Japan Exchange : JPX Report2020 (Annual Report)

October 26, 2020 at 04:35 am EDT

2020

JPX Report 2020

Contents

1. Overview of JPX

Who We Are...
Corporate Philosophy
The Role of Exchange Markets
Business Environment

6 JPX History

8 JPX Business Model

10 Creating Value at JPX

12 FY2019 Financial and Non-Financial Highlights

2. Approach to Creating Value -Value Creation Strategies-

14 Message from the CEO

18 Message from the CIO

20 Message from the CFO

22 Special FeatureSail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange

Special FeatureResponding to Technology and Innovation
Sources of Value Creation

∙ Listing
∙ Trading
∙ Clearing
∙ Information Services
∙ Self-Regulation

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society
Market User-Focused Initiatives

∙ Promoting the Spread of ESG Investment

∙ Engagement with Trading Participants
∙ Listed Company-Focused Initiatives

35 Initiatives for Investors and Society

∙ Financial Literacy and Economic Education

∙ Promoting International Cooperation
∙ Facilitating Studies and Research

42 Shareholder-Focused Initiatives

45 Initiatives for Employees

Initiatives for the Environment and Regional Communities
Corporate Data: Environment and Employees

4. Foundations for Sustainability

50 Corporate Governance

Messages from Chairpersons of the Nomination, Compensation, and Audit Committees
Directors

61 Risk Management

Internal Control Systems and Compliance
PICK UP Toward ESG Disclosure based on International Debate

5. Financial and Corporate Data

Review of Operations and Financial Condition

Consolidated Statement of Financial Position
Consolidated Statement of Income/
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Economic Data/Market Data

82 Corporate Data

Editorial Policy

Contributing to realizing an affluent society by promoting sustainable development of the market lies at the heart of JPX's corporate philosophy. We believe that our efforts to realize this corporate philosophy will enable us to both create sustainable value and fulfill our corporate social responsibility. Our goal in publishing JPX Report 2020 is to provide readers with a deeper understanding of this idea and our initiatives in business activities.
This report consists of five chapters. First, "Overview of JPX" illustrates the company's corporate philosophy, role in society, and business model, etc. Second, "Approach to Creating Value -Value Creation Strategies-" explains the progress made under our management plan. Third, "Approach to Creating Value -Value Created with Stakeholders-" introduces our varied initiatives for creating value. Fourth, "Foundations for Sustainability" outlines the foundations of JPX's sustainable growth and value creation. And lastly, "Financial and Corporate Data" provides an overview of the company's business and financial results as well as profile.

September 2020

Reference guidelines

International Integrated Reporting Council (IIRC) framework
Guidance for Collaborative Value Creation (METI)

Disclaimer

This publication is prepared solely for the purpose of providing information regarding Japan Exchange Group, Inc., and, as such, it is not intended as any 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.
This publication contains 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 this publication. We disclaim any obligation to update any of the forward-looking statements contained in this publication to reflect future actual events or developments.

1. Overview of JPX

Who We Are...Corporate Philosophy The Role of Exchange Markets Business Environment JPX History JPX Business Model Creating Value at JPX FY2019 Financial and Non-Financial Highlights

Who we are...

Japan Exchange Group, Inc. (JPX) was formed through the merger between Tokyo Stock Exchange Group and Osaka Securities Exchange in January 2013.
More than 140 years ago in 1878, soon after the Meiji Restoration, Shibusawa Eiichi, who is known as the father of capitalism in Japan, established Tokyo Stock Exchange. In the same year, Godai Tomoatsu, a businessman who was instrumental in the economic development of Osaka, established Osaka Stock Exchange.
In October 2019, JPX acquired Tokyo Commodity Exchange as a subsidiary and began engaging in the establishment and operation of markets essential to commodity futures and other products.
JPX has inherited the will of both Shibusawa Eiichi and Godai Tomoatsu as the pioneers of capitalism in modern Japan, and is determined to contribute to driving sustainable growth in the Japanese economy.

Osaka Exchange

Godai Tomoatsu

Shibusawa Eiichi

Tokyo Stock Exchange

JPX Organizational Structure

Japan Exchange Group, Inc

Cash		Derivatives		Self-
Equities				Clearing

	Markets		Regulation
Markets

Tokyo Stock	Osaka			Tokyo		Japan Exchange	Japan Securities
		Commodity			Clearing
Exchange, Inc.	Exchange, Inc.			Regulation
	Exchange, Inc.			Corporation

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020

1. Overview of JPX

Who We Are... Corporate PhilosophyThe Role of Exchange Markets Business Environment JPX History JPX Business Model Creating Value at JPX FY2019 Financial and Non-Financial Highlights

Corporate Philosophy

Contributing to realizing

an affluent society through

sustainable market development

Our mission is to contribute to the realization of

an affluent society by promoting sustainable development of the market.

Committed to our public nature and credibility,

we build highly convenient, efficient, and transparent markets,

and provide creative and attractive services.

Our efforts help us attract the support and confidence of investors and market users and reap the rewards in the form of profits.

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.

2 JPX Report 2020

Who We Are... Corporate Philosophy The Role of Exchange MarketsBusiness Environment JPX History JPX Business Model Creating Value at JPX FY2019 Financial and Non-Financial Highlights

The Role of Exchange Markets

The markets established by JPX provide companies with business financing methods, investors with asset management opportunities, and society as a whole with price discovery functions. By fulfilling these social roles, we contribute to realizing an affluent society through sustainable market development.

For companies	For investors	For society

Flexible business	Effective asset		Price discovery functions
financing methods	management opportunities		(Economic barometer)

Exchange Markets

Rules and	Market	Guaranteed	Attractive listed	Wide-ranging
System
reliability	fairness	products	investor base
usability

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020

1. Overview of JPX

Who We Are... Corporate Philosophy The Role of Exchange Markets Business EnvironmentJPX History Business Model at JPX Creating Value at JPX FY2019 Financial and Non-Financial Highlights

Business Environment

The markets operated by JPX are significantly affected by changes in the external environment, such as the domestic and global economic climates, monetary policies, and geopolitical risks, so we must operate our markets with an eye on domestic and global economic trends and market situations. Besides worries of depressed economic activity and economic decline due to the impact of the Covid-19 pandemic, there are also concerns over the impact of medium- to long-term structural factors in the Japanese economy that are quickly becoming apparent, including the falling birthrate and aging population, fiscal deficit, and prolonged monetary easing.

As for the global economy, we foresee growing risks from monetary policy trends in the U.S. and Europe, economic trends in the U.S. and China, such as the U.S.-China trade dispute, and politics. JPX properly responds to the various risks stemming from uncertainties and unknowns in its business environment, while recognizing that our greatest management challenge is providing market infrastructure that consistently and stably delivers a high level of satisfaction to users.

Impact of Financial Market Trends

The Japanese economy is rapidly slowing down and is in extremely difficult circumstances due to Covid-19. The difficult circumstances caused by this virus are expected to continue for the near future, and we need to keep a close eye on the risks that further damage could be caused to the domestic and overseas economies.
JPX's revenue is greatly affected by trends in the

secondary market for securities and derivatives products as well as the primary market for securities, and furthermore by trends in global financial markets and economic conditions in Japan and overseas. In particular, as most TSE listed companies are Japanese companies, JPX Group's earnings are strongly influenced by economic conditions in Japan.

Competitive Landscape

Competition in cash equities and other markets has been intensifying, and we recognize that competition will continue to increase in various areas, including market liquidity, the speed and cost of trade execution, trading system performance, products provided to trading participants and listed companies, as well as

service diversification and developments in the regulatory environment. The stock trading value at JPX accounted for about 84% of the stock trading value for domestic listed companies from January to December 2019, while off-exchange trading (PTS and OTC, etc.) in Japan accounted for about 16%.

Consolidation in the Exchange Industry

Since the later part of the first decade of the 2000s, there was a clear trend towards consolidation among exchanges mainly in the U.S. and Europe. For example, the 2007 merger between NASDAQ and OMX was followed by the acquisition of NYSE

Euronext by Intercontinental Exchange in 2013. More recently, M&As have also been undertaken for the purpose of strengthening positions in business operation domains, such as the clearing business, information business, and IT business.

4 JPX Report 2020

Covid-19 Response

Along with the unavoidable slowdown in global economic activity due to the spread of Covid-19, Japan has seen the emergence of a demand for citizens and companies to pull together to curb the spread of the disease. This situation arose in part from the Japanese government declaring a state of emergency across all prefectures in Japan based on the Act on Special Measures for Pandemic Influenza and New Infectious Diseases Preparedness and Response (Special Measures Act) in response to the growing number of new infections at the time.
In response, JPX implemented the following measures to ensure business continuity as a means of fulfilling our responsibilities as a market operator to the best of our ability and of ensuring that the impacts of Covid-19 do not affect the stable operation of our markets. This is in addition to various measures to prevent further spread of Covid-19 in line with guidance such as the Japanese government's Basic Policies for Prevention and Control of the Novel Coronavirus.

Established a BCP (Business Continuity Plan) Emergency Headquarters headed by the Group CEO, in line with the JPX Group's BCP;
Carefully examined each department's duties and situation, and encouraged remote working as the default for employees whose duties are judged to not require physical attendance at the office based on this;
For employees whose duties require physical attendance at the office, actively implemented staggered working hours using the flex time system;
Developed and implemented a multi-channel operational structure for employees whose duties require physical attendance at the office, by dividing them into several teams which work at physically different locations, in principle rotating between the office and home but also using nearby back up facilities; and so on.

The impact of Covid-19 may be prolonged until the situation finally settles. As we continue to monitor the spread of the disease, JPX will establish a business continuity structure and flexibly address the situation in line with changes in government policies.
JPX will aim to establish a "New Way of Life" and thoroughly implement basic infection prevention measures while exploring new ways of working as a means of continuously striving to secure stable market operations and trading opportunities.

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020

1. Overview of JPX

Who We Are... Corporate Philosophy The Role of Exchange Markets Business Environment JPX HistoryJPX Business Model Creating Value at JPX FY2019 Financial and Non-Financial Highlights

JPX History

Since their establishment in 1878 shortly after the Meiji Restoration, both the Tokyo and Osaka exchanges have consistently served as the engine of the Japanese economy, responding to the needs of the times for over 140 years. JPX will continue to contribute to the sustainable growth of the Japanese and the global economies.

1700-1940s

1950-1980s

1990-2000s

History of the Japanese Economy and Key Global Developments

1882 The Bank of Japan is founded.

1929 The Great Depression

1944 Japan pegs yen exchange rate to the U.S. dollar.

Kinroku government securities

1952 Japan joins the IMF.

1965 First deficit-financing bonds are issued.

1971 Nixon shock

1973 Yen transitions to floating exchange rate.

1st oil crisis

1979 2nd oil crisis

1988 Trading value and market capitalization of TSE both become world's No. 1.

1989 Nikkei Stock Average reaches record high of JPY 38,915.87.

1991 Nikkei 225 Futures becomes the world's most traded contract on a trading value basis.

1997 Asian currency crisis

1999 Bank of Japan's zero interest rate policy

2002 Euro goes into circulation.

2007 Global financial crisis

1700	1950	1990

JPX History

1730 World's first securities futures exchange is founded in Dojima, Osaka.

1878 A group including Shibusawa Eiichi, who is known as the father of capitalism in Japan, establishes Tokyo Stock Exchange. That same year, a group including Godai Tomoatsu, a businessman who is instrumental in the economic development of Osaka, establishes Osaka Stock Exchange.

Tokyo Stock Exchange at the turn of the 20th Century

Osaka Stock Exchange during the

Meiji Period

1949 Tokyo Stock Exchange (TSE) and Osaka Securities Exchange (OSE) are established as membership organizations and begin equity trading in May of that year.

1951	Tokyo Textile Exchange is founded.	1999	TSE launches Mothers, a market
1952	Tokyo Rubber Exchange is founded.		for new emerging companies,
	with OSE following suit in 2000
1969	Calculation of Tokyo Stock Price		in the form of Nasdaq Japan
	(now integrated into JASDAQ).
	Index (TOPIX) begins.
		The trading floors at both TSE
1973	Foreign stocks are listed in response
	and OSE are closed.
	to internationalization.		After this, trading of stocks and
1974	TSE's Market Information System		other listed issues becomes
	computerized.
	goes into operation to deliver the

	latest information to investors.	2001	TSE and OSE are demutualized.

1982	TSE launches the Second Section		ETF and J-REIT markets are
	Trading System and promotes		established.
	systematization in the securities market.	2003	Japan Securities Clearing
	Tokyo Gold Exchange is founded.
		Corporation (JSCC) goes into

1984	Tokyo Commodity Exchange (TOCOM) is		operation.

	founded following the merger of the Tokyo	2004	OSE lists on OSE Hercules to
	Textile Exchange, the Tokyo Rubber		become Japan's first public
	Exchange and the Tokyo Gold Exchange.
		exchange.

1985	TSE begins trading of government		Japan Commodity Clearing
	bond futures.
		House (JCCH) is founded.

1988	TSE begins trading of TOPIX Futures	2008	TOCOM is demutualized and
	and OSE begins trading of Nikkei
		transformed into a corporation.
	Stock Average (Nikkei 225) Futures.

Nikkei 225 Futures launch at OSE

6 JPX Report 2020

2010-2020s

2010	The Greek crisis spreads to Southern	2016 Britain decides to	2018 The EU introduces the Markets in Financial
	European and other eurozone countries	leave the EU.	Instruments Directive II (MiFID II).
	(European sovereign debt crisis).	The Bank of Japan

2013	The Bank of Japan starts quantitative	announces the
	and qualitative monetary easing with a	adoption of negative
	target of 2% inflation.	interest rates.

2017

2019

2020

The range of

Japan's

Britain leaves the EU.

Bank of Japan

eligible users

consumption

Covid-19 pandemic

of iDeCo

tax rate raised

2014

increases.

to 10%.

NISA launched.

2013

2014

2015

2016

2017

2018

2019

2020

January

"Action Program for

Strengthening the

Functions of the Cash

Equity Market" is

January 2013

January

TOCOM is granted

Foreign Board

published.

Japan Exchange

of Trade (FBOT) registration by

February

"Overview of Market

the U.S. Commodity Futures

Group is formed

Trading Commission (CFTC).

Structure Review and

through the merger

April

The infrastructure funds market is

Outline of the New Market

between TSE Group

Segments" is published.

established.

and OSE.

March

"Practical Handbook for

June

Japan's Corporate Governance

ESG Disclosure" is

Code is formulated.

published.

September

The cash equity trading system

(arrowhead) is renewed.

March

Basic agreement is reached with TOCOM

toward realizing a Comprehensive Exchange.

January

Calculation and publication of

April

Japan-China ETF Connectivity is established.

July

Stock settlement cycle is shortened to T+2.

JPX-Nikkei Index 400 begins.

October

TOCOM is acquired as a JPX subsidiary.

March

TSE derivatives market is

November

arrowhead is upgraded.

integrated into OSE.

February

Tokyo Industrial Exchange changes its trade

February

New clearing system for listed derivatives goes live.

June

Japan's Corporate Governance Code is revised.

name to Tokyo Commodity Exchange. Name in

JPX establishes Sustainability Committee.

English remains unchanged as Tokyo Commodity

July

Agreement is reached on mutual cooperation with the London

Exchange.

Stock Exchange Group in sustainability-related fields.

July

OSE cash equity market is integrated into TSE.

September

Calculation and publication of S&P/JPX Carbon Efficient Index

October

JSCC and Japan Government Bond Clearing

begins.

Corporation are merged.

October

Domestic stock trading units are standardized to 100 shares.

Cooperation agreement is signed with Shanghai Stock Exchange

to promote ETF listings.

March Trading begins on the Yangon Stock Exchange,

JPX declares support for the Task Force on Climate-related

established through the support of JPX.

Financial Disclosures (TCFD).

April Calculation and publication of JPX/S&P CAPEX &

Human Capital Index begins.

January

Calculation and publication of S&P/TOPIX 150 environmental indices begins.

July The derivatives trading system (J-GATE) is renewed.

July

Basic agreements on collaboration are concluded with regional financial institutions

September Provision of the J-GATE derivatives trading system

for developing regional economies.

to TOCOM begins.

December

JPX joins the UN's Sustainable Stock Exchanges (SSE) Initiative.

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020

1. Overview of JPX

Who We Are... Corporate Philosophy The Role of Exchange Markets Business Environment JPX History JPX Business ModelCreating Value at JPX FY2019 Financial and Non-Financial Highlights

JPX Business Model

In addition to TSE, which handles cash equities markets, and OSE and TOCOM, which handle derivatives markets, JPX Group also includes a self-regulatory subsidiary, which carries out the examination and supervision processes needed to maintain market quality. Our comprehensive services also encompass clearing and settlement functions.

Information Vendors

• Stock information	Data distribution	Information fees


• Index information

Listing Trading

Listed Companies

Fund-raising
Better name recoginition/higher credit standing

Benefit

Listing fees

Japan Exchange Group

Cash Equities Markets

Tokyo Stock Exchange

L 1st Section	2,166 companies
L 2nd Section	484 companies
L Mothers	326 companies
L JASDAQ	703 companies
L TOKYO PRO Market	33 companies
L TOKYO PRO-	61 issues
BOND Market
L ETFs/ETNs	245 issues
L REITs	63 issues
L Infrastructure Funds	7 issues

Derivatives Markets

Osaka Exchange2

Index Futures
Index Options
JGB Futures
Options on JGB Futures
Securities Options
Commodity Futures/Options

Tokyo Commodity Exchange

Commodity Futures (oil and electricity)

Self-regulation

Japan Exchange Regulation3

Application of listing rules and codes

Execution of trades

Support for timely disclosure of corporate information

Distribution of market data and index information

Listing examination

Listed company compliance

Market surveillance and compliance

Participants examination and inspection

Notes: 1. The numbers of companies and issues are as of Mar. 31, 2020.

Osaka Securities Exchange was renamed Osaka Exchange on Mar. 24, 2014.
Tokyo Stock Exchange Regulation was renamed Japan Exchange Regulation on Apr.1, 2014.
Tokyo Stock Exchange, Osaka Exchange, Tokyo Commodity Exchange, Japan Exchange Regulation, Center is a JPX affiliate.

Trading related

Clearing related

Listings related

Info

8 JPX Report 2020

As consideration for JPX services, we receive various fees from market participants such as securities companies, listed companies, and information vendors. Specifically, our sources of revenues are (1) revenues from trading services, (2) revenues from clearing services, (3) revenues from listing services, and (4) revenues from information services.

JPX of Overview .1

ClearingSettlement

Japan Securities	Japan Securities
Clearing	Depository
Corporation	Center
(JSCC)	(JASDEC)

ClearingSettlement

Cash equities
Derivatives	Book-entry transfer and
custody of securities

OTC

Price data

(web, newspapers, etc.)

Order

placement

Trade

execution

Trading

participant fees

Securities,

money

Clearing and

settlement

Clearing and

settlement fees

Trading participants (Securities Companies, etc.)

Price data

Order

placement

Investors

Securities,

money

Value Creating to Approach .2 -Strategies Creation Value-

and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

and Japan Securities Clearing Corporation are JPX subsidiaries. Japan Securities Depository

ormation related

Data Corporate

JPX Report 2020

1. Overview of JPX

Who We Are... Corporate Philosophy The Role of Exchange Markets Business Environment JPX History JPX Business Model Creating Value at JPXFY2019 Financial and Non-Financial Highlights

Creating Value at JPX

Vibrant securities markets are essential to economic development and a prosperous society. Expanding the base of market participants is a key factor for

sustainable growth, and this requires a robust financial market infrastructure that continuously provides diverse products and services.

