 225	TOPIX	JPX-Nikkei400	JPY/USD Rate		Trading Value (TSE 1st)	130
	120
						110
						100

Trading Value

JPY 4 tril.

JPY 2 tril.

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

© 2020 Japan Exchange Group, Inc.	24

Outline of JPX Stock

Stock Code

8697

Listed Exchange

Tokyo Stock Exchange 1st Section

Fiscal Year End

March 31

Annual General Shareholders Meeting

June

Record Date

Annual general shareholders meeting: March 31

Year-end dividend: March 31

Interim dividend: September 30

Number of Shares in One Trading Unit

100 shares

Total number of shares issued

536,351,448

JPX adopts a dividend policy with a target payout ratio of about 60% tied to business

performance while giving due consideration to the importance of internal reserves for the

Basic Policy on Profit Distribution

following purposes:

- Maintaining sound financial health as a financial instruments exchange group,

- Preparing for risks as a clearing organization, and

- Enabling the group to pursue investment opportunities to raise the competitiveness of

its markets as they arise.

Structure of JPX

Japan Exchange Group

(Kiyota Akira, Group CEO)

Cash Equities Trading

Derivatives

Trading

Self-regulation

Clearing

Tokyo Stock Exchange

Osaka Exchange

Tokyo Commodity

Japan Exchange

JapanSecuritiesClearing

Miyahara Koichiro

Yamaji Hiromi

Exchange

Regulation

Corporation

President & CEO

President & CEO

Yamaji Hiromi

Hosomizo Kiyoshi

Shizuka Masaki

Representative Director & Chair

President

President & CEO

Hamada Takamichi

Representative Director, President

© 2020 Japan Exchange Group, Inc.

25

Disclaimer

These materials are prepared solely for the purpose of providing information regarding Japan Exchange Group, Inc., and as such, they are not intended as an offer or sale of securities or other similar action whether inside or outside Japan. Our securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

These materials contain forward-looking statements. These statements are based on our assumptions and beliefs in light of the information currently available to us and are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those we currently anticipate. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of these materials. We disclaim any obligation to update any of the forward-looking statements contained in these materials to reflect future actual events or developments.

© 2020 Japan Exchange Group, Inc.	26