Challenges for Japan

Bolstering corporate earning power
Falling birthrate and aging population
Revitalizing regional economies
Building a sustainable society

JPX's Assets and Strengths

Diverse Human Assets

Employees who think freely and creatively from a broad perspective

Number of Employees: 1,208

Solid Physical Assets

System infrastructure that provides stable operations

Investments for replacing core systems and building the Kansai
backup center (FY2019) JPY 15.1 billion

Healthy Financial Position

Stable financial base

Total equity attributable to owners
of the parent company JPY 270.2 billion1

Strong Client Assets

Relationships with companies, trading participants, and investors cultivated over a long period of time

Number of listed companies: 3,712
Number of trading participants: 1122

JPX Value Creation Process

JPX's

		Listing

		Tokyo Stock Exchange

Japan		Osaka Exchange
Exchange
Group
	Tokyo Commodity

		Exchange

Japan Exchange Regulation

Medium-Term	Internal Control
Systems and
Management Plan
Compliance

P.15	P.66

* Figures are current as of the end of FY2019.

Notes: 1. Calculated by deducting "default compensation reserve funds" from "total equity attributable to owners of the parent company" in the Consolidated Statement of Financial Position

2. Entities with trading qualifications as general trading participants, futures, etc. trading participants, or government bond futures, etc. trading participants

Medium- to Long-Term Vision

Total smart exchange

An exchange where anyone can trade any product safely and easily

Strategies to develop JPX's strengths

Contributing to realizing a market development

Solving social issues a

10 JPX Report 2020

JPX contributes to the realization of an affluent society by promoting sustainable development of the market by ensuring our public nature and credibility, constructing a foundation of the market that is highly convenient, efficient and transparent, and providing creative and attractive services.

Created Value

Core Businesses

JPX of Overview .1

Trading Clearing Settlement

Japan		Japan
Securities		Securities
Clearing		Depository
Corporation		Center

Infrastructure

P.18-19, P.24

Risk Management

Corporate Governance

P.61-65P.50-54

OUTPUT

Performance Highlights

 Operating Revenue	JPY 123.6 billion
 Average Daily Trading Value for Cash Equities	JPY 3.1 trillion
 Average Daily Trading Volume for Financial Derivatives	1.71 million contracts
Reference: Average daily trading value for financial derivatives	JPY 13.1 trillion
 Average Daily Trading Volume for Commodity Derivatives	89,000 contracts
Reference: Average daily trading value for commodity derivatives	JPY 274.0 billion

Market Management

Published "Action Program for Strengthening the Functions of the Cash Equity Market" P.33

 Review of Cash Equity Market Structure	P.34
 Published "Practical Handbook for ESG Disclosure"	P.31

OUTCOME

Value Shared with Stakeholders

Market Users

P.31-34

Promoting the spread of ESG investment
Offering opportunities for trading with trust and confidence

Number of IPOs in FY2019: 94

Offering opportunities for financing
Enhancing corporate governance

Investors and Society

P.35-41

Promoting financial and economic literacy
Total number of participants in Economics Lectures
for Parents and Children, JPX Academy, and other programs: 47,200
Promoting the shift from savings to investment
Public release of studies and research7JPX working papers:

Employees

P.45-47

 A working environment that allows employees to perform to their full potential Ratio of annual paid leave taken: 72.0%

Employees' average years of service Male 16.4 Female 18.4 Ratio of women: 27.6% Ratio of maternity leave taken by female employees: 100% Ratio of female employees returning to work after maternity leave: 100%

Shareholders

P.42-44

 Enhanced corporate value over the medium to long term Annual dividend per share: JPY 54 (+54% over five years)

Total return ratio: 60.7%

Value Creating to Approach .2 -Strategies Creation Value-

.5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

* Figures are current as of the end of FY2019.

n affluent society through sustainable

nd the growth of JPX

Data Corporate and Financial

JPX Report 2020 11

1. Overview of JPX

Who We Are... Corporate Philosophy The Role of Exchange Markets Business Environment JPX History Business Model at JPX Creating Value at JPX FY2019 Financial and Non-FinancialHighlights

FY2019 Financial and Non-Financial

Financial Highlights

Operating Revenue

(JPY billion)

150	123.6JPY billion

100
50
0	2015	2016	2017	2018	2019
(FY)

In addition to growth in clearing services revenue, primarily for OTC-related products, information services revenue, including market data usage fees and index licensing fees, exceeded that of the previous fiscal year, thereby resulting in year-on-year growth of 2.1% to JPY 123.6 billion.

Operating Expenses

(JPY billion)				58.5	JPY billion
60


30
0	2015	2016	2017	2018	2019
(FY)

System maintenance and operating expenses, depreciation, and amortization increased due to development of the Kansai backup center and upgrades to arrowhead, the cash equity trading system, in November 2019. As a resuit of this and recording expenses associated with the Tokyo Commodity Exchange merger, operating expenses increased 8 . 2% year on year to JPY 58 . 5 billion.

Net Income (attributable to owners of the parent company)

(JPY billion)

Dividends, etc.	■■	Total return ratio
	Annual dividends per common share

(JPY∙%)

47.6JPY billion

100

30
0	2015	2016	2017	2018	2019
(FY)

As a result of operating expenses exceeding the increase in operating revenue, net income (attributable to owners of the parent company) decreased 3.0% year on year to JPY 47.6 billion.

		60.7%
50			54JPY


0
	2015 2016 2017 2018 2019
(FY)

Based on the basic policy of providing approximately 60% dividend payout ratio, the annual dividend per common share for FY2019 was JPY 54.

Non-Financial Highlights

Ratio of Women in Managerial Positions

(%)

6.9%

(Year/Month) 2016/4 2017/4 2018/4 2019/4 2020/4

From the viewpoint of boosting female employees' careers by encouraging them to participate and contribute at a higher level, we have advanced a variety of initiatives, including career training programs for female employees and supporting networking with career-minded female employees from other companies. JPX has set a numerical target of at least 8% female employees in managerial positions (6.9% as of April 2020) to be achieved through the above measures by FY2022.

Employees' Average Years of

Service ■ ■ Employees' average years of service (male) ■ ■ Employees' average years of service (female)

(Years)

30	Male	Female

	16.4	18.4

20				Years	Years

10
0	2015	2016	2017	2018	2019
(FY)

In the 3rd Medium-Term Management Plan, JPX adopts the development of human resources and advancement of work style reforms as a means of strengthening the business foundations. Under this concept, JPX endeavors to enrich training programs and create workplaces where employees find it easy to work in order to bring out the best in each and every employee.

12 JPX Report 2020

Highlights

Ratio of Annual Paid Leave Taken

(%)

100

						72%
50

0
	2015	2016	2017	2018	2019
(FY)

JPX undertakes initiatives to create an environment that allows greater flexibility in work styles and creates more time outside of work, defines targets for total working hours and taking annual paid leave for each department, and advances work style reforms as a Group-wide initiative.

Ratio of Outside Directors

(%)

100

					64%
50

0
	2015	2016	2017	2018 2019
(FY)

The JPX Board of Directors is comprised of 14 members, including two women. To strengthen the board's functions, namely increasing the transparency and accountability of management and supervising the appropriateness of business execution, the composition of the board includes nine independent outside directors, constituting a board majority, and an independent outside director as non-executive Chairperson.

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

ESG Index Inclusion

JPX is a constituent of the following ESG indices. (As of July 2020)

＊THE INCLUSION OF JAPAN EXCHANGE GROUP, INC. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF JAPAN EXCHANGE GROUP, INC. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Endorsed Initiatives

As a responsible infrastructure operator that supports Japan's financial capital markets, JPX recognizes the importance of actively contributing to building a sustainable society and believes that in doing so it also serves as a source of JPX's corporate value. Based on this concept, JPX endorses the following initiatives:

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020 13

2. Approach to Creating Value -Value Creation Strategies-

>> Message from the CEOMessage from the CIO Message from the CFO Special Feature Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange Special Feature Responding to Technology and Innovation Sources of Value Creation

Message from the CEO

September 2020

Director & Representative Executive Officer,

Group CEO

Japan Exchange Group, Inc.

Introduction

In March 2019, JPX released its 3rd Medium-Term Management Plan (FY2019 - FY2021), which features the slogan "Sail to the Future. Keep the Market Secure." in line with our belief that providing stability in the operation of the market is our top management priority.
"Sail to the Future" acknowledges the fact that it will be extremely important for us to adapt quickly and act boldly

in the face of increasingly rapid technological change and other developments in the market environment in order to continue to fulfill our duty to the market. Meanwhile, "Keep the Market Secure" encapsulates our intention to remain committed to our fundamental mission of providing a stable market that is both secure and reliable.

Overview of the 3rd Medium-Term Management Plan and a Recap of FY2019

JPX was highly successful in achieving the goal of maximizing synergies through the integration of Tokyo Stock Exchange and Osaka Securities Exchange in our 1st Medium-Term Management Plan, which was launched in 2013, and also the goal of strengthening itself into an entity not heavily dependent on stock market conditions in Japan, a key objective of our 2nd Medium-Term Management Plan, which followed in 2016.
As part of our medium- to long-term vision, the basic policy of our 3rd Medium-Term Management Plan centers on the evolution of JPX into a "total smart exchange," where enhanced cooperation with stakeholders and establishment of new partnerships will allow anyone to trade any product safely and easily, including not only

stocks and related products, but also products in similar and peripheral segments, such as commodities.

Our basic policy includes four core strategies: 1) Pursue "the shape of the market" toward the next generation; 2) Launch and develop a Comprehensive Exchange; 3) Diversify and propel data services into the next generation; and 4) Develop a foundation to support the future of our business and society. In FY2019, JPX continued to implement measures designed to achieve these goals.
With regard to the first strategy, "Pursue the 'shape of the market' toward the next generation," in addition to upgrading the arrowhead cash equity trading system, we shortened the stock settlement period to T+2 and successfully resolved issues to bolster competitiveness.

14 JPX Report 2020

3rd Medium-Term Management Plan Update for FY2020 (published on March 31, 2020)

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.

Four Core Strategies

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Creating to Approach .3 Created Value-

I	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 III 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 II develop the Comprehensive

Exchange

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

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

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 preparedness for the risk of natural disasters.

Data Corporate and Financial .5 Sustainability for Foundations .4Value -Stakeholderswith

JPX Report 2020 15

Special Feature

2. Approach to Creating Value -Value Creation Strategies-

>> Message from the CEOMessage from the CIO Message from the CFO Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange Responding to Technology and Innovation Sources of Value Creation

We also realized simultaneous ETF listings in Japan and China through the use of Japan-China ETF Connectivity and welcomed 94 IPOs.

With regard to the second strategy, "Launch and develop a Comprehensive Exchange," we achieved business integration with Tokyo Commodity Exchange (TOCOM), a challenge we have pursued over several years. In so doing, we consolidated the administrative and marketing divisions to accelerate the generation of synergies. In pursuit of a Comprehensive Exchange, we shifted some products from TOCOM to Osaka Exchange (OSE), and pulled together across the group to achieve the integration of Japan Securities Clearing Corporation and Japan Commodity Clearing House.
Turning to the third strategy, "Diversify and propel data services into the next generation," we leveraged

innovative technologies and partnerships to conduct seven proof-of-concept tests in FY2019 in line with our aim to create ten new services and acquire 150 new customers. Of these, we were able to turn two such use-cases into new services, including one for providing alternative data for derivatives trading systems.

Finally, with regard to our fourth strategy, "Develop a foundation to support the future of our business and society," we pushed forward on the construction of a Kansai backup center to enhance our BCP and worked to strengthen stability in market operations. Moreover, in addition to launching a project aimed at building infrastructure for the practical application of blockchain technology, we focused our efforts on activities aimed at improving financial literacy among the population as society ages and moves into an era synonymous with "the 100-year life."

Management Focus and Initiatives from FY2020

The markets operated by JPX are highly susceptible to changes in the external environment, including domestic and overseas economic conditions, monetary policies, and geopolitical risks. Since the end of FY2019, the Covid-19 pandemic has raised questions as to the true value of JPX as part of the market infrastructure underpinning the Japanese economy. Despite the pandemic, we continued to undertake a variety of measures aimed at fulfilling our duty to the market while also putting the health and safety of our employees first. Moving forward, we will maintain our awareness that our top management priority is the continued provision of stable market infrastructure that offers market users a high degree of satisfaction.
In addition, JPX will continue to work toward stabilizing and strengthening its financial position so as not to be dependent on earnings that are easily impacted by conditions in the Japanese stock market. Moreover, in light of the rapidly expanding focus on ESG in the financial and capital markets, as part of our responsibility as an infrastructure operator supporting Japan's financial and capital markets, we will strive to make a more active contribution toward building a sustainable society.
With this in mind, JPX is maintaining the overarching framework for the second year of the Plan with regular updates that include: 1) reviewing concrete measures and flexibly managing costs in response to changes in the environment and the pace of progress toward meeting targets in the plan, while at the same time actively developing ways to further diversify the revenue stream, including by increasing activity in the

Comprehensive Exchange and creating new data services, and 2) further strengthening our efforts to promote sustainability by encouraging increased ESG investment and disclosure, as well as improving our own ESG disclosure and ratings.

To promote sustainability, JPX established a Sustainability Committee with the Group CEO as its chair in July 2018, increased awareness of ESG among listed companies through the creation and publication of the "Practical Handbook for ESG Disclosure," participated in international discussions, including those on the Task Force on Climate-Related Financial Disclosures (TCFD), and worked on the listing of ESG-related ETFs and calculating and publishing related indices. We intend to bolster our efforts in this area moving forward.
As human behavior and values change as a result of the Covid-19 pandemic, capital markets, corporate value, communication methods, and working arrangements are attracting renewed attention. While we consider how we want such aspects to be at JPX, we will strive to achieve the understanding and cooperation of our domestic and overseas investors, listed companies, trading participants such as securities firms, as well as of regulators and the general public as we contribute to Japan's economic revitalization through sustainable development of the market as a core infrastructure for financial and capital markets at the heart of the country's economy. We deeply appreciate your continued support and ask that you walk alongside us on our journey forward.

16 JPX Report 2020

Past Medium-Term Management Plans

	1st Medium-Term Management Plan	2nd Medium-Term Management Plan
	FY2013-FY2015	FY2016-FY2018
	Become the most preferred exchange in the Asian	STEP UP TO THE NEXT
	region	Increase investment for sustainable market development

Vision / Concept	∙ Securing an overall competitive advantage in Asian	based on successful TSE-OSE integration
	markets	∙ Leveraging competencies across JPX Group

	∙ Contributing to economic growth in the Asian region	∙ Aggressively pursuing new business


	a Creating a new Japanese stock market	a Satisfying diverse investor needs and encouraging
	 Expanding the derivatives market	medium- to long-term asset building
	 Supporting listed companies in enhancing

Core strategies	 Expanding exchange business fields	corporate value
		 Fulfilling our social mission by reinforcing the
		market's structure
		 Creating new horizons in the exchange business

	a Creating a new Japanese stock market	a Building momentum in asset building
	Introduction of the Corporate Governance Code,	An increase of 129,000 ETF holders, introduction of
	launch of JPX-Nikkei 400 index	a new ETF market making incentive scheme, new
	 Expanding the derivatives market	global environmental indices

	Launch of JPX-Nikkei Index 400 futures,	 Increasing the corporate value of listed companies
	developed next J-GATE derivatives trading system	Revised corporate governance code, annual IPO
	 Expanding exchange business fields	count steady in the 80s to 90s, 43 new ETFs

Results	Expansion of OTC derivatives clearing business	 Reinforcing the market structure
 Early realization of integration benefits	Shortened JGB settlement cycle to T+1, enhanced
	backup capabilities in Tokyo and Osaka,
	Achievement of JPY 8.5 billion in cost synergies,
	strengthened market surveillance based on HFT
	completed integration of major organizational
	registration regime
	functions, regulations, and IT infrastructure

	 Improving the presence of JPX in Asia	 Developing new fields in the exchange business
	Advanced PoC testing for utilization of blockchain,
	Supported the establishment of a stock exchange
	incorporated AI into market surveillance, listed
	in Myanmar, cross-listed ETF and futures with
	products related to sustainability
	exchanges in Taiwan, achieved interconnectivity

	with SGX co-location facilities

	Earnings
Operating Revenue	Net Income (attributable to owners of the parent company)
(JPY mil.)	(JPY mil.)

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

.5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

150,000
120,000
90,000
60,000
30,000
0	2013	2014	2015	2016	2017	2018	2019
FY

60,000
50,000
40,000
30,000
20,000
10,000
0	2013	2014	2015	2016	2017	2018	2019
FY

Data Corporate and Financial

1st Mgmt Plan	2nd Mgmt Plan	3rd Mgmt Plan	1st Mgmt Plan	2nd Mgmt Plan	3rd Mgmt Plan

JPX Report 2020 17

2. Approach to Creating Value -Value Creation Strategies-

>> Message from the CEO Message from the CIOMessage from the CFO Special Feature Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange Special Feature Responding to Technology and Innovation Sources of Value Creation

Message from the CIO

Senior Executive Officer & CIO

Japan Exchange Group, Inc.

Yokoyama Ryusuke

With IT as a source and means to sharpen JPX's competitive edge, we will press forward with highly reliable market operations and initiatives that tackle issues associated with future challenges.

The Path to Computerization of Exchange Operations

At JPX, 1999 was the year that saw the closure of trading floors at both TSE and OSE, and as a result, manual processing of orders and other associated tasks came to an end. What took their place were systems that totally computerized trading, clearing and settlement as well as external distribution of information such as stock prices.
Having advanced from an age of manual processing to computerization in stages, we have arrived at where we are today with more sophisticated systems that we know

need to be of a level that meets the stringent demands of social infrastructure.

Stable systems operations are a mandatory requirement for handling transactions smoothly, as well as for maintaining market stability and reliability. Moreover, it is vital to respond appropriately and with agility to the diversification and sophistication of trading methods that have come about on the back of recent technological advances, in order to accommodate the needs of market users.

JPX's IT Strategy

As its IT strategy, JPX has formulated its IT Master Plan for the purpose of clearly communicating JPX's direction and strategy on IT internally and externally as well as driving business by aligning management and IT policies.
In conjunction with the 3rd Medium-Term Management Plan, and in light of the vision JPX has for its IT departments in the coming decade, we have set the categories of "areas requiring steady implementation"

and "IT agility amid changes." With regard to the former, we will steadily undertake system upgrades and other measures that put an emphasis on stability and reliability. Concerning the latter, to promptly respond to dramatic changes in the environment, importance will be placed on constructing new platforms, utilizing accumulated data and aggressively adopting the latest technologies.

18 JPX Report 2020

Initiatives Toward "Sail to the Future. Keep the Market Secure"

With an emphasis placed on stability, reliability, and processing capabilities, JPX offers a wide array of systems and networks to users. These include the cash equity trading system "arrowhead," the derivatives trading system "J-GATE," the "clearing system" that handles clearing and settlement tasks, and "arrownet," a dedicated network that connects trading participants and other users.
To achieve stable, consistent provision of services to users, we are enhancing the structure for business continuity with the construction of a new secondary (backup) center in the Kansai region. The goal of maintaining such a system is to get the market back

online as soon as possible, even in the event of a risk that may exert an enormous impact on business continuity, such as a large-scale disaster in the Tokyo region.

Cyber security has been a topic of discussion recently. As a steady stream of new threats emerge, we are constantly striving to make improvements, such as detecting such threats in real time and having external expert organizations conduct security diagnostics.
In addition, amidst rapidly advancing technology, markets are another area where the use of data has come to occupy an extremely important position. JPX already provides diversified market data, and we will continue to intensify our use of data while making full use of technology.

JPX of Overview

Creating to Approach .2 Creation Value-

IT is the Cornerstone of JPX's Value Creation

Value Strategies

An exchange's IT is the foundation upon which an exchange promotes business, such as market operations, and creates new value. Compared with the past where transactions would have been impossible without physically gathering at an exchange, it is now possible to place orders online, from any location. Looking ahead, introducing and making use of technologies such as cloud computing and AI will more than merely streamline those operations that had until now been performed manually: it will enable a generation of new businesses to emerge with technology as its key.
There is a necessity to push ahead with implementation of digital technology and transformation of IT systems so that the creation and evolution of new

businesses can be realized, and for this reason management is committed to constructing a framework for digital transformation (DX). As a greater challenge in the area of digitization, we are striving to apply agile development and test automation that supports swift system development, and also focus on training to nurture expertise in digital technology and digital business.

In a bid to address issues on both stability in market operations and environmental changes, we will further promote the transformation of IT systems that will enable us to face challenges in the future, while making ongoing enhancements to functions as well as capability improvements.

.4Value Creating to Approach .3 -Stakeholders with Created Value-

Specific Measures

Medium-Term Management Plan

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

Launch, invigorate,

and develop the Comprehensive Exchange

III

Diversify and propel data services into the next generation

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

Sustainable market operationsIT agility amid changes

-a

-

Improve reliability and

Raise the topline by

convenience via

building new

system upgrades

platforms

-a

Realize flexible launch

of new products and

functions

III

-a

III

-

Use accumulated

Diversify channels that

information resources

enable flexible

information distribution

Improve BCP

Enhance

-a

-

-

-

measures by

stability by

building new secondary center

using new technology

Proactively adopt

Train/develop human

Optimize

Strengthen

-

-

advanced technology

resources to use

operations via

measures against

technology

cloud and automation

more complex cyber-attacks

Data Corporate and Financial .5 Sustainability for Foundations

JPX Report 2020 19

2. Approach to Creating Value -Value Creation Strategies-

>> Message from the CEO Message from the CIO Message from the CFOSpecial Feature Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange Special Feature Responding to Technology and Innovation Sources of Value Creation

Message from the CFO

Executive Officer & CFO

Japan Exchange Group, Inc.

Tabata Atsushi

We will support the sustainable development and evolution of the market by making ongoing investment while keeping a balance between shareholder returns and financial resilience for stable market operations.

JPX's Capital Policy

It is extremely important that JPX maintains a strong financial base to ensure that the market operates stably, and in a manner that is highly satisfactory to users, without being affected by local and global economic conditions, financial policies, geopolitical risks, and other trends. From this perspective, and in order to diversify our business portfolio, one important theme of the 2nd Medium-Term Management Plan (FY2016 - FY2018) was proactively developing areas of business not directly connected with market trading and transitioning to a management structure that does not overly rely on the condition of the Japanese stock market. We understand that as a result of this focus, considerable progress has been made, with peripheral businesses such as co-location and index/information services witnessing growth at a steady rate. While we continue to promote this theme under our 3rd Medium-Term Management Plan (FY2019 - FY2021), the need to confront the

challenge of "keeping the market secure" has been especially marked in 2020, as the market has been shaken severely by the Covid-19 pandemic. This has caused us to reaffirm the critical importance of ensuring our sound financial health and stability.

While actively developing ways to further diversify the revenue stream and flexibly managing costs in response to changes in the environment and progress under the plan, we are cognizant of the critical need to strike a balance between ensuring our financial health and providing adequate returns to shareholders. JPX's basic policy is to maintain ROE of 10% in the medium to long term, that is above the cost of capital, regardless of market conditions, and to continue managing the company with an eye toward capital efficiency. By FY2021, the final year of the 3rd Medium-Term Management Plan, we aim to achieve operating revenue of JPY 130 billion and net income of JPY 50 billion.

Looking Back at FY2019

In FY2019, trading on both the cash equities and derivatives markets continued to be sluggish. However, toward the end of the fiscal year, market conditions fluctuated significantly in response to concerns surrounding the spread of Covid-19. As a result, the derivatives

market was strongly impacted by the sharp increase in volatility, with annual trading volume coming in at 412 million contracts, up 13.1% from the previous fiscal year, exceeding 400 million contracts annually for the first time since the derivatives market was established. Moreover,

20 JPX Report 2020

and in addition to an increase in revenues from clearing services mainly for OTC-related products, revenues from information services grew due to upswings in market data usage as well as index licensing fees. Taking into account the aforementioned, company-wide operating revenue climbed 2.1% year on year, to JPY 123.6 billion.

Meanwhile, operating expenses grew 8.2% year on year, to JPY 58.5 billion. This was due to a variety of factors including increases in system maintenance and

operation expenses as well as depreciation and amortization owing mainly to the development of the Kansai backup center and an upgrade to the arrowhead cash equity trading system in November 2019, as well as system integration with TOCOM.

In light of the aforementioned, operating income declined 1.4% year on year, to JPY 68.5 billion. Net income (attributable to owners of the parent company) decreased 3.0% year on year, to JPY 47.6 billion.

JPX of Overview .1

Shareholder Return Policy

As part of its fundamental shareholder return policy, JPX has announced a dividend payout ratio target of approximately 60%, and continues to aim for this as a general rule.
When the company was first established, JPX targeted a dividend payout ratio of around 40%. In FY2015, however, having secured a certain financial base, we raised the target for the payout ratio to around 60%.
Furthermore, JPX repurchased approximately JPY 20 billion of its own shares for the first time between July 2016 and May 2017 (FY2016: approximately JPY 12.5 billion; FY2017: approximately JPY 7.5 billion). The

company also paid a commemorative dividend of JPY 10 per share (for a total of JPY 5.3 billion) in FY2017 and a special dividend of JPY 15 per share (for a total of JPY 8 billion) in FY2018. In this manner, JPX has adopted a flexible approach toward the return of profits to shareholders in line with its policy.

The impact of Covid-19 has led to an increased focus on the balance between financial health and stability and capital efficiency. With this in mind, JPX will consider the additional return of profits to shareholders after comprehensively considering such factors as investment plans for growth and the external environment.

Value Creating to Approach .2 -Strategies Creation Value-

.3 -

Proactive Engagement with Shareholders and Investors to Enhance Corporate Value

to Approach Created Value

As the executive officer in charge of investor relations, I interact with numerous stakeholders including institutional and retail investors as well as analysts. In FY2019, in addition to earnings and business presentations, we called on overseas investors in Europe, the Americas, and Asia, while also conducting online and other briefings for retail investors around the country. Through these means, we actively engaged in the exchange of ideas on JPX's business and financial strategies.
The business environment remains uncertain due to

the spread of Covid-19. Under these circumstances, we recognize the increasing need for stakeholders to have an appropriate understanding of the strengths and resilience of our business model. Some of the comments we receive through these dialogues with stakeholders are difficult to hear, but my goal is to spearhead efforts to further improve JPX's corporate value by giving serious consideration to all these suggestions, and properly reflecting them in the company's management.

Foundations .4Value Creating -Stakeholders with

Historical Records of Total Return Ratios and Value of Return to Shareholders

for

（%）								(JPY.bil.)
100				90.4%	85.9%			100
					76.4%
80							80
						60.7%
60			61.2%				60
39.6%	39.9%
40						40

20								20
0	2013	2014	2015	2016	2017	2018	2019	0
FY

Total return ratio

Buy-back

Commemorative dividend, etc. Ordinary dividend

and Financial .5 Sustainability

Major Initiatives in FY2019 (Institutional Investors and Analysts)


Earnings	Visits to overseas	JPX IR Day	Earnings	Visits to overseas
presentations	investors	(Business briefing sessions)	presentations	investors
		(Europe)			(The Americas, Asia)

Annual General Shareholders Meeting

Data Corporate

JPX Report 2020 21

Special Feature

2. Approach to Creating Value -Value Creation Strategies-

>>Message from the CEO Message from the CIO Message from the CFO Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange

Responding to Technology and Innovation Sources of Value Creation

Special Feature Sail to the Future. Keep the Market

The Aim of a Comprehensive Exchange

Ishizaki: Osaka Exchange (OSE) has taken the first steps toward becoming a Comprehensive Exchange with the transfer of precious metals, rubber, and agricultural commodity derivatives from Tokyo Commodity Exchange (TOCOM) in July 2020. Meanwhile, TOCOM will play an important role as a comprehensive energy market, and as the president of the exchange, this fills me with a great sense of responsibility.

Yamaji: I believe this launch of a full-fledged Comprehensive Exchange as a result of these transfers is likely to produce two effects. The first would be improved convenience for investors. Previously, to trade financial derivatives and commodity derivatives they needed two separate accounts, but now they can trade in a single one-stop account. As a result, investors should find it easier than ever to create diverse portfolios.

The second effect would be improved liquidity in Japan's derivatives market. In short, the ability to invest in a wide range of derivative products under a centralized system of rules and infrastructure will make it easier for investors trading financial derivatives at OSE to also participate in the commodities market, thus improving overall liquidity. Moreover, the consolidation of Japan Commodity Clearing House, which operates as a clearing organization for commodity derivatives, under Japan Securities Clearing Corporation brings about enhanced credibility from the creation of an environment that builds even greater investor confidence in the resilience of the market.
I believe that these efforts have improved the standing of JPX as a transparent market that is open to the world and have contributed significantly to the enhanced international competitiveness of Japan's capital market.

The Path to Further Growth

Ishizaki: Turning to the energy market at TOCOM, the pilot listing of electric power futures was launched only recently, in September 2019, and generating more activity in this area will be our biggest mission moving forward.

The electric power futures market was recognized as a key component for realizing reform in the electric power system in 2018 in the Cabinet Office's "Third Report by the Council for Promotion of Regulatory Reform" and is

considered to be indispensable infrastructure in regard to the risk of price fluctuations associated with market liberalization. In this sense, nurturing the electric power futures market can be considered part of national policy. As such, we would like to put it on track to a full-scale launch as quickly as possible.

Now that the market for electric power has effectively been liberalized, what we need is for electric power utility companies to use electric power futures and fuel futures to hedge risk. In terms of the liberalization of electric power markets, Europe and the U.S. are considered to be about 20 years ahead of Japan. Their electric power companies use the electric power futures market in the course of their daily business, and this has resulted in the size of the market in some regions becoming approximately three times as large as total electricity demand. Japan's electric power market is the fourth largest in the world, and with trading on the spot-market Japan Electric Power Exchange (JEPX) continuing to expand at a brisk pace, this has fueled expectations for considerable growth in the electric power futures market. Yamaji: If we look at the world of commodity derivatives,

22 JPX Report 2020

Secure: Realizing a Comprehensive Exchange

we can see that there are already other huge markets, such as the Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE) in the U.S. In comparison to these markets, the market in Japan is still small.

While it will not be easy to change this situation quickly, by leveraging the standing of JPX as a financial instruments exchange operating in Asia, I believe we can continue to show leadership as a Comprehensive Exchange offering both financial and commodity products. OSE already has a wide range of financial derivative products, including Nikkei 225 mini, which are the world's fourth most liquid stock index futures contracts, TOPIX futures, and JPX-Nikkei Index 400

futures, as well as 10-year JGB futures. Moreover, with overseas investors accounting for more than 70% of trading, there is already an extensive network of overseas customers in place. By making full use of the overseas investor base that has been nurtured thus far, we can increase activity not only in financial derivatives, but also in our commodities segment as well.

Our Vision for the Future

Ishizaki: TOCOM has great potential as an energy market for Japan. Moving forward, we will look to create a comprehensive energy market that also trades LNG futures in addition to our current offerings of crude oil futures and electric power futures. Japan is currently the largest importer of LNG, which is seeing growing demand around the world as an environmentally friendly fuel for power generation. On a personal note, I have had the pleasure of hosting the LNG Futures Market Council during my time at the Ministry of Economy, Trade and Industry, and from my experience in identifying the need for the market, I believe it is important to establish as quickly as possible an environment in which fuels for power generation and electric power futures can be used in combination with each other.

Yamaji: To further develop Japan's capital market, we need balanced development between financial derivatives and commodity derivatives. As we move forward, we will generate synergies by removing the barriers between OSE and TOCOM and pursuing integrated operations in all aspects from market administration to marketing and promotion. By increasing convenience and providing products with high liquidity in the JPX derivatives market, we believe that we can bolster the earnings capacity of the group as a whole.

We will devote all our energies toward achieving our 3rd Medium-Term Management Plan goal of "evolving into a total smart exchange where anyone can trade any product in a secure and easy way."

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

Osaka Exchange, Inc.Tokyo Commodity Exchange, Inc.

Yamaji Hiromi, President & CEO	Ishizaki Takashi, Representative
	Director, President
Joined Nomura Securities Co., Ltd. in 1977.	Joined the Ministry of International Trade and
Became President & CEO, Osaka Securities	Industry (MITI, now the Ministry of Economy,
Exchange Co., Ltd. (currently Osaka	Trade and Industry (METI)) in 1990. Served as
Exchange, Inc.) and Member of the JPX	Director of Commerce and Consumer Affairs
Board of Directors in 2013. Appointed	Policy Division, Commerce and Consumption
Representative Director & Chair, Chairperson	Economic Policy Department, Commerce and
of the Board, Tokyo Commodity Exchange,	Information Policy Bureau, METI. Became a
Inc. in 2019.	Director of the Office for the Promotion of
	Regulatory Reform, Cabinet Office, in 2016.
	Appointed Representative Director, President
	of Tokyo Commodity Exchange, Inc. in 2020.	JPX Report 2020 23

Data Corporate and

Special Feature

2. Approach to Creating Value -Value Creation Strategies-

>> Message from the CEO Message from the CIO Message from the CFO Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange

Responding to Technology and InnovationSources of Value Creation

Special Feature Responding to Technology and Innovation

JPX Puts Digital Technology to Use in Creating Value

In recent years, we have seen a tectonic shift in the business environment surrounding exchanges, brought about by diversification in trading venues and the needs of market participants. Having honed our capability to cope with such dramatic changes in the external environment, JPX is leveraging digital technology to seize upon these developments as new business opportunities.
Up until now, IT departments have been the driving force behind taking up the challenge to acquire technologies in areas such as cloud computing, big

data, and AI, and then accumulating the insights gained. However, we have now newly established the DX (Digital Transformation) Promotion Team, and these tasks have also been disseminated to the business operations departments. Digital transformation that unites business and IT has already begun. We see this in business reforms that use digital technologies, as well as in incorporating the expertise that IT departments have, such as agile development, as ways to generate new business.

Initiative: Case 1Swift Development That Curbs Costs for a New Data Business

In the area of securities investment, there is the fast- rising trend of using what is known as "alternative data" in transactions, going beyond stock prices and other traditional forms of data. Given this, JPX knew it should be offering useful, alternative data as a new product that would be of value to investors and began looking into the launch of a proof of concept (PoC) program. Traditionally, JPX develops new products after conducting interviews to survey user needs. Then, to distribute data, we would

Initiative: Case 2Solving Issues Using DLT

At JPX, we are conducting research on Distributed Ledger Technology (DLT) and, having garnered the participation of a number of financial institutions, from April 2020 commenced a pilot test of a DLT information sharing platform. "Securities post-trade" refers to all processes after securities transactions are executed. As many of these processes are handled on a one-on-one basis, it has been pointed out that data and operational flow

typically construct a system in yearly increments. However, in this PoC program, we adopted an approach whereby we would offer users sample data through the cloud, and upon their use of actual data, would have them determine its usefulness.

At the same time, using the cloud shortened the time required for infrastructure build-out, taking a mere four months from planning to the rollout of services. This also significantly cut start-up cost.

mismatches between market participants hinder efficiency. Since DLT excels at recording and executing data and operational flows in a synchronized manner, construction of a DLT information sharing platform offers potential solutions to an array of issues in the securities post-trade domain. Through this initiative we hope to contribute to standardization and enhanced efficiency of data and operational flows in the field of securities post-trade.

Creating new services to provide new value to customers

Successful combination of stable market operations and

new value provision through DX

Digital Technology		Adopt digital technology		Create new value utilizing

		for existing business		digital technology
Existing Technology

	Carry out stable operation		Reach new client bases

			through business
		of exchange business
			transformation



		Existing Business Model		New Business Model

Structure for promoting DX with top-level commitment

Direct commitment from

management for action on DX

Management including CEO

DX Promotion Team

Business operations				IT departments

departments

Active Dialogue and Engagement between IT

and Business Operations Departments

24 JPX Report 2020

>> Message from the CEO Message from the CIO Message from the CFO Special Feature Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange

Special Feature Responding to Technology and Innovation Sources of Value Creation

Sources of Value Creation

Listing Trading Clearing Settlement

JPX will fulfill its mission as a provider of infrastructure which contributes to the resolution of social issues by ensuring the smooth supply of equity to the corporate sector while creating an environment where domestic and overseas investors can invest with confidence.

Hayashi Kentaro

Director, Listing Department

Tokyo Stock Exchange, Inc.

Major Stakeholders	Creating Social Value

	∙ Listed companies and those preparing to list	∙ By ensuring appropriate design and operation

	∙ Institutional investors, asset owners and their	of the listing rules, we will maintain the trust
	beneficiaries, private equity investors	of investors and fulfill expectations as a
	∙ Service providers such as securities companies	provider of infrastructure which contributes to
	the resolution of social issues.
	and auditing firms


	Creating Value
Growth Strategy

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

.3 -

The cash equity markets operated by JPX not only provide the corporate sector with opportunities to raise equity through listing securities, but at the same time provide a variety of domestic and overseas investors with the opportunity to manage their funds through investment in listed securities, thereby fulfilling the role of ensuring the smooth circulation of funds throughout society and supporting its sustainable development.
In order to properly fulfill this role, we believe that it is essential to maintain the trust of investors in the market and to assist in the improvement of medium- to long- term corporate value for all listed companies.
The Covid-19 pandemic is not only having a strong impact on the business activities and finances of listed companies in Japan, but is also bringing about significant changes in the country's economy and society. Within this environment, the Listing Department is striving to maintain market credibility and ensure that the channel of funds to the corporate sector remains functional by

requiring all listed companies to disclose information important to investment decisions in a timely and appropriate manner.

In JPX's 3rd Medium-Term Management Plan, within the framework of the core strategy "Pursue 'the shape of the market' toward the next generation," the key goals for the Listing Department were to complete a review of the TSE market structure and to enhance corporate governance. While the Corporate Governance Code was established as a foundation for promoting improved corporate value among listed companies, our goal moving forward is to bolster its effectiveness by further promoting constructive dialogue between listed companies and institutional investors. In addition, with the cooperation of market participants, we will continue with the development of concrete designs for the new market segments, working towards a highly functional, convenient, and reliable infrastructure that can readily adapt to changes in socioeconomic conditions.

.5 Sustainability for Foundations .4Value Creating to Approach -Stakeholders with Created Value

Perceived risks

A decrease in investor confidence in the market

Diversification in corporate sector funding channels

Stagnation in global economic activity due to either geopolitical risks or the Covid-19 pandemic continuing longer term

Perceived strengths

Having many of Japan's most successful companies listed

Enabling effective funding for a large number of venture companies

A diverse investor base from both Japan and overseas

Long-term and ongoing cooperation with domestic and overseas market participants

JPX Report 2020 25

Data Corporate and Financial

2. Approach to Creating Value -Value Creation Strategies-

>> Message from the CEO Message from the CIO Message from the CFO Special Feature Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange Special Feature Responding to Technology and Innovation Sources of Value Creation

Listing Trading Clearing Settlement

We can provide an attractive market for all participants by ensuring fair and smooth price formation and further improving convenience.

Hasegawa Takaaki

Director, Equities Department

Tokyo Stock Exchange, Inc.

Major Stakeholders

Creating Social Value

Securities companies
Investors

Providing people with opportunities for asset formation through the operation and development of markets
Ensuring fair and smooth price formation in the markets through effective trading supervision
Improving market convenience and reliability through various measures to enhance market functions

Growth StrategyCreating Value

The Equities Department is in charge of planning in relation to rules for trading of stocks and equity products and regulations for trading participants, among other things. The department is also responsible for trading supervision, which involves monitoring the market in real time for unfair trading or irregular orders.
Given the rapidly changing market environment, we believe it is vital to meet the execution-related needs of a diverse range of investors to ensure the sustainable development of the market. The 3rd Medium-Term Management Plan aims to "Pursue 'the shape of the market' toward the next generation" with the goal of improving the attractiveness of the Japanese market by, for example, strengthening the functions of the cash equity market, creating new communication channels with retail investors, enhancing support for global investors, revitalizing the ETF market, and improving the market to facilitate trading for a wide range of investors.

We are promoting a variety of initiatives aimed at improving market functions based on the Action Program for Strengthening the Functions of the Cash Equity Market announced in January 2020, which include the introduction of flexible settlement dates for the ToSTNeT market in August 2020, and the planned December 2020 launch of a request for quote (RFQ) function for ETF trading. At the same time, we understand that for sound and sustainable market operations, we must continually improve both the transparency and credibility of the market. With that in mind, we will further strengthen our trading supervision moving forward, including real-time monitoring and detection of irregular orders that impair fair price formation and orders that could signal unfair trading. As we move forward, we will continue to work to provide a market that is attractive to all participants by ensuring fair and smooth price formation and by further improving convenience.

Perceived risks

A fall in liquidity caused by a downturn in trading volume and a deterioration in the market environment due to economic stagnation in Japan and overseas

Reduced efficiency in the price discovery function as a result of lower liquidity on the exchange due to a higher share of off-exchange trading

Perceived strengths

One of the world's largest markets, with a diverse investor base that includes individual investors as well as Japanese and overseas institutional investors

Trust and cooperation with market participants built over time Stock trading systems that are safe and reliable

26 JPX Report 2020

Listing Trading Clearing Settlement

People choose JPX for clearing backed by an excellent risk management system.

Potential value creation from the launch of the Comprehensive Exchange -

Yamashita Akio

Director, Listed Products Clearing Service

Director, Clearing Planning Department

Japan Securities Clearing Corporation

Major Stakeholders	Creating Social Value
∙ Clearing participants	∙ Ensuring reliability, efficiency, and convenience of the financial and
∙ Investors	commodity markets
Growth StrategyCreating Value

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

.3 -

We are continually receiving requests for verification and opinions from global regulatory and supervisory organizations, clearing participants, and investors in regard to, for example, whether JPX's clearing house is properly securing collateral or perhaps taking too much, if reasonable procedures will be followed should a clearing participant default, or if safe clearing and settlement can be ensured for trades done through JPX. With this in mind, we are focused on improving all of our rules and processes, in particular for risk management.
Within Japan Securities Clearing Corporation (JSCC), I am responsible for the clearing of derivative and cash equity transactions, which mainly happen on the exchange, and within that framework I am working on a variety of projects, including improvements to the margin rules, the launch of an ETF Creation/Redemption

Platform Service, and adapting to new products and rules in each market.

Among these, our efforts from July 2020 to improve default management procedures, including setting a cap on additional contributions from non-defaulting participants in the case of a default, won strong praise from related parties, mainly those overseas. These measures appear to have greatly bolstered trust in JPX.
With the launch of the Comprehensive Exchange, we hope that by starting commodities clearing at JSCC, a trusted clearing organization, we can strive to create new value by attracting new liquidity from financial institutions and other participants who have been looking for opportunities to enter the market.

Sustainability for Foundations .4Value Creating to Approach -Stakeholders with Created Value

Perceived risks

A fall in profits caused by a decline in debt assumption volumes and a deteriorating environment for the secondary market due to an economic slump in Japan and overseas

Business continuity difficulties due to natural disasters, or operational and system troubles

Perceived strengths

A strong degree of credibility as a clearing organization

Fit-for-purpose risk management rules and structures

Robust business and systems operations

Clearing operations for a wide range of products, including cash equities, derivatives, OTC derivatives, and OTC government bonds

JPX Report 2020 27

Data Corporate and Financial .5

2. Approach to Creating Value -Value Creation Strategies-

>> Message from the CEO Message from the CIO Message from the CFO Special Feature Sail to the Future. Keep the Market Secure: Realizing a Comprehensive Exchange Special Feature Responding to Technology and Innovation Sources of Value Creation

Listing Trading Clearing Settlement

Information Services

We aim to advance as one of JPX's core businesses, encouraging further use of JPX-operated markets through the creation of information services that meet the diversifying and sophisticated needs of our users.

Arai Keisuke

Director, Information Services

Tokyo Stock Exchange, Inc.

Osaka Exchange, Inc.

Tokyo Commodity Exchange, Inc.

Major Stakeholders

Creating Social Value

Securities companies
Information vendors
Institutional investors
Asset management companies
Start-upcompanies

Providing the market information necessary to ensure fair price formation in the cash equity and derivative markets
Developing and providing stock indices which can be used as indicators of market trends, as benchmarks, and for the composition of ETFs and other financial products
Promoting ESG investment through the development of ESG indices
Contributing to the global standing of the Japanese market in terms of information services, through cooperation with international organizations and compliance with overseas laws and regulations

Growth StrategyCreating Value

In addition to market information on trading in equities and derivatives (e.g., in real time), the Information Services Department provides stock index and other statistical information to users such as information vendors and securities companies. The department also provides information addressing specific user needs, including a search function for timely disclosure by listed companies and a corporate action information service.
In line with the "Diversify and propel data services into the next generation" goal in the company's 3rd Medium-Term Management Plan, the department is focused on making the best use of open and innovative frameworks to create new services and develop a new customer base. More specifically, we launched a Proof of Concept program in April 2019 to test new content for distribution, a data sandbox program in August 2019 to expand the information-user base, and four new services through June 2020.

In terms of stock index operations, we will work to strengthen our tie-ups and partnerships and develop new products leveraging the TSE brand, while for TOPIX, the mainstay JPX index, we will follow the directives outlined in the final report published by the Financial System Council's Expert Study Group on Capital Markets in Japan in December 2019, and shift to an index that properly represents the market as well as performing its function as an investment target. Also, in light of the ongoing expansion in ESG investment across the world over the past few years, we will continue to develop socially meaningful indices that not only support the sustainable development of society and the environment, but also contribute to enhancing the medium- to long- term corporate value of listed companies.

Perceived risks

A decrease in the balance of total assets due to reduced attractiveness of the ETF market, and a decline in the number of information users due to reduced attractiveness of the Japanese market, caused by economic deterioration

Perceived strengths

Competitive market information fees, even with overseas exchanges

A strong ability to develop indices that meet societal demand and the increasingly diverse needs of our users

Structures that make the best use of tie-ups and partnerships as well as in-house development to develop innovative products, and structures that provide support for JPX information product users

28 JPX Report 2020

Listing Trading Clearing Settlement

Self-Regulation

We aim to build a fair and reliable market through market surveillance adapted to an increasingly complex and diverse market.

Suzuki Toru

Director, Department of Market Surveillance and Compliance

Japan Exchange Regulation

Major Stakeholders	Creating Social Value
∙ Investors	∙ Utilizing market surveillance and compliance operations to ensure a fair
∙ Listed companies
and trusted market
∙ Securities companies

Growth StrategyCreating Value

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

.3 -

Japan Exchange Regulation's role is to ensure a market where investors can trade with confidence; in other words, a quality control center for the exchange. The Market Surveillance and Compliance Department maintains a fair and trusted market by monitoring for unfair trading, including insider trading and market manipulation.
One of the core strategies in the 3rd Medium-Term Management Plan is "Develop a foundation to support the future of our business and the society." In order to ensure the self-regulatory function works properly in line with trends in the market environment, the department has built a new trade surveillance system which uses the latest screening methods. With market trading systems becoming increasingly sophisticated as information and communications technology advances, algorithmic and high-frequency trading has emerged, resulting in a sharp increase in buy and sell orders. In light of these changes,

the department introduced artificial intelligence-based technologies into the monitoring and surveillance system to quickly process early-stage investigations and allow us to focus more deeply on detailed investigations afterward, contributing to more precise and in-depth monitoring and surveillance operations. The department is also focused on training for market participants to help eliminate unfair trading, while holding seminars for listed companies and providing support for human resource development among trading participants. The market environment is changing rapidly, and it is crucial that we can respond flexibly to these trends in order to carry out appropriate self-regulatory operations for events that are happening on a daily basis. The department will continue to conduct highly effective market surveillance operations with the goal of building a fair and trusted market that contributes to higher corporate value at JPX.

Sustainability for Foundations .4Value Creating to Approach -Stakeholders with Created Value

Perceived risks

Emergence of new types of unfair trading

Unfair trading off-exchange

Perceived strengths

Market surveillance that uses cutting-edge technologies, including artificial intelligence

Highly specialized personnel with expert knowledge of the market

A neutral position independent of the exchange

JPX Report 2020 29

Data Corporate and Financial .5

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent SocietyMarket User-Focused Initiatives Initiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Aiming to Realize an Affluent Society

At the UN Sustainable Development Summit in 2015, 17 Sustainable Development Goals (SDGs)-international goals related to the economy, society, and environment-were adopted as a step towards realizing a society that is sustainable, diverse, and inclusive.
JPX's corporate philosophy is to contribute to the realization of an affluent society by promoting the sustainable growth of the market and, by extension, realizing the society envisioned in the SDGs. Under this corporate philosophy and as a member of society, JPX will continue to regularly hold dialogues with a wide range of stakeholders, including listed companies, trading participants such as securities companies, investors, and other related organizations, and aim to contribute to the realization of an affluent society.

	Shareholders
Investors	Listed
Companies

Information	Trading
Vendors	Participants

Government	Employees
and Securities

Related Groups

International	Environment and
Organizations	Regional Communities

Academic and

Research Organizations

30 JPX Report 2020

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-FocusedInitiativesInitiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Promoting the Spread of ESG InvestmentEngagement with Trading Participants Listed Company-Focused Initiatives

Market User-Focused Initiatives

Promoting the Spread of ESG Investment

	In recent years, investors have increasingly been taking environment, social and

	governance (ESG) factors into consideration when evaluating listed companies' sustainability
Approach	and medium- to long-term corporate value.
	As operator of the infrastructure which underpins Japan's financial and capital markets,
	JPX understands the importance of proactively contributing to the creation of a sustainable
	society, and believes that this can contribute to JPX's own corporate value. We have
	positioned the promotion of ESG investment as a pillar of our Medium-Term Management
	Plan, and we are also endeavoring to enhance our own ESG disclosures.

JPX of Overview .1

Initiatives

Practical Handbook for ESG Disclosure

The disclosure of ESG-related information by listed companies is an essential factor in the promotion of ESG investment. JPX has long supported listed companies' voluntary efforts to disclose ESG information, while working to encourage dialogue between listed companies and investors.
The Corporate Governance Code, formulated in 2015, requires listed companies to positively and proactively address sustainability issues, including social and environmental issues. The 2018 update clarifies that ESG-related information is included in "non-financial information" for disclosure purposes, and requires that companies present this information in a valuable and useful way. In June 2019, JPX translated into Japanese the "Model Guidance for Companies on Reporting on ESG Information" published by the Sustainable Stock Exchanges (SSE) Initiative, of which it is a member.
It was in this context that, in March 2020, JPX published its Practical Handbook for ESG Disclosure, with the objective of helping listed companies which choose to begin or improve ESG disclosure as part of their aim to improve corporate value over the medium to long term and achieve sustainable growth. An English translation was published in May 2020 for overseas investors to use.
Some important features of the Handbook are listed below:

Rather than simply focusing on specific points to disclose, the Handbook gathers together issues that listed companies come across when looking at ESG disclosure internally and splits these, as well as related processes and other points to consider, into the following four Steps (see the chart on the right): (1) ESG Issues and ESG Investment, (2) Connecting ESG Issues to Strategy, (3) Oversight and Implementation, and (4) Information Disclosure and Engagement.
To encourage disclosure of information useful to investors for making investment decisions, the Handbook incorporates investors' points of view (for example on identifying material issues and how to link them to strategy).
To make sure the Handbook can be used by listed companies as a practical guide to jump-start preparations towards disclosure, it contains references to existing information disclosure frameworks and examples of actual corporate disclosure.

JPX believes that if a large number of listed companies use this Handbook to work towards better ESG disclosure and improving their engagement with investors, this will translate into higher corporate value for listed companies and increased attractiveness of the market overall, leading to improved corporate value for JPX itself.

Web Practical Handbook for ESG Disclosure

https://www.jpx.co.jp/english/corporate/sustainability/esg-investment/handbook/ index.html

The Four Steps of the Practical Handbook for ESG Disclosure

Step 1

ESG Issues and ESG Investment

As the first step toward ESG information disclosure, understand what ESG is and why investors are carrying out ESG investment.

Step 2

Connecting ESG Issues to Strategy

Based on the understanding gained in Step 1, identify the ESG issues that are the most important (material) in relation to the company's strategy.

Step 3

Oversight and Implementation

Put in place internal structures so that corporate value can be linked to the material issues identified in Step 2.

Create governance structures and obtain commitment from top management
Set metrics and targets
Step 4

Information Disclosure and Engagement

Taking Steps 2 and 3 into account, disclose information about material ESG issues while linking them to corporate value. Based on these disclosures, engage in dialogue with investors and other stakeholders.

Practical Handbook for ESG Disclosure

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020 31

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-FocusedInitiativesInitiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

 Promoting the Spread of ESG InvestmentEngagement with Trading Participants Listed Company-Focused Initiatives

Listing ESG-Related Products

TSE calculates ESG-related indices, lists ESG-related ETFs, and has set up an infrastructure fund market and an information disclosure platform for green and social bonds.
A total of 10 ESG-related indices are calculated, including the S&P/JPX Carbon Efficient Index. In April 2020, TSE began calculation of the Tokyo Stock Exchange Infrastructure Funds Index covering all infrastructure fund listings on TSE. There are 21 ESG-related ETF listings, and seven listings on the infrastructure fund market following the addition of a Japan Infrastructure Fund Investment Corporation issue in February 2020.
With regard to green and social bonds, which have recently been drawing the interest of investors both inside and outside Japan, information about social bonds listed on the TOKYO PRO-BOND Market from issuer the Japan International Cooperation Agency (JICA) and a green bond issued by the Japan Finance Organization for Municipalities is disclosed on the dedicated platform.

ESG-Related Products

Calculation and publication of ESG-related indices (10 indices)
- We calculate and publish indices such as the JPX-Nikkei Index 400, which focuses on corporate governance, and the S&P/ JPX Carbon Efficient Index
Listing of ESG-related ETFs (21 listings)
- We list a wide variety of ESG-related ETFs, including those linked to indices tracking women's empowerment and other issues, in addition to the ESG-related indices mentioned above
Listing of infrastructure funds (7 listings)
- We list funds that invest in renewable energy, such as solar power
Listing of green and social bonds (8 listings)
- We list green and social bonds which use the dedicated information disclosure platform

Listing numbers are as of June 30, 2020

Promoting the Spread of TCFD

The Task Force on Climate-related Financial Disclosures (TCFD) is a private sector-led task force established in 2015 at the request of the G20 Finance Ministers and Central Bank Governors Meeting. Its final recommendations were issued in June 2017 aimed at encouraging individual financial institutions and corporates to ascertain and disclose the possible financial impacts of "risks" and "opportunities" brought about by climate change.

In October 2018, JPX announced its support for the TCFD recommendations, joining over 1,200 companies and organizations around the world that have also voiced their support. Since then, JPX has worked to promote wider take-up of the recommendations. As a member of the TCFD Consortium established in May 2019, JPX has participated in debate about how to make TCFD-based disclosure more effective and how to appropriately reflect disclosed information into investment decisions.
Furthermore, in October 2019, JPX held a joint seminar with the U.S.-based Sustainability Accounting Standards Board (SASB) and Climate Disclosure Standards Board (CDSB) to introduce the SASB-CDSB "TCFD Implementation Guide" with the objective of furthering understanding of the TCFD recommendations among listed companies and investors, and to promote the disclosure of information related to climate change. In December 2019, following on from FY2018, JPX and the Financial Services Agency of Japan (JFSA) held a seminar for institutional investors and listed companies about dialogue between companies and investors on TCFD.

JPX and JFSA's seminar about dialogue between companies and investors on TCFD

Comments from Staff on the Ground

Contributing to the Creation of Sustainable Markets by Promoting ESG Investment

The Sustainability Committee works to promote ESG investment, support ESG disclosure efforts at listed companies, and advance ESG-related products. In March 2020, we created and published our Practical Handbook for ESG Disclosure to provide meaningful information to listed companies that are looking into disclosure of ESG information. With various discussions about ESG taking place around the world, the industry is constantly moving, so it is important to carry out our work while keeping track of the latest discussions and coordinating with related parties inside and outside Japan. Regarding climate change, a topic which is attracting particular interest, JPX provides information with the cooperation of related parties to help spread wider understanding and take-up of the TCFD recommendations. JPX also connects with other stock exchanges around the world through the Sustainable Stock Exchanges (SSE) initiative and the World Federation of Exchanges. I believe that environment and social issues will become increasingly important for the financial markets in the future. By promoting ESG investment, we can contribute to the creation of a sustainable market.

Torii Natsuho

Manager, Sustainability

Committee, Corporate Strategy

Department

Japan Exchange Group, Inc.

32 JPX Report 2020

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-FocusedInitiativesInitiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Promoting the Spread of ESG Investment Engagement with Trading ParticipantsListed Company-Focused Initiatives

Engagement with Trading Participants

	By pursuing "the shape of the market" toward the next generation, a core strategy in the 3rd

	Medium-Term Management Plan, JPX conducts sustainable market operations while working to
Approach	improve the attractiveness and strengthen the global competitiveness of the Japanese market.
	Toward this end, it is essential to build relationships of trust and cooperation with trading
	participants. JPX creates various opportunities to engage in dialogue with trading participants
	for the purpose of ensuring market transparency and further improving convenience.

JPX of Overview .1

Initiatives

Market Operating Committee

TSE and OSE, operators of JPX markets, are each equipped with a Market Operating Committee as an advisory unit to the Board of Directors composed of outsiders from academia, securities companies, institutional investors, and other areas of expertise. With the aim of creating even more convenient markets, outside expert opinions are considered in decisions on important matters, such as listing new products, establishing new markets, and revising rules or frameworks.

Mutual Understanding through Dialogue

Creating to Approach .2 Strategies Creation Value-

Exchanging Views with Representatives of Securities Companies and Others

We believe that communication with securities companies is very important for sustainable exchange operations. JPX makes a concerted effort to facilitate mutual understanding among people in top management by periodically holding events to exchange views with representatives of trading participants. Additionally, we exchange views through close communications with staff in charge at securities firms and institutional investors, and take a dynamic and flexible approach to revising trading rules to adapt to changes in the trading environment.
As a result of these dialogues, in January 2020, TSE released its "Action Program for Strengthening the Functions of the Cash Equity Market" with the objective of sharing with related parties the matters that should be addressed to reinforce the overall functions of securities markets in Japan. Based on this initiative, TSE is advancing measures to improve the convenience of its markets, having already added more flexibility to settlement dates on the ToSTNeT market (August 2020) and moving to start providing RFQ functions for the ETF market (planned for December 2020). Through various measures, JPX aims to further increase convenience and transparency to create an even more attractive market for trading participants and other market users.

Providing Markets,

Improving Operations

		Opportunities
		for dialogue,
Expectations and		disseminating
	market
needs for market
	information
operations

Market Users

Investors Listed Trading companies participants

Web

Action Program for Strengthening the Functions of the Cash Equity Market

https://www.jpx.co.jp/english/ corporate/news/news- releases/0060/20200130-01.html

Value -

Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

Comments from Staff on the Ground

Launch of ETF Market Making Scheme Version 2.0

ETFs are useful products for both retail investors and institutional investors from the standpoint of portfolio diversification, low cost, high transparency, and the flexibility to buy and sell. More investors are taking advantage of ETFs, but there are only a limited number of heavily-traded ETFs, and some are difficult for institutional investors to trade in large lots on stock exchanges. For this reason, in April 2019, TSE introduced Version 2.0 of its ETF market making scheme to require participating market makers to display quotes that exceed JPY 100 million for major ETFs to facilitate more large-lot trading on TSE and thereby make it easier for all investors to execute trades in a more timely manner at more appropriate prices. When designing such schemes or rules, it is important to exchange views with related parties and constantly review the rules based on their feedback. To provide a highly convenient environment for trading ETFs, I will put more effort into exchanging views with market participants for designing and revising the rules.

Omaki Masahiro

Manager

Equities Department

Tokyo Stock Exchange, Inc.

Data Corporate and Financial .5

JPX Report 2020 33

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-FocusedInitiativesInitiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Promoting the Spread of ESG Investment Engagement with Trading Participants Listed Company-FocusedInitiatives

Listed Company-Focused Initiatives

	JPX's vision of sustainable market development and the creation of an affluent society hinges on

	the participation of a diverse range of investors from around the world in its markets and the medium-
Approach	to long-term improvement of the corporate value of its listed companies. By pursuing "the shape of
	the market" toward the next generation, a core strategy in the 3rd Medium-Term Management Plan,
	JPX aims to create a market foundation that is highly convenient, efficient and transparent, while
	developing an environment to support listed companies in their efforts to increase corporate value.

Initiatives

Review of Cash Equity Market Structure

The TSE cash equity market open to all investors is currently made up of four market segments - First Section, Second Section, Mothers, and JASDAQ. In April 2022, we plan to change the market structure to incentivize listed companies to improve their corporate value over the medium to long term and thereby garner even higher levels of support from diverse investors in Japan and around the world. In February 2020, TSE disclosed a summary of the new market segments and the transition process, and will continue to work on the listing rules for the transition to the new market segments.

Corporate Governance Code

For many years, TSE has been working to improve the corporate governance of listed companies in Japan with the intention of supporting companies listed on TSE in their endeavors to sustain growth and improve corporate value over the medium to long term. Since the 2018 revision to the Corporate Governance Code, TSE has followed up on the initiatives taken by listed companies and continued with its efforts, such as by introducing case studies of positive examples.

Promoting Management Aimed at Improving Corporate Value

In order to encourage listed companies to engage in management focused on enhancing corporate value, TSE created the "Corporate Value Improvement Award" to showcase listed companies that have sustainably achieved improvements in corporate value under management based on outstanding awareness and solid initiatives. Moving forward, we will continue to disseminate information that will help listed companies take those first steps toward further growth and create an environment that encourages them to proactively engage in management focused on increasing corporate value.

Market Structure

Current Market Segments

First Section

For highly liquid companies

Mothers	Second Section
For companies with
For startup firms
track records

For various companies

(Companies with track records and startups)

Standard

Growth

New Market Segments

Prime Standard Growth

* Tentative names for market segments

Web

Winners of the 8th Corporate Value Improvement Award (FY2019)

https://www.jpx.co.jp/english/ equities/listed-co/award/index.html

Comments from Staff on the Ground

Toward Realizing an Attractive Cash Equity Market

When the cash equity markets of the exchanges in Tokyo and Osaka were integrated in 2013, we maintained the market structure (market segments) as it was to ease the burden on listed companies and avoid confusion among investors. This resulted in TSE's current four cash equity market segments open to all investors. In recent years, however, we have received a variety of requests concerning the First Section, which is linked to the widely used TOPIX benchmark, along with criticism about the ambiguous concepts of each market segment, and the lack of incentive for listed companies to continuously improve their corporate value. In light of such circumstances, TSE has been re-examining its current listing rules in preparation for the new market segments in April 2022. Although the revision of market segments is expected to have broad-reaching impact, we will re-evaluate the related rules to create a more attractive and broadly-embraced cash equity market in the transition to the new market segments.

Yamawaki Natsumi

Manager

Listing Department

Tokyo Stock Exchange, Inc.

34 JPX Report 2020

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and SocietyShareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Financial Literacy and Economic EducationPromoting International Cooperation Facilitating Studies and Research

Initiatives for Investors and Society

Financial Literacy and Economic Education

Role of Financial Literacy and Economic Education

Faced with problems of a shrinking workforce and the limits of its social security system, the major task at hand for Japan is figuring out how to use its assets as efficiently as possible to generate economic growth for the next generation. JPX believes it can help to address these issues by raising the financial and economic literacy of each and every member of society and by pushing for a shift from savings to investment. To this end, JPX implements various initiatives.
In Japan, households hold ample monetary assets totaling more than JPY 1.9 quadrillion. However, these assets are not being fully utilized. Statistics on the composition of Japanese household assets indicate that cash and deposits account for a high proportion, approximately 53% of the total, while stocks and other investments account for only approximately 14%. In particular, cash and deposits account for more than half of all household assets. If just a portion of this were to be invested in publicly traded companies, companies could increase production and provide new products and services, which will in turn bring about business expansion, create more jobs, and increase wages. We recognize the need to promote the shift from savings to investment to create a virtuous cycle in the Japanese economy.
At the same time, there is no guarantee that the existing social security system will be able to continue providing sufficient financial support for the elderly in the era of "a 100-year life" where more and more people will live for 100 years. Every one of us must each build our own assets in a manner suited to the different phases of our lives.

Driving the Economic Growth Cycle

Initiatives to Encourage Participation

through Asset Utilization

in the Market

Shareholders

Oppor-

Promoting

provide funds for

tunities

Knowledge

the shift

businesses

to think

from

about

investment

savings to

Cycle of

investment

Businesses pay

Businesses

Economic

out dividends,

provide goods and

stock prices rise

Growth

services to society

Increase in financial

and economic literacy

Businesses

generate profitHighlighting the significance of

and expand

investment and offering information to deepen investment knowledge

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020 35

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and SocietyShareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Financial Literacy and Economic EducationPromoting International Cooperation Facilitating Studies and Research

	JPX engages in a variety of educational activities while considering the most effective approach
	to take for a broad range of age groups, from elementary school students to adults, and for
Approach	people who have investment experience and those who do not. We believe these activities lay the
	foundations for supporting the future of businesses and society, by showing the attractiveness of
	investing to retail investors and improving financial literacy to accommodate an aging society.

Initiatives

Outreach to Schools (Elementary through High School)

Although our daily lives are closely related to the economy and stock companies, there are very few opportunities to learn about these topics in school. To address this situation, JPX sends staff to schools to speak during politics & economics or civics classes. They give lectures on how stock companies work and mix in some roleplay and skits to help students familiarize with financial and economic concepts.
During FY2019, JPX held 85 lectures in schools, reaching out to approximately 3,300 students, and to more than 7,800 students across 375 groups visiting TSE.

Financial Lectures for All Generations

School students1	About 13,000

Teachers	About 1,200

University students	About 10,000

Adults	About 23,000

Note: 1. Includes parents and guardians of students participating in the programs for elementary and junior high school students.

Economics Lectures for Parents and Children (Elementary and Junior High School Students)

JPX holds many events, mostly during summer vacation, for elementary and junior high school students and their families to familiarize them with financial and economic concepts. In FY2019, a total of approximately 1,600 persons participated in these events.
OSE held a program called "Learning with Children - Finance and Stocks Summer School," for elementary school students in collaboration with the Osaka prefectural government's finance and public relations committee, Japan Securities Dealers Association, and other organizations. The students learned about finance and

stocks as they visited key financial and economic facilities in Osaka.	Economics lecture for parents and children

Lectures for University Students

JPX offers lectures at universities nationwide to substantially deepen the understanding of finance, economics, and securities markets among university students who will soon be deeply involved in the Japanese economy. The students also have an opportunity to visit TSE and OSE to gain first-hand experience and attend lectures. In FY2019, more than 200 lectures were held as part of this program, attracting a cumulative total of more than 10,000 attendees.
To help nurture the next generation of leaders, JPX holds sponsored courses and joint courses at a number of universities. The courses cover the latest developments in law, economics, management and accounting related to the securities market, along with the roles expected of listed companies.

Lecture for university students

Comments from Staff on the Ground

Providing Places for Financial Learning So That People Can Think and Make Decisions on Their Own

I am in charge of guiding visitors on tours of TSE, and I explain finance and economics to university students and young adults. JPX engages in financial education so that everyone can have a proper understanding of these subjects amid the increasing importance of asset building. In a society where there is so much information, I believe people need to develop the ability to think and make decisions on their own.
Through my work of explaining how the economy works and the role of stock exchanges and markets, I hope everyone active in society gains a broader perspective and becomes more interested in economic trends. Some visitors have told me that they gained a deeper understanding of stock companies and will try to look at companies from various angles when they look for a job. I hope everyone who participates in the tours will eventually learn to find the right information they need on their own.

Takasawa Azumi

Financial Literacy Support

Department

Tokyo Stock Exchange, Inc.

36 JPX Report 2020

JPX Entrepreneur Experience Program

The JPX Entrepreneur Experience Program aims to give students the experience of setting up and running a pseudo stock company that operates a bazaar stall. This program allows participants to learn and gain the ability to think on their own and, thereby, contributes to the development of more well-rounded individuals. Carried out in collaboration with schools and regional communities as part of JPX's activities to support financial literacy, in FY2019, the program was held in eight locations across Japan and drew about 990 participants.
JPX was honored to receive the 13th Kids Design Award (organized by non-profit Kids Design Association) in recognition of the JPX Entrepreneur Experience Program's role in enriching children's interaction with the community and deepening children's knowledge of social issues as a part of the Iizuna Future School, a public- private program for community interaction and development implemented in Iizuna Town, Nagano Prefecture.

Economics Lectures for School Teachers

JPX provides seminars for junior high and high school teachers mainly during summer vacation, aiming at equipping teachers with economic knowledge and concepts that will aid them in their teaching. In FY2019, JPX held the Summer Vacation Economics Course for Teachers and the Winter Vacation Economics Seminar for Teachers for a cumulative total of around 1,200 teachers. JPX also sends staff to speak at training and study sessions for teachers.

JPX Academy

Knowledge of finance and economics and asset building is important for everyone, and there is a growing need to create more opportunities for people of all ages to learn about them.
JPX Academy offers information from a neutral position on financial products such as stocks, ETFs, and derivatives, as well as macroeconomic trends, the latest economic theories, and other subjects relevant to asset building and management. In FY2019, a cumulative total of more than 12,000 persons participated in JPX

Academy programs, the highest number since it was renamed from TSE Academy in	JPX Academy
FY2014.

Joint Projects with Industry Groups

JPX collaborates with groups and organizations in the securities industry to jointly offer ongoing programs to disseminate information and forge a deeper understanding of securities over the long term. Activities include providing schools with educational materials for financial education and holding lectures and seminars for adults.

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020 37

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and SocietyShareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

 Financial Literacy and Economic EducationPromoting International Cooperation Facilitating Studies and Research

+YOU Japanese Economy Support Project

TSE launched the "+YOU Japanese Economy Support Project" in FY2012 to make Japan come alive through the securities market. The objective of this project is to convey to as many people as possible the true meaning and power of investing. To achieve this objective, the project targets those who are not particularly interested in economics or investment and introduces the attractiveness of investment to them.
In FY2019, TSE held 33 seminars, which drew a cumulative total of approximately 5,600 participants.

Sending Speakers to Listed Companies

To provide employees of listed companies and other organizations with opportunities to learn more about securities markets and asset building in training and study sessions, we began a service to send JPX staff well-versed in finance and capital markets as speakers to listed companies. The sessions aim to help attendees build assets in a way best suited to their needs by enhancing their financial literacy and increasing their interest in asset management. Therefore, the lecture contents are flexibly customized to meet individual needs and include topics such as how to use your money to realize your life plan and pointers for using defined contribution pension plans, such as DC/iDeCo, and NISA.
This service was used mainly as part of in-house training and new employee training. The sessions were held for approximately 100 companies and organizations and were attended by more than 4,700 individuals in FY2019.

+YOU seminar

33 seminars held in FY2019

Tohoku/Hokkaido	4

Kanto-Koshinetsu	17: including 4
	live radio tapings
Chubu/Hokuriku	5

Kinki/Chugoku/	5
Shikoku


Kyushu/Okinawa	2

Visits to JPX Facilities

To give everyone a better first-hand understanding of securities exchanges, JPX opens its facilities to groups and individuals from elementary schools through to university and the general public. In FY2019, a combined total of more than 53,000 persons visited TSE Arrows in Tokyo and OSE Gallery in Osaka.

Visiting JPX

Comments from Staff on the Ground

Working to Enhance Financial Literacy (Understanding and Deciding How Money Works)

In the Financial Literacy Support Department, we aim to get as many people as possible, from children to adults, more interested in investing. To this end, we hold a variety of events and seminars with the cooperation of internal and external parties. While we strengthen and upgrade our operational structure to advance our activities toward this goal, in response to the Covid-19 pandemic, we are putting extra effort into webinars for people to view them whenever they want.
I sometimes give lectures at these seminars, and I have learned, through trial and error, to focus on conveying information from a fair and neutral standpoint, while making the seminars enjoyable and easy to understand for people who have no experience in investing, so they will become more interested in investing.
I will continue to do my best in the belief that these initiatives will not only enrich people's lives but also contribute to the development of Japan's economy.

Hara Ruriko

Financial Literacy Support

Department

Tokyo Stock Exchange, Inc.

38 JPX Report 2020

Special Website: TSE's Money Club

TSE's Money Club (TSE Money-bu) is a website where we publish information daily to promote asset building by retail investors (currently only available in Japanese). The purpose of this website is to help as many people as possible on their way to growing their assets by providing information about the importance of asset building through long-term, diversified investment. The website presents stories about the role of money in familiar situations, using language that is easy to comprehend even for novice investors. The website is designed to be accessible to varied age groups. For example, the website includes explanatory videos, infographics which explain things in an easy-to-understand visual form, and articles for retirees to prepare them for a 100-year life. We intend to deliver information to those who have little to no interest in investing, by reaching out through social networking sites and popular news apps. In FY2019, we published more than 370 articles.

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

TSE's Money Club website

Special Tool: The "What-if" Investment Returns Calculator

JPX launched a "What-if" investment returns calculator to encourage individuals to think about long-term asset building in an attempt to ease any fears they may have about investing while showing them the outcome of building asset by investing in stocks through a fun and easy game. After entering a certain year to start investing, the user can pick different companies to invest in to better understand how time and asset distributions affect investment returns.

Initiatives to Put Courses and Seminars Online

JPX works to provide opportunities to learn about finance, economics, and asset building to those who are unable to attend seminars due to location or time constraints.
Since 2018, TSE has collaborated with NTT DOCOMO subsidiary DOCOMO gacco to offer online courses on asset building. Around 6,300 signed up for new courses in FY2019. JPX Academy streams live explanations about the basics of investing and videos about market conditions, and it has also released archives of past videos on the Official JPX Group Channel on YouTube. Speaker dispatch services have also shifted to remote meetings based on teleconferencing systems. For schools, we now also offer online lessons and live lectures from TSE Arrows.

Web

The "What-if" investment returns calculator website (only in Japanese)

https://jpx-game.com/simulation

Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

Web

Online course "Let's Learn the Basics of Asset Building: More ease, more benefits!" (only in Japanese)

https://gacco.org/jpx/shisankeisei/

JPX Academy: Online Course Website

Data Corporate and

JPX Report 2020 39

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and SocietyShareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Financial Literacy and Economic Education Promoting International CooperationFacilitating Studies and Research

Promoting International Cooperation

At JPX, through activities with international organizations, we gather information and express views about trends in international regulations. At the same time, we collaborate with

Approach foreign stock exchanges to strengthen our business foundations in other countries.

JPX also provides technological assistance to develop capital markets in other countries, especially in Asia. Through such assistance, we aim to create business synergies over the long term while fulfilling our social responsibility as a corporation.

Initiatives

Contributing to International Organizations

World Federation of Exchanges (WFE)

An industry association composed of members from exchanges and clearing organizations around the world, WFE is engaged in making policy recommendations and conducting surveys and research about capital markets. Recent WFE activities center on important themes including ESG-related issues and the value of the role played by exchanges in generating market data.
JPX supports the work of WFE by actively participating in the activities of the WFE Board of Directors and Working Committee, in particular by serving as vice-chair of the Sustainability Working Group.

Asian and Oceanian Stock Exchanges Federation (AOSEF)

AOSEF is a regional federation of 19 stock exchanges for the Asia-Oceania region. AOSEF aims to facilitate information sharing among member exchanges. JPX serves as the secretariat for AOSEF, promoting research initiatives while also leading the General Assembly and Working Committee.
Recent activities have focused on topics of high interest among members, such as sustainability initiatives by stock exchanges.

Trainees from Foreign Exchanges (commissioned by JICA)

Commissioned by the Japan International Cooperation Agency (JICA), JPX accepts trainees from exchanges and related organizations of various countries and provides them with training based on the developmental status of each stock exchange, thereby contributing to the development of their stock markets.
In Myanmar, there is a joint public-private effort from Japan in support of the development of its capital market. In addition to providing training programs with a focus on nurturing the country's securities market, Japan also contributes to the development of Myanmar's securities market by supporting the operation of Yangon Stock Exchange.

AOSEF Working Committee

JICA seminar

Comments from Staff on the Ground

Fostering Global Connections

Global Strategy consists of several different groups, each handling a different facet of our international relations and collaboration work. We have a team supporting operations at Myanmar's Yangon Stock Exchange, another one helps to prepare English material, while a handful of people are engaged in global business initiatives and representing the exchanges' interests in the international arena. I am involved in preparing English material for publication or external use, and also work with foreign exchanges to explore business opportunities and deepen collaborative ties. Following on from last year's milestone launch of the Japan-China ETF Connectivity scheme, the global business team is monitoring regulatory changes that impact access to the Japanese market in various jurisdictions as we plot the way forward. While we keep

an eye on regulatory trends on the global and regional levels, and in the world's leading financial markets, I also introduce developments in Japan to foreign visitors when the chance presents itself.

I hope my work goes toward fostering connections and making meaningful contributions to society on a wider, global level.

Andrew Wong

Manager

Global Strategy Department

Japan Exchange Group, Inc.

40 JPX Report 2020

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and SocietyShareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Financial Literacy and Economic Education Promoting International Cooperation Facilitating Studies and Research

Facilitating Studies and Research

	One of the core strategies in the 3rd Medium-Term Management Plan is to develop a

	foundation to support the future of our business and the society. As part of this strategy, JPX
Approach	works with external researchers to assess and study the various factors affecting markets,
	legal systems, and related changes. The outcomes of these studies are used to inform JPX's
	measures and are broadly disseminated to society, including related parties such as securities
	firms and investors.

JPX of Overview .1

Initiatives

JPX Working Papers

With a view to enhancing its competitiveness, executives and employees at JPX work with external researchers to assess and study the market environment and publish their findings as JPX Working Papers. We have published papers on fintech- related initiatives at JPX and studied the applicability of blockchain/distributed ledger technology to financial market infrastructure. In addition, we have also announced the introduction of robotic process automation (RPA) throughout JPX Group and the use of machine translation for corporate governance reports.

Joint Research with The University of Tokyo

JPX is working with the research team under Professor Izumi Kiyoshi at the Department of Systems Innovation, School of Engineering of The University of Tokyo to conduct research on technologies and system design for the stable and efficient operation of financial instruments exchange markets. We are driving forward with research into the use of artificial market simulations to virtually create conditions that cannot be observed in the actual market. The results of such joint research are published in the form of JPX Working Papers.

Study Group on the Financial Instruments and Exchange Act

JPX establishes a study group on Japan's Financial Instruments and Exchange Act to provide a platform for making research outcomes on the various legal issues related to the financial instruments and exchange market broadly available in Japan and other countries.
This study group is composed of more than 20 leading researchers, who generally meet once a month to present reports and hold discussions. Along with posting the minutes and reports of this study group on the JPX website, the reports are periodically compiled into publications that are distributed to researchers and respective organizations.

Web

JPX Working Papers

https://www.jpx.co.jp/english/ corporate/research-study/working- paper/index.html

JPX Working Papers Published in FY2019

	Title
March 27,	Systemic Risk Analysis using Multiplex
2020	Model among Bank, Company and
	Financial Market
January 30,	Self-Adjusting Mechanism in the
2020	Evolving U.S. Listings Market
August 6,	A Case Study of Initiatives at JPX on
2019	Experimental Tests toward the RPA
	Adoption Project and its Promotion
May 8,	Examination of Machine Translation in
2019	Corporate Governance Reports
April 9,	Analysis of the Use of Distributed Ledger
2019	Technology in Post-Trade Process of
	Cross-Border Securities Transaction
April 1,	Detection of Factors Influencing Market
2019	Liquidity Using an Agent-based Simulation
April 1,	Analysis of Investors' Behavior through
2019	Non-Time Series Analysis of Stock Prices

Web

Study Group on the Financial Instruments and Exchange Act (only in Japanese)

https://www.jpx.co.jp/corporate/ research-study/research-group/ index.html

Value Creating to Approach .2 -Strategies Creation Value-

Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

Comments from Staff on the Ground

Studies and Research for Evolving into a Total Smart Exchange

JPX is aiming to become a total smart exchange, where anyone can trade any product in a secure and easy way. Toward this goal, we engage in studies and research into legal systems and changes in the environment surrounding the markets. At the Fintech Laboratory, we coordinate with various related parties to promote the use of cutting-edge technology as a means of realizing this vision.
I conduct studies related to documents disclosed by listed companies. Recent major research topics have included whether machine translation can be used to provide foreign investors with greater access to information on listed companies in Japan.
I believe improving the usability of corporate information is key to realizing our goal of evolving into a total smart exchange. This research would not have been possible without the cooperation of many related parties, including universities and other research institutions, IT firms, and translation companies. I would like to take this opportunity to express our gratitude to everyone who helped. We will continue to contribute to advancing and improving the efficiency of the financial industry.

Doi Nobushige

Fintech Laboratory

Corporate Strategy Department

Japan Exchange Group, Inc.

Data Corporate and Financial .5

JPX Report 2020 41

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and Society Shareholder-FocusedInitiativesInitiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Shareholder-Focused Initiatives

	JPX is focusing on promoting two-way communication with its shareholders and investors

	and building relationships of trust based on mutual understanding. JPX actively provides
Approach	investors with the corporate information necessary for their decisions and shares views
	obtained from shareholders and investors with senior management, thereby further enhancing
	corporate value.

Initiatives

Engagement with Shareholders

General Shareholders Meeting

JPX held its annual general shareholders meeting (AGM) for FY2019 on June 17, 2020.
The notice of the AGM is sent out three weeks ahead of the meeting to ensure that shareholders are given sufficient time to decide how to exercise their voting rights. With regard to electronic information, the Japanese and English versions of the notice are made available on the JPX website four weeks prior to the meeting and are also simultaneously available to overseas shareholders via the Electronic Voting Platform for Institutional Investors provided by Investor Communications Japan, Inc. (ICJ). In addition, JPX is promoting the use of more images and charts in the AGM notice as part of its efforts to present the information in a more easily understandable form.
The AGM is attended in person not only by the directors and executive officers of JPX, but also the directors of its subsidiaries and affiliates. This is so that the broad range of shareholder questions, which cover the activities of the corporate group, can be appropriately answered by the right people, including those from subsidiaries. We also upload videos of the AGM to the JPX website for those who were unable to attend on the day.
Shareholders can send in their votes via the Internet or the electronic voting platform, as well as by post. At the AGM held on June 17, 2020, approximately 90% of voting rights were exercised.

Web Shareholders meetings

https://www.jpx.co.jp/english/corporate/investor-relations/shareholders/meeting/ index.html

[TRANSLATION]

DISCLAIMER: This English version is not an official translation of the original Japanese document and may be used for reference purposes only. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. This translation is subject to change without notice. Japan Exchange Group, Inc., its subsidiaries, and/or its affiliates shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with regard to this translation.

Securities Code: 8697

May 26, 2020

Notice of the 19th Annual General Shareholders Meeting

Dear Shareholder,

We are pleased to inform you that the 19th Annual General Shareholders Meeting of Japan Exchange Group, Inc. (hereinafter the "Company") is scheduled to be held as described below.

This year, with a view to preventing the spread of the novel coronavirus, we ask you to reconsider your attendance in person regardless of your condition of health. If you are not attending in person, we encourage you to exercise your voting rights either in writing or via the Internet. Please review the items in the reference documents for the general shareholders meeting described in this Notice and indicate your approval or disapproval either by returning the enclosed form for exercise of voting rights or via electromagnetic means by accessing the website indicated in the form. Votes must be received by 4:45 p.m. (JST), Tuesday, June 16, 2020.

Sincerely yours,

Kiyota Akira

Director & Representative Executive Officer, Group CEO

Japan Exchange Group, Inc.

2-1,Nihombashi-Kabuto-cho,

Chuo-ku, Tokyo

Regarding exercise of voting rights

Exercise of voting rights in writing (postal mail)
Please indicate your approval or disapproval and return the enclosed form for exercise of voting rights by the deadline indicated above.
Exercise of voting rights by electromagnetic means (via the Internet)
Please access the website (https://evote.tr.mufg.jp/) designated by the Company and follow on-screen instructions to indicate your approval or disapproval by the deadline indicated above.

AGM notice

Comments from Staff on the Ground

Deepening Shareholders' Understanding of JPX

The AGM is an opportunity for us to engage in constructive dialogue with shareholders, and one of our key objectives must be to deepen their understanding of JPX. The AGM notice contains a variety of information, including our medium-term management plan and corporate governance structure, along with visual aids. We make every effort to quickly publish and disseminate the AGM notice so it is available to shareholders at the earliest possible date.
For the AGM held in June 2020, we strongly recommended that shareholders send in their votes by mail or via the Internet as a measure to prevent the spread of Covid-19, and we are grateful for their cooperation. In the future, I look forward to having more constructive dialogue with shareholders as we watch how the Covid-19 situation develops.

Mori Shohei

Manager

General Administration

Department

Japan Exchange Group, Inc.

42 JPX Report 2020

Engagement with Institutional Investors and Analysts

IR Meetings

JPX senior management reaches out to domestic and foreign institutional
investors and analysts through meetings. In FY2019, JPX held investor roadshows
across Europe, the U.S., and Asia. We are also striving to increase opportunities for
dialogue with institutional investors and analysts, for example by participating in IR
conferences both in Japan and abroad. Feedback from institutional investors and
analysts obtained through such meetings is presented periodically to the
management and related departments, and then reflected into management of the	JPX IR Day 2019
company.

Briefings on Earnings and Business Developments

In FY2019, in addition to holding two earnings presentations, JPX held a business briefing (JPX IR Day 2019) to provide opportunities for dialogue between investors and the Group CEO, as well as senior management of Group companies. Video and audio recordings of the briefings are made available in Japanese and English on the day after the event as a part of our commitment to providing domestic and overseas investors with information in a timely manner.

Engagement with Retail Investors

We participated in major domestic IR events, holding a total of 13 JPX outreach events to reach approximately 1,800 retail investors through face-to-face seminars held at securities company branches nationwide and live online seminars.
JPX also actively provides information to retail investors on its IR website. In addition to providing content that offers an easy-to-understand overview of JPX, we deliver documents, videos, and other content on IR events in a timely manner.

Web	For retail investors (only in Japanese)	Online briefing for retail investors
	https://www.jpx.co.jp/corporate/investor-relations/individual/index.html

Web	IR E-mail Distribution Service (only in Japanese)
	https://www.jpx.co.jp/corporate/investor-relations/ir-mail/index.html

Comments from Staff on the Ground

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

Toward Greater Corporate Value through Meaningful Dialogue with Shareholders and Investors

JPX engages in constructive dialogue with shareholders and investors with the aim of sustaining growth and increasing corporate value over the medium to long term.
To facilitate more meaningful dialogue, we make a concerted effort to provide detailed information in light of the desires and interests of shareholders and investors. Recently, the Covid-19 pandemic has

made it very difficult to hold face-to-face meetings with individual shareholders and investors, but we have stepped up efforts to hold conversations over the telephone and online meetings. When we happen to receive criticism of JPX in the course of our dialogues, I do my utmost to have meaningful dialogues with our shareholders and investors with a sense of urgency and the intent to garner even one more JPX supporter over the long term.

Takahashi Hiroyuki

Manager

Corporate Communications

Department

Japan Exchange Group, Inc.

Data Corporate and Financial .5

JPX Report 2020 43

See page 24 for details.

See page 22 for details.

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and Society Shareholder-FocusedInitiativesInitiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Investor FAQ

Q1 JPX's Medium-Term Management Plan

Once every three years, JPX formulates a Medium-Term Management Plan, and updates it every year based on recent changes in the business environment. Under the 3rd Medium-Term Management Plan, which extends from FY2019 through FY2021, JPX aims to evolve into a "total smart exchange," an exchange where anyone can trade any product in a secure and easy way. In the FY2020 update to the Medium-Term Management Plan, JPX reiterated that its medium- to long-term vision is to make a more active contribution to building a sustainable society as a responsible infrastructure operator. Our four core strategies under the plan are to (1) pursue "the shape of the market" toward the next generation, (2) launch and develop a Comprehensive Exchange, (3) diversify and propel data services into the next generation, and (4) develop a foundation to support the future of our business and the society. See page 14 for details.

Q2 Promoting Sustainability

In July 2018, JPX established a Sustainability Committee with the Group CEO as its chair and has since strengthened and accelerated its initiatives for promoting sustainability. In March 2020, the Sustainability Committee published the Practical Handbook for ESG Disclosure to provide listed companies with a guide on ESG information disclosure. In addition, we are promoting the use of ESG-relatedproducts by calculating and publishing ESG-relatedindices, and listing ESG-relatedETFs. We are also improving and enhancing our own ESG information disclosure as a listed company. See page 31 for details.

Q3 Market Structure Review

The review of the cash equity market structure is aimed at providing a more attractive market that will enjoy strong support from a diverse base of investors at home and abroad. We will reorganize the current four market segments into three market segments with clear concepts so as to support the sustainable growth and medium- to long-term improvement of corporate value of listed companies. TSE plans to transition to the new market segments in April 2022. See page 34 for details.

Q4 IPOs

Over the past few fiscal years, the number of IPOs has hovered within the 80 to 100 range. In FY2019, there were 94 successful IPOs.

Q5 Business Combination with TOCOM and Invigoration of Derivatives Markets

In FY2019, JPX effected a business combination with TOCOM toward the realization of a Comprehensive Exchange. We expect this business combination to attract new investment

flows into the commodity derivatives market and increase liquidity. While it depends on the market environment, we see the potential for this market to roughly double in size in around three years after the combination, compared with the current TOCOM market on its own.

Q6 Diversifying and Propelling Data Services into the Next Generation

In FY2019, JPX launched a "Proof of Concept Program for Utilizing Securities Data" as an initiative for distributing new content in the data services field, and a "Data Sandbox Program" as an effort to expand the number of new information service users. Under the 3rd Medium-Term Management Plan, JPX is working to diversify and bring its data services forward into the next generation, such as by building next-generation information distribution systems with APIs and cloud-based services for a diverse range of

channels.

Q7 Capital Expenditures

In its 3rd Medium-Term Management Plan, JPX plans to spend a total of JPY 45 billion over three years to upgrade its J-GATE derivatives trading system and construct a Kansai backup center by FY2021. In FY2019, JPX made about JPY 15.1 billion in capital expenditures as planned.

Q8 Shareholder Returns

Our policy on shareholder returns is to flexibly return value to shareholders while considering future growth investments based on a dividend payout ratio of about 60%. JPX will comprehensively consider additional shareholder returns, taking into account its own capital, cash equivalents and growth investment plans, while monitoring changes in the external environment, including the impact from the Covid-19 pandemic.

See page 20 for details.

44 JPX Report 2020

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for EmployeesInitiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Initiatives for Employees

	Human resources are one of the most important resources for enabling JPX to sustainably

	increase its corporate value. Under the 3rd Medium-Term Management Plan, JPX has identified
Approach	human resources development and implementing work style reforms as keys to strengthening
	its business foundation. To bring out the best in each and every employee, JPX endeavors to
	ensure its training programs are enhanced and create comfortable working environments.

JPX of Overview .1

Initiatives

Human Resources Development

JPX has created an environment where employees can actively pursue specialized knowledge, assimilate the latest information, and obtain a broad perspective with free and creative thinking. Specifically, depending on an employee's length of service and job responsibilities, the programs provided vary and encompass career training to enhance knowledge and skills, skills improvement training to acquire foreign languages and gain advanced expertise, professional career building support to obtain an MBA or other advanced degrees at overseas universities and more.

Promoting Diversity

For JPX, "promoting diversity" means that each and every employee has mutual respect for other employees with differing values and lifestyles. In short, JPX believes that, by accepting diversity, individual employees will be able to work energetically and create new value (innovation) that leads to overall organizational growth. Based on those beliefs, JPX is promoting the development of a work environment that accepts and supports ways of working which fit in with diverse values and lifestyles. From the viewpoint of supporting employees' desire to continue working, we are advancing initiatives to give impetus to the active participation of a variety of employees. These initiatives include introducing support systems for employees living with illness as well as for maternity, childcare and adult caregiving, promoting women's careers, and enhancing the post-retirementre-employment system to meet diverse workers' needs. By continuously implementing a raft of measures to reform working culture throughout the Group, we are also aiming to create more comfortable workplaces and build a more robust organizational foundation for the future.

Human Resources Development and Training Programs

Position-Specific Training

For management executives,

managers, mid-level employees, and others

Harnessing Employee Talent

- Competency -

	Personal Skills		Career Building Support
	Improvement Training		Postgraduate studies abroad/in
	Foreign Language Training,		Japan, Secondment to
	Expertise Training and more		overseas offices and more

Group CEO Kiyota mingles with new employees

Value Creating to Approach .2 -Strategies Creation Value-

Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

Supporting the Balance between Various Lifestyles and Work

Improving Maternity, Childcare and Adult Caregiving Support Systems

At JPX, we are working to create comfortable working environments so that employees with limited time available - for example, due to childcare, adult caregiving or receiving treatment for illness - can make the most of their abilities. In particular, to make it possible for male employees to participate in childcare and share housework, we introduced paternity leave as a type of paid leave, and created an environment where employees feel comfortable using it, in addition to the legal requirement for childcare leave support systems.
We also introduced family care leave and nursing care leave exceeding the legal requirements for adult caregivers, and a system for flexible shortened working hours. Leave for adult caregivers can be taken in daily, half-day or hourly units, and we also hold ongoing "caregiver seminars" in support of balancing both work and caregiving. The caregiver seminars provide information and promote understanding of adult caregiving, so that employees shouldering this burden, the number of which is expected to increase in the future, can continue to balance caregiving with work.

Kurumin Mark

Web

Diversity, Employee Advancement,

and Work Style Reforms

https://www.jpx.co.jp/english/ corporate/sustainability/jpx-esg/ employee/index.html

Data Corporate and Financial .5 Sustainability for

JPX Report 2020 45

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for EmployeesInitiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Career Advancement for Female Employees

From the viewpoint of boosting female employees' careers by encouraging them

to participate and contribute at a higher level, we have advanced a variety of

initiatives, including career training programs for female employees and supporting

Ratio of Women in Managerial Positions

(%)

9.0

8.0 Targetingfor at least 8% by FY2022

networking with career-minded female employees from other companies. JPX has

7.0

6.9

set a numerical target of at least 8% female employees in managerial positions

(6.9% as of April 2020) to be achieved through the above measures by FY2022. In

FY2020, JPX promoted two female employees to Department/Section Director.

In the years to come, we will continue to increase the ratio of women in managerial

positions, with a view to cultivating and securing human resources with the skills

needed for director and executive positions.

6.1

6.0
5.5

	5.0
5.0	4.5
3.7
4.0

3.0 2015/4 2016/4 2017/4 2018/4 2019/4 2020/4

The Diversified Re-Employment System

JPX has a re-employment system in place that enables employees to select part- time work after reaching retirement. Through this system, JPX is working to keep valuable human resources, while making it possible for re-employed employees to continue working.

Employment of Persons with Disabilities

Under the principle of "Competency (Harnessing Employee Talent)" laid out in the JPX Creed, in addition to encouraging female employees and those of an advanced age to actively participate in the workplace, JPX also offers employment opportunities for persons with disabilities according to the individual's abilities and aptitudes.

JPX Work Style Reforms

In response to internal and external environmental changes, as well as personnel issues, JPX is implementing working style reforms through flexible business operations and working to improve productivity, so that the entire JPX organization can achieve sustainable growth.
For JPX, the work style reform program is a collaboration between the company and its employees. JPX is undertaking initiatives to create an environment that allows greater flexibility in work styles and create more time after work. The reform is expected to change employees' mindset about work hours and productivity, as well as their work styles, and to provide more opportunities for after work activities that will be positively reflected at work.

Targets for Work Style Reforms

To allow employees to spend more time on activities outside of work, JPX is advancing work style reforms on a group-wide scale with numerical targets for reducing overtime hours and using up annual paid leave.

Specific Work Style Reforms at JPX

Overwork Prevention	Every month, we conduct checks into employees' working hours, including those at the managerial level. To prevent long working
hours from damaging an employee's health, by our own standards we will try to ascertain their conditions early on.


	JPX has established systems for Professional Development Leave and Leave to Accompany Spouse for cases such as when an
Diversifying leave systems	employee chooses to study abroad or his/her spouse is given an overseas assignment, allowing for flexible work styles that adapt to
	employees' diverse life plans.

Re-employing former	JPX also has a program in place for re-employing individuals who decided to resign from JPX in the past for such reasons as
employees	childcare. The program offers ambitious and talented former employees an opportunity to once again contribute to and excel at JPX.

Increasing opportunities for	JPX supports employees who would like to engage in activities for personal development during the extra time made available by
employees to engage in	the work style reforms. JPX is raising the amount and number of subsidies offered and expanding the number of eligible courses for
after work activities	skills development training.

	JPX is working on reforming the corporate culture and encouraging employees to re-evaluate their ethical behavior by offering
Reforming corporate culture	lectures on work style reforms, running e-learning courses, regularly providing information, making efforts through employee
	outreach, and so forth.

Joining the Iku-boss	Managers or bosses will play a significant role in achieving work style reforms, thereby creating more flexibility in employee work
styles and more after work hours. With the workforce becoming more diverse, JPX has joined the Iku-boss Enterprise Alliance in
Enterprise Alliance	order to help promote our work style reforms and is working on developing executives and managers as Iku-boss, a new generation
	of ideal bosses.

46 JPX Report 2020

Toward a Positive, Rewarding, and Harassment-

Free Work Environment

JPX takes into consideration individual rights and safety in the workplace to create an environment where all employees are able to work as productively as they can. Therefore, JPX stipulates "respect for human rights and antidiscrimination" in its Charter of Corporate Behavior, which prohibits all forms of harassment such as sexual or power harassment including those based on gender, seniority, maternity/ paternity, and any other personal attributes, as well as unfair discrimination against those who identify as LGBT. We ensure that all employees can easily and safely consult with the relevant contacts if they are victims of or witness any type of harassment. JPX employees have access to direct consultations with HR and a Compliance Hotline that also accepts anonymous calls. We also provide detailed training to raise understanding of harassment and appropriate actions to take for eliminating harassment. We will continue with these efforts to provide workplaces where employees can work with confidence, be motivated and be free from discrimination or harassment in all its forms.

JPX Health Management Declaration

In order to bring out the best in each and every employee, JPX proactively encourages employees to maintain and improve their mental and physical health.

Health Management

To help employees and their families maintain and improve their health, we make efforts to understand and find early detection from the health conditions of all of our employees. JPX also provides monetary assistance for examinations to facilitate the early detection of a range of cancer types.

Mental Health Care

JPX has made counseling available within and outside the company to ensure that employees can work while maintaining both their physical and mental well-being. In addition to interviews with psychiatrists as needed, we also provide information for prevention of mental illness.

Safety and Health Initiatives

To provide a safe and healthy work environment, JPX organizes a monthly health committee, facilitates workplace inspections by an occupational health physician, conducts management of long working hours and late-night work, and performs stress checks.

Comments from Staff on the Ground

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

Creating Workplaces Where Every Employee Can Work Safely and to the Best of their Abilities

Since FY2017, the Human Resources Department has allowed all employees to telework, putting in place an environment where employees can have diverse and flexible work styles. With the Covid-19 pandemic, a "new normal" has taken hold where economic activities are balanced against measures to prevent the spread of infections. While prioritizing the health of our employees and their families, we will continue to encourage teleworking and staggered working shifts to fulfill our responsibility to the markets as an infrastructure provider that supports the economy and society. Furthermore, we will listen carefully to the opinions of employees and take care to respond appropriately and in a timely fashion so that they can engage in work without worry, despite these challenging times. While the markets continue to operate amid unpredictable risks, I will do my utmost to create workplaces where all employees can work to the best of their abilities.

Monden Koichiro

Senior Manager

Human Resources Department

Japan Exchange Group, Inc.

Data Corporate and Financial .5

JPX Report 2020 47

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional CommunitiesCorporate Data: Environment and Employees

Initiatives for the Environment and Regional Communities

	JPX aims to contribute toward the realization of a sustainable society and actively
	implements initiatives to reduce its environmental footprint. JPX also takes steps to raise
Approach	environmental awareness among its employees through activities such as forest preservation
	and community cleanup programs. In addition, JPX actively participates in events to give
	back to local communities that provide it with invaluable support on a day-to-day basis.

Initiatives

Contributing to the Environment

Reducing Our Environmental Footprint

As a part of activities to reduce its environmental footprint, JPX is cutting down its power consumption for lighting, air conditioning, and is taking other energy saving measures. For example, JPX updated equipment in the TSE building, its main business site, after the securities industry established a voluntary power consumption reduction target for itself in 2008. JPX has also worked to raise environmental awareness among its employees. In response to the greenhouse gas emission targets set for the five years from FY2015 to FY2019 under the Tokyo Metropolitan Environmental Security Ordinance (17% reduction from the average emissions released from FY2005 to FY2007), JPX has continued to strive to reduce power consumption, namely by replacing air-conditioning equipment and hot-water supply equipment, switching to LED lighting, and reducing lighting sources in common areas. As a result, JPX was able to reduce emissions of greenhouse gases from the TSE building in FY2019 by 13% in comparison with the emissions targets. (See page 49 for data.)
In addition, overall use of electricity at JPX, including data centers, has decreased. While the enhancement of backup systems in recent years has led to the need to expand facilities, JPX has improved the energy efficiency of its infrastructure and reduced overall energy use. Going forward, we, as a corporate group, will continue to strengthen our environmental management systems and reduce our environmental footprint in our contributions to the creation of a sustainable society.

Tree Planting Program

The TSE Listing Forest began in June 2004 in Yurihonjo, Akita Prefecture. Conservation activities have been carried out at the five-hectare plot in the hope that the exchange will grow and prosper along with the planted trees. In September 2019, we held a tree planting ceremony and lecture event in Yurihonjo to commemorate the 15th anniversary of the program.
Together with these conservation activities, JPX has worked alongside the local Yashima region, which has cooperated on these activities, in providing financial education. In a typical year, JPX offers on-site courses about how stock companies work at Yurihonjo Shiritsu Yashima Elementary School, Yurihonjo Shiritsu Yashima Junior High School and Akita Prefectural Yashima High School. An NPO established to run the JPX Entrepreneur Program under its own direction has initiated projects - for example at Akita Prefectural University and Akita Prefectural Nishime High School - with the collaboration of industry, academia, government, and financial sectors. The NPO has developed a finance and economics education program integrated throughout the local community, to the extent that in February 2019 it won an award from the Government's Small and Medium Enterprise Agency.

Contributions to Local Communities

Every year, JPX participates in "Chuo City Marugoto Museum" (literally, all of Chuo City is a museum) to make the area that is home to TSE a living museum. For the event, JPX awards original merchandise bearing the JPX logo as prizes in lucky draws. JPX's other contributions to local communities include participating in cleanup programs in Tokyo's Kabutocho district.

48 JPX Report 2020

3. Approach to Creating Value -Value Created with Stakeholders-

Aiming to Realize an Affluent Society Market User-Focused Initiatives Initiatives for Investors and Society Shareholder-Focused Initiatives Initiatives for Employees Initiatives for the Environment and Regional Communities Corporate Data: Environment and Employees

Corporate Data: Environment and Employees

Energy Consumption at TSE Building (electricity and gas)

Energy consumption at	TSE Building
Emissions of greenhouse gases	from TSE Building

Total usage

Electricity (kwh)

City gas (m3)

Per capita

Electricity (kwh)

City gas (m3)

Total emissions

CO2

CO2 emission target (based on Tokyo Metropolitan Environmental Security Ordinance)

CO2 emission result (based on Tokyo Metropolitan Environmental Security Ordinance)

Per capita

CO2

FY2008		FY2009		FY2010		FY2011		FY2012		FY2013		FY2014		FY2015		FY2016		FY2017		FY2018	FY2019

8,132,632	7,921,216	7,435,466	6,079,696	6,272,280	6,413,800	6,135,360	5,899,040	5,935,384	6,035,488	5,936,520	5,733,488
349,994	343,707	362,622	319,200	341,276	304,248	300,295	306,467	322,579	326,926	311,238	304,359
10,078	9,660	9,214	7,686	7,715	7,297	7,044	6,989	7,419	7,442	7,302	7,026
434	419	449	404	420	346	344	363	403	403	383	373

3,943	3,848	3,631	3,020	3,143	3,114	3,001	3,542	3,595	3,656	3,571	3,457
-		-	3,585	3,585	3,585	3,585	3,585	3,956	3,956	3,956	3,956	3,956
-		-	+1%		−16%		−12%		−13%		−16%		−10%		−9%		−8%	-10%	-13%
4.89	4.69	4.5	3.82	3.87	3.54	3.44	4.19	4.49	4.51	4.39	4.24

JPX of Overview

Value Creating to Approach .2 -Strategies Creation Value-

Note: The volume of greenhouse gas emissions is calculated according to the method specified in the Tokyo Carbon Reduction Reporting Program issued in the Tokyo Metropolitan Environmental Security Ordinance.

Figures for FY2010 through FY2014 were emission targets for the first compliance period of the ordinance. Those for FY2015 through FY2019 were for the second compliance period.

Employees

to Approach .3 Created Value-

No. of employees by gender

All

Male

Female

Average years of service

All

Male

Female

No. of employees in managerial positions

Total

Female

No. of new hires

Total

Females/Foreign nationals

Average overtime worked

Ratio of annual paid leave taken

No. of male employees taking time off for childcare (including childcare leave)

Ratio of male employees taking time off for childcare (including childcare leave)3

No. of female employees returning to work after maternity leave

Users of re-employment system

FY2014		FY2015		FY2016		FY2017	FY2018	FY2019

1,001	1,088	1,085	1,093	1,110	1,208
728 (72.7%)	796 (73.2%)	792 (73.4%)	803 (73.4%)	805 (72.5%)	875 (72.4%)
273 (27.3%)	292 (26.8%)	293 (26.5%)	290 (26.5%)	305 (27.4%)	333 (27.6%)
17.3	16.7	17.0	17.1	17.3	17.0
15.9	15.5	15.9	15.9	16.1	16.4
21.0	20.2	20.5	20.5	19.9	18.4
350	336	339	345	388	422
13 (3.7%)	15 (4.5%)	17 (5.0%)	19 (5.5%)	24 (6.1%)	29 (6.9%)
17	12	20	25	26	26
6	3	10	7	12	11
26 hours and		27 hours and		25 hours and		24 hours and	23 hours and	23 hours and
23 minutes		54 minutes		3 minutes		15 minutes	7 minutes	52 minutes
49.9%	53.7%	67.0%	67.0%	71.8%	72.0%
8	10	7	30	35	24
26.6%	24.3%	20.6%	71.3%	77.5%	55.8%
94.1%	100%	100%	100%	100%	100%
Prior to		Prior to	1		-	1	-
enactment		enactment

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating -Stakeholders with

Notes: 1. As a general rule, "employees" refers to number of persons working at JPX. This excludes persons such as those temporarily assigned by JPX to outside entities and those dispatched to JPX from temporary staffing agencies. It does include, however, persons temporarily assigned by an outside entity to JPX and persons on maternity/childcare leave.

Only figures for the ratio of women in managerial positions are denoted as of April 1 for the next fiscal year.
Calculated by dividing the number of male employees who took time off for childcare by the number of male employees who had a spouse give birth multiplied by 100.

JPX Report 2020 49

4. Foundations for Sustainability

Corporate GovernanceMessages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Corporate Governance

JPX is committed to developing its corporate governance system appropriately to fulfill its social mission as the core infrastructure of the Japanese market.

Fundamental Views

In order to implement management in line with its corporate philosophy (page 2), JPX is aware of the importance of having its stakeholders understand its corporate philosophy and corporate activities. Therefore, JPX has established fundamental views on corporate

governance from the following four perspectives.

Based on these fundamental views, JPX is committed to developing its corporate governance system appropriately based on each principle in Japan's Corporate Governance Code.

Corporate Philosophy and Social Mission

JPX Group operates markets which are public assets and fulfills its social mission by pursuing sustainable development of its markets.

Market Operations

JPX Group operates markets with the view that garnering support for and fostering confidence in the markets it establishes are in the common interest of all investors and market users, and that maintaining and enhancing such support and confidence will build the foundations for sustainable development of its markets.

Enhanced Corporate Value

In pursuing sustainable development of its markets, JPX must continue to accommodate the diverse needs of shareholders and other stakeholders, and through these JPX will enhance its corporate value over the medium to long term.

Effective Corporate Governance

JPX strives to constantly improve its corporate governance system to further facilitate effective and properly functioning systems, so as to support the sustainable development of its markets.

Corporate Governance System

JPX clearly segregates the management oversight and supervision functions with the business execution functions and adopts the structure of a company with

committees to strengthen oversight, supervision functions and raise the transparency of management.

Corporate Governance Organizational Chart

General	Board of	CEO	COO
Shareholders Meeting	Directors

Nomination	Compensation	Audit
Committee	Committee	Committee
L Comprised of 5	L Comprised of 5	L Comprised of 5
directors, including	directors, including	directors, including
4 outside directors	3 outside directors	4 outside directors
L Decides on	L Determines the	L Conducts audits on the
proposals regarding	compensation, etc.	execution of director
the appointment	of each director and	and executive officer
and removal of	executive officer	duties, prepares audit
directors to be		reports, and decides on
submitted at		proposals regarding the
general		election and dismissal
shareholders		of the accounting
meetings, etc.		auditor, as well as the
		disengagement of the
		accounting auditor

Risk Policy

Committee

Comprised of 5 members, including 4 directors, 3 of which are outside directors and 1 executive officer
Examines and discusses important risks, compiles the results of such deliberations, and submits recommendations to the Board of Directors in the form of a statement on comprehensive risk management

Board of	Internal Auditing
Executive Officers	Office
L Discusses	L Reports
important	directly to
matters	CEO and COO
regarding	and conducts
aspects	internal audits
including
business
strategy,
management,
and finances
concerning the
corporate
group

Audit Committee

Office

Comprised of dedicated staff to support members of the Audit Committee and performs work related to the committee

50 JPX Report 2020

Composition of the Board of Directors

The JPX Board of Directors is comprised of 14 members, including two women. To strengthen the board's functions, namely increasing the transparency and accountability of management and supervising the appropriateness of business execution, the composition of the board includes nine independent outside directors, constituting a board majority, and an independent outside director who is not involved in business execution as Chairperson.
The breakdown of the nine independent outside directors is as follows: three top executives, one legal professional, one certified public accountant, and four academics or former government officials. Each of them has considerable experience and insight in his/her respective field and contributes to a structure that allows for multi-faceted external perspectives to be readily incorporated into the management of JPX.

Board of Directors

Nomination, Compensation, and Audit Committees

As required by law, JPX has a Nomination Committee and a Compensation Committee for the purpose of ensuring transparency and objectivity in the appointment/ removal and compensation of directors and executive officers. Outside directors are in the majority for both of these committees. The appointment and removal of directors and executive officers are thoroughly deliberated and determined by the Nomination Committee and put forth for approval at general shareholders meetings, and the compensation of directors and executive officers is determined by the Compensation Committee.
JPX also has an Audit Committee, as required by law, to perform the audit function. This committee is made up of five directors (including one full-time Audit Committee member), of which four, including a certified public accountant, are independent outside directors. JPX also has an Audit Committee Office to assist the committee members in the performance of their duties.

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Areas of Expertise of

Committee Memberships

Independent Outside Directors

Board of

Name

Position and Responsibilities

Corporate

Financial

Research/

Directors

Independent

Risk

Law

Government

Technology

Nomination Compensation

Audit

outside

management

audit

Agencies

directors

policy

Tsuda Hiroki

Independent Outside Director

100%

Chairperson of the Board of Directors

11/11 Times

Kiyota Akira

Director and Representative Executive Officer,

100%

Group CEO

11/11 Times

7/7Times

5/5Times

Director and Representative Executive Officer,

100%

Miyahara Koichiro

Group Co-COO

100%

President & CEO, Tokyo Stock Exchange, Inc.

11/11 Times

5/5Times

Director and Representative Executive Officer,

Group Co-COO

100%

Yamaji Hiromi

President & CEO, Osaka Exchange, Inc.

11/11 Times

Representative Director & Chair, Chairperson of

the Board, Tokyo Commodity Exchange, Inc.

Shizuka Masaki

Director and Executive Officer

Appointed in

President & CEO, Japan Securities Clearing

June 2020

Corporation

Christina

Independent Outside Director

91%

Ahmadjian

10/11 Times

100%

5/5Times

9/9Times

Endo Nobuhiro

Independent Outside Director

91%

100%

10/11 Times

7/7Times

Ogita Hitoshi

Independent Outside Director

100%

11/11 Times

7/7Times

Kubori Hideaki

Independent Outside Director

100%

11/11 Times

7/7Times

Kohda Main

Independent Outside Director

100%

11/11 Times

9/9Times

Kobayashi Eizo

Independent Outside Director

100%

11/11 Times

100%

7/7Times

5/5Times

Minoguchi Makoto

Director

100%

11/11 Times

9/9Times

Mori Kimitaka

Independent Outside Director

100%

11/11 Times

5/5Times

9/9Times

Yoneda Tsuyoshi

Independent Outside Director

100%

11/11 Times

100%

9/9Times

Time Board of Directors

Number of items approved

spent on discussions

1,153 minutes

by the Board of Directors

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

Note: "qp" indicates the director is the chairperson of the committee. Figures represent actual performance in FY2019.

JPX Report 2020 51

4. Foundations for Sustainability

Corporate GovernanceMessages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Independent Outside Directors Committee

JPX has an Independent Outside Directors Committee	committee helps independent outside directors to better
as a corporate organ composed exclusively of part-time	perform management oversight and facilitates active
independent outside directors to allow them to exchange	discussion at Board of Directors meetings.

information and form consensus among themselves. The Independent Outside Directors Committee

	For part-time independent outside directors to exchange information and form consensus
Objectives	*The chairperson of the board, the Group CEO, and other members of management may
	participate upon the request of the committee.

Frequency of	In principle, at least twice a year
meetings	*The committee chairperson convenes meetings as needed.

	The committee chairperson convenes meetings and presides over them.
Committee	When the committee deems it necessary for ensuring smooth communication, the committee
Chairperson	chairperson may report the content of the discussions of the committee to the chairperson of the
	board, the Group CEO, and other members of management.

Risk Policy Committee

JPX has a Risk Policy Committee with the aim of	For further information on JPX's risk management
further improving its corporate governance. The role of	systems, including information on the content of
the committee, which consists mainly of outside	activities of the Risk Policy Committee, please refer to
directors, is to bring an outside perspective to risk	page 61.
management.

Evaluating the Effectiveness of the Board of Directors

At JPX, the Board of Directors analyzes and assesses its own effectiveness based on interviews with and surveys completed by all board members. The Independent Outside Directors Committee is tasked to conduct the evaluation to increase the

objectivity and transparency of the evaluation process.

For information on the evaluation process, an overview of evaluation results and other related matters, please refer to the Company's Corporate Governance Report.

Web Corporate Governance Report

https://www.jpx.co.jp/english/corporate/governance/policy/

Board Effectiveness Evaluation Cycle

		Other members		Independent	Board of	Independent
All Directors			Outside Directors		Outside Directors
	of management			Directors
			Committee		Committee


Self-assessment		Consideration of		Evaluation of	Confirmation of
by interview				evaluation,	Review
	improvements, etc.		improvements, etc.
and/or survey				improvements, etc.

52 JPX Report 2020

Training for Outside Directors

Each of the JPX outside directors has sufficient knowledge in regard to management and corporate governance thanks to their expert knowledge and experience. With the goal of helping these outside directors deepen their understanding of JPX Group's business, the company runs observation sessions at

company offices and other training based on the rulebook, etc., holds lunchtime discussion workshops where they can keep up to date on knowledge and information regarding the exchange business, and conducts training courses aimed at providing an opportunity to share opinions with external experts.

JPX of Overview .1

Director and Executive Officer Remuneration and Factors for Detemining Remuneration

Remuneration is comprised of (1) basic salary, (2) bonuses, and (3) JPX stock. The policies, etc. regarding decisions on each type of compensation are as follows:

(1) Basic salary

Basic salary is determined in accordance with each executive's position and duties as consideration for their everyday execution of duties and participation in management, and with reference to the level of executive remuneration at other companies, based on research by external expert organizations and other sources.

(2) Yearly Incentives (Bonuses)

The yearly incentive (bonus) is awarded to executive officers in proportion to net income (for the purposes of this section, "net income" refers to net income attributable to owners of the parent company as announced in the consolidated statement of income). Net income is used as the metric as it is the source of investment aimed at creating corporate value as well as the capital used in the payment of dividends to shareholders. It is also because it is appropriate to base a yearly incentive (bonus) awarded every fiscal year on the net income reported in that fiscal year. Also, to evaluate the performance of each executive officer in each fiscal year, a bonus is awarded based on evaluation of that officer's individual performance.
The yearly incentive (bonus) will not be awarded if net income is less than JPY 10 billion for a fiscal year.

Medium- to long-term incentive (stock remuneration)

The medium- to long-term incentive (stock remuneration) is paid to Executive Officers with the aim of aligning the interests of executives closer to those of shareholders, providing motivation for corporate value creation over the medium to long term, and strengthening the link between performance and compensation. JPX stock remuneration utilizes a share delivery trust framework and is comprised of a fixed amount and a performance-linked amount.
For the fixed amount, executives are issued points every fiscal year in accordance with their position, etc., and are awarded stocks corresponding to these points three years later.
For the performance-linked amount, all executives are given performance-linked base points each fiscal year. Three years later, stocks are awarded corresponding to the final tally of performance-linked points, which is calculated by multiplying the performance-linked base points with a coefficient based on the degree of achievement of certain performance conditions. The above-mentionedco-efficient is set within a 0-150% range, based on the following conditions: (i) the Company's consolidated ROE exactly three years from the issuance date of the performance- linked base points and (ii) a comparative assessment of Total Shareholder Return (TSR) and the performance of the JPX-Nikkei Index 400 (total return index) for the three-year period from the end of the fiscal year before the performance-linked base points were issued. Consolidated ROE is used as an indicator from the perspective of improving capital efficiency, while TSR is used from the perspective of improving value for shareholders.

Value Creating to Approach .2 -Strategies Creation Value-

.5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

Conditions tied to the performance-linked portion of the medium- to long-term incentive (stock remuneration)

			Consolidated ROE

		Less than 10%	10% or more, less than 14%	14% or more

Comparison of Total	Outperformed	Performance coefficient	Performance coefficient	Performance coefficient
Shareholder Return and	50%	100%	150%

the performance of the
	Performance coefficient	Performance coefficient	Performance coefficient
JPX-Nikkei Index 400	Underperformed
(total return index)	0%	50%	100%

Data Corporate and Financial

JPX Report 2020 53

4. Foundations for Sustainability

Corporate GovernanceMessages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

The Stock Remuneration System

JPX shares

purchased on

the market

Points issued in

accordance with

position, etc.

Fixed amount

Stocks

Cash

Performance coefficient

awarded

Performance-linked amount

(50%)

Fixed amount

Stocks

Cash

Performance coefficient

awarded

Performance-linked amount

(50%)

Fixed amount

Stocks

Cash

Performance coefficient

awarded

Performance-linked amount

(50%)

1st year

2nd year

3rd year

4th year

5th year

6th year

The medium- to long-term incentive (cash remuneration) is awarded to executive officers in line with the performance of consolidated ROE as set out in the 3rd Medium-Term Management Plan. This incentive is awarded on the condition that consolidated ROE is 10% or above for every fiscal year covered within the Medium-Term Management Plan (three years), and will

be maximized if either consolidated ROE for the last fiscal year of the Plan or the average consolidated ROE over the three years of the Plan is at 15% or higher. The amount of incentive for each executive officer will be decided based on the consolidated ROE figure and their respective positions.

Total Compensation Paid to Directors and Executive Officers

Classification	Number of recipients	Total amount paid

Directors	10	JPY 181 million
(of which, outside directors)	(9)	(JPY 153 million)

Executive officers	6	JPY 451 million

Notes: 1. Four Directors serving concurrently as Executive Officers do not receive compensation as Directors and are therefore not included in the number of recipients. Furthermore, one Executive Officer serving concurrently as Director of Tokyo Stock Exchange, Inc., one Executive Officer serving concurrently as Director of Osaka Exchange, Inc. and Director of Tokyo Commodity Exchange Inc., one Executive Officer serving concurrently as Director of Tokyo Commodity Exchange, Inc., and one Executive Officer serving concurrently as Director of Japan Securities Clearing Corporation do not receive compensation as Executive Officers and are therefore not included in the number of recipients.

2. The payment amounts above include the amount of basic salary, the bonus for Executive Officers, and the expenses recorded as stock remuneration, as indicated below:

(1) The amount of basic salary awarded is in accordance with the position and duties of each executive, and in consideration of their everyday execution of duties and

management participation

(2) An amount of JPY 148 million in annual incentive (bonus) for Executive Officers was determined at the Compensation Committee meeting held on April 20, 2020

(3) An amount of JPY 107 million in medium- to long-term incentive (stock remuneration) for Executive Officers has been recorded as expenses in the fiscal year under review.

54 JPX Report 2020

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit CommitteesDirectors Risk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Messages from Chairpersons of the Nomination, Compensation, and Audit Committees

Ogita Hitoshi

Chairperson of the Nomination

Committee

Outside Director

JPX plays a role as a societal infrastructure with a highly public nature, while at the same time is required to increase corporate value and the value of its products/services as a listed company. What is expected of us in terms of increasing reliability as a societal infrastructure? Are the available products and services providing the value that customers demand? I judge whether my advice as an outside director ultimately produces tangible results, from a different perspective than that of an executive officer, by asking these kinds of questions.
Executives are responsible for raising corporate value. As Chairperson of the Nomination Committee, it is my duty to select and nominate executives who can achieve this goal. To this end, I believe that it is important to accurately assess each candidate's credentials and personality, and nominate executives who will be open and objective .
Expanding derivatives trading has been considered necessary for JPX to compete in international markets, and the launch of the Comprehensive Exchange is a big step forward. The growth of the Comprehensive Exchange will be a large part of creating a "total smart exchange."

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Kobayashi Eizo

Chairperson of the Compensation

Committee

Outside Director

JPX is expected to aim for increased corporate value as a listed company in line with the expectations of stakeholders, while stably and steadily fulfilling its public role as an operator of infrastructure that supports the free economy. JPX's outside directors help to decide JPX's direction by leveraging their diverse experience and expertise to shape a future vision for JPX from various perspectives. The Compensation Committee discusses and determines appropriate compensation packages every year, based on study of the executive board's execution of duties. As part of our efforts to increase JPX's medium- to long-term corporate value in line with stakeholder expectations, we recently introduced a medium- to long-term incentive system to bring executive thinking closer to that of stakeholders.
I believe the role that JPX is expected to fulfil will be even larger after the Covid-19 outbreak is contained. Going forward, I look forward to discussions on the management plan leading to a re-evaluation of JPX's global strategy, capital policy, and management benchmarks, and I intend to do my part through flexible verification of compensation packages in line with any changes.

Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

Yoneda Tsuyoshi

Chairperson of the Audit Committee Outside Director

JPX's Audit Committee consists of four expert outside directors with diverse backgrounds and one executive director. JPX is required to stably operate financial instruments exchange markets that serve as critical infrastructure for the Japanese economy as well as demonstrate a high level of governance as parent company of TSE, which established Japan's Corporate Governance Code. The Audit Committee carries out its duties based on the understanding that fulfilling these missions forms the basis of JPX's corporate value as well as emphasizing keen risk awareness and proactive risk management. Under the 3rd Medium-Term Management Plan, JPX is entering a new stage of development, having taken a huge step forward on the Comprehensive Exchange as well as progressing on the cash equity market structure review. At the same time, with this development bringing changes in organizational structures and business scope, as well as the new environment of Covid-19 and beyond, we are seeing a shift in business procedures and communication methods. As Chairperson of the Audit Committee, I look forward to JPX developing stably and sustainably and will also fulfill my duties while keeping a close eye on risks arising from internal and external changes.

Data Corporate and Financial .5 Sustainability for

JPX Report 2020 55

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees DirectorsRisk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Directors

Tsuda Hiroki

Independent Director,

Outside Director

Chairperson of the Board of Directors

Apr. 1972 Joined Ministry of Finance

Aug. 2002 Director-General, Tokyo Customs

Jan. 2003 Deputy Vice Minister for Policy Planning and Co-ordination

Jul. 2004 Deputy Vice Minister

Jul. 2006 Director-General of the Budget Bureau Jul. 2007 Administrative Vice Minister of Finance Jul. 2008 Retired

Sep. 2008 Professor, Graduate School of Public Management, Waseda University

Jun. 2015 Outside Director and Chairperson of the Board of Directors of the Company (current position)

No. of Company shares held: 2,000 shares

Apr. 1969 Joined Daiwa Securities Co. Ltd.

		(currently Daiwa Securities Group Inc.)
	Jun. 1994 Director, Head of Tobu Area Sales Division
	May 1996 Director, Head of Bond & Finance Division
	Jun. 1997 Managing Director, Head of
		Bond & Finance Division
	Oct. 1997	Deputy President
	Apr. 1999 President, Daiwa Securities
		SB Capital Markets Co. Ltd.
		(currently Daiwa Securities Co. Ltd.)
Kiyota Akira	Jun. 2004 Deputy Chairman of the Board and
	Corporate Executive Officer,
Director and Representative	Daiwa Securities Group Inc.
Executive Officer, Group CEO	Chairman of the Institute,
Daiwa Institute of Research Ltd.

Member of the	Member of the
Nomination Committee	Compensation Committee

Member of the Risk

Policy Committee

Jun. 2008 Chairman of the Board and Corporate Executive Officer, Daiwa Securities Group Inc.

Apr. 2011 Director and Honorary Chairman Jun. 2011 Honorary Chairman

Jun. 2013 Director of the Company (current position) President & CEO,

Tokyo Stock Exchange, Inc.

Jun. 2015 Representative Executive Officer, Group CEO of the Company (current position)

Director, Tokyo Stock Exchange, Inc. (current position)

Significant Concurrent Position: Director, Tokyo Stock Exchange, Inc.

No. of Company shares held: 82,485 shares

Apr. 1979 Joined Electric Power Development

		Co., Ltd.
	Apr. 1988 Joined Tokyo Stock Exchange
	Jun. 2002 Director, General Administration
		Department, Tokyo Stock Exchange, Inc.
	Jun. 2004 Director, Information Services Department
	Jun. 2005 President, Representative Director,
		ICJ, Inc.
	Dec. 2005	Executive Officer,
		Tokyo Stock Exchange, Inc.
Miyahara Koichiro	Oct. 2007	Standing Governor,
	Tokyo Stock Exchange Regulation
Director and Representative		(currently Japan Exchange Regulation)
Executive Officer, Group Co-COO	Jun. 2009	Senior Executive Officer, Tokyo Stock
Member of the		Exchange Group, Inc.
Jan. 2013	Senior Executive Officer of the Company
Compensation Committee

Senior Executive Officer,

Tokyo Stock Exchange, Inc.

Jun. 2014 Executive Vice President of the Company

Jun. 2015 Director of the Company (current position) President & CEO, Tokyo Stock Exchange, Inc. (current position)

Nov. 2015 Executive Officer of the Company

Jun. 2020 Representative Executive Officer, Group Co-COO of the Company (current position)

Significant Concurrent Position:

President & CEO, Tokyo Stock Exchange, Inc.

No. of Company shares held: 37,777 shares

56 JPX Report 2020

Yamaji Hiromi

Director and Representative Executive Officer, Group Co-COO

Apr. 1977 Joined The Nomura Securities Co., Ltd. (currently Nomura Holdings, Inc.)

Jun. 1997 General Manager, Personnel Department

Jun. 1998 Member of the Board in charge of Investment Banking Products Division

Jun. 2000 Managing Director, Head of Global Investment Banking Division

Apr. 2002 President & CEO, Nomura Europe Holdings plc (London) and Chairman, Nomura Holding America Inc. (New York)

Apr. 2007 Executive Vice President, Global Investment Banking, in charge of Corporate Finance Division, Nomura Securities Co., Ltd.

Jun. 2013 Director of the Company (current position) President & CEO, Osaka Securities Exchange Co., Ltd. (currently Osaka Exchange, Inc.) (current position)

Nov. 2015 Executive Officer of the Company

Oct. 2019 Representative Executive Officer, Tokyo Commodity Exchange, Inc.

Dec. 2019 Representative Director & Chair, Chairperson of the Board (current position)

Jun. 2020 Representative Executive Officer, Group Co-COO of the Company (current position)

Significant Concurrent Position: President & CEO, Osaka Exchange, Inc.

Representative Director & Chair, Chairperson of the Board, Tokyo Commodity Exchange, Inc.

No. of Company shares held: 24,217 shares

JPX of Overview .1

to Approach .2 Creation Value-

Shizuka Masaki

Director and

Executive Officer

Apr. 1982 Joined Tokyo Stock Exchange

Jun. 2004 Director, Treasury Department,

Tokyo Stock Exchange, Inc.

Jun. 2005 Director, Corporate Strategy Department

Jun. 2007 Executive Officer

Aug. 2007 Executive Officer,

Tokyo Stock Exchange Group, Inc.

Jun. 2008 Executive Officer,

Tokyo Stock Exchange, Inc.

Jun. 2011 Senior Executive Officer

Jun. 2013 Managing Director

Jun. 2014 Director & Senior Executive Officer

Apr. 2016 Director & Executive Vice President

Apr. 2017 Senior Executive Vice President,

Japan Securities Clearing Corporation

Jun. 2017 Director & Senior Executive Vice President

Apr. 2020 Executive Officer of the Company (current position)

President & CEO, Japan Securities Clearing Corporation (current position)

Jun. 2020 Director of the Company (current position)

Significant Concurrent Position:

President & CEO, Japan Securities Clearing Corporation

No. of Company shares held: 27,447 shares

Value Creating -Strategies

Value Creating to Approach .3 Stakeholders with Created Value-

		Jan. 1995 Assistant Professor, Columbia
		Business School (Graduate School of
		Business, Columbia University)
		Oct. 2001 Associate Professor, Graduate School of
		International Corporate Strategy,
		Hitotsubashi University
		Jan. 2004 Professor, Graduate School of
		International Corporate Strategy
		Apr. 2010 Dean, Graduate School of
		International Corporate Strategy
		Apr. 2012 Professor, Graduate School of

Christina Ahmadjian	Commerce and Management
Jun. 2012 Outside Director, Mitsubishi Heavy
Independent Director,
	Industries, Ltd. (current position)
Outside Director
	Jun. 2014 Outside Director of the Company

Member of the	Member of the	(current position)
Compensation Committee	Audit Committee

Apr. 2018 Professor, Graduate School of Business Administration, Hitotsubashi University (current position)

Jun. 2018 Outside Director, Sumitomo Electric Industries, Ltd. (current position)

Mar. 2019 Outside Director, Asahi Group Holdings, Ltd. (current position)

Significant Concurrent Positions: Professor, Graduate School of Business Administration, Hitotsubashi University

Outside Director, Mitsubishi Heavy Industries, Ltd. Outside Director, Sumitomo Electric Industries, Ltd. Outside Director, Asahi Group Holdings, Ltd.

No. of Company shares held: 2,000 shares

Data Corporate and Financial .5 Sustainability for Foundations .4 -

JPX Report 2020 57

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees DirectorsRisk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

	Apr. 1981 Joined NEC Corporation
	Apr. 2006 Associate Senior Vice President,
		Executive General Manager of
		Mobile Network Operations Unit
	Apr. 2009 Executive Vice President
	Jun. 2009 Executive Vice President and
		Member of the Board
	Apr. 2010	President (Representative Director)
	Apr. 2016	Chairman of the Board
		(Representative Director)
Endo Nobuhiro	Jun. 2018	Outside Director of the Company
	(current position)

Independent Director,

Outside Director

Member of the

Nomination Committee

Jun. 2019 Member, Board of Directors (Outside), Sumitomo Dainippon Pharma Co., Ltd. (current position)

Chairman of the Board, NEC Corporation (non-executive) (current position) Outside Director, Tokio Marine Holdings, Inc. (current position)

Significant Concurrent Positions:

Chairman of the Board, NEC Corporation (non-executive) Member, Board of Directors (Outside),

Sumitomo Dainippon Pharma Co., Ltd. Outside Director, Tokio Marine Holdings, Inc.

No. of Company shares held: 2,800 shares

Ogita Hitoshi

Independent Director,

Outside Director

Member of the	Member of the
Nomination Committee	Independent Outside
(Chairperson)	Directors Committee
	(Chairperson)

Apr. 1965	Joined Asahi Breweries, Ltd.	Mar. 2014 Senior Adviser, Asahi Group Holdings, Ltd.
	(currently Asahi Group Holdings, Ltd.)	(current position)
Mar. 1997 Director, General Manager of	Jun. 2016 Outside Director of the Company
	Fukuoka Branch	(current position)
Mar. 2000 Managing Corporate Officer,	Significant Concurrent Positions:
	Senior General Manager of	Senior Adviser, Asahi Group Holdings, Ltd.
	Kyushu Regional Headquarters	No. of Company shares held:

Mar. 2002 Senior Managing Corporate Officer,	5,000 shares
	Senior General Manager of
	Kanshin-etsu Regional Headquarters
Sep. 2002 Corporate Officer, Vice President,
	Asahi Soft Drinks Co., Ltd.
Mar. 2003	President and Representative Director
Mar. 2006	President and Representative Director,
	Asahi Breweries, Ltd.
Mar. 2010	Chairman of the Board and
	Representative Director

Apr. 1971 Registration as Attorney-at-Law

				(current position)
				Joined Mori Sogo
				(currently Mori Hamada & Matsumoto)
			Apr. 1998	Representative, HIBIYA PARK LAW
				OFFICES (current position)
			Apr. 2001	President, Daini Tokyo Bar Association,
				and Vice President,
				Japan Federation of Bar Associations
			Jun. 2011	Outside Director,
				Tokyo Stock Exchange Group, Inc.
Kubori Hideaki			Outside Governor,
		Tokyo Stock Exchange Regulation
Independent Director,				(currently Japan Exchange Regulation)
Outside Director			Jan. 2013	Outside Director of the Company
Member of the	Member of the Risk		(current position)

Nomination Committee		Policy Committee
		(Chairperson)

Jun. 2014 Outside Director, SOURCENEXT

CORPORATION (current position)

Apr. 2015 Professor, Toin Law School

(current position)

Apr. 2018 Outside Director, Coincheck, Inc.

(current position)

Significant Concurrent Positions:

Attorney-at-law

Representative, HIBIYA PARK LAW OFFICES

Outside Director, SOURCENEXT CORPORATION

Professor, Toin Law School

Outside Director, Coincheck, Inc.

No. of Company shares held: 1,700 shares

Kohda Main

Independent Director,

Outside Director

Member of the	Member of the Risk
Audit Committee	Policy Committee

Sep. 1995 Started independently as novelist, to the present

Jan. 2003 Member of Fiscal System Council, Ministry of Finance Japan

Apr. 2004 Visiting professor, Faculty of Economics, Shiga University

Mar. 2005 Member of the Council for Transport Policy, Ministry of Land, Infrastructure, Transport and Tourism

Nov. 2006 Member of the Tax Commission, Cabinet Office, Government of Japan

Jun. 2010 Member of the Board of Governors, Japan Broadcasting Corporation

Jun. 2012 Outside Director, Japan Tobacco Inc. (current position)

Jun. 2016 Outside Director of the Company (current position)

Jun. 2018 Outside Director, MITSUBISHI MOTORS CORPORATION (current position)

Significant Concurrent Positions:

Novelist

Outside Director, Japan Tobacco Inc.

Outside Director, MITSUBISHI MOTORS

CORPORATION

No. of Company shares held: 3,200 shares

58 JPX Report 2020

Apr. 1972 Joined C. Itoh & Co., Ltd.

			(currently ITOCHU Corporation)
		Jun. 2000	Executive Officer
		Apr. 2002 Managing Executive Officer
		Jun. 2003 Representative Director, Managing Director
		Apr. 2004 Representative Director, Senior Managing
			Director
		Jun. 2004 President & Chief Executive Officer
		Apr. 2010 Representative Director, Chairman
		Jun. 2011	Director, Chairman
Kobayashi Eizo		Jun. 2013 Outside Director, OMRON Corporation
		(current position)
Independent Director,		Jun. 2015	External Director, Japan Airlines Co., Ltd.
Outside Director			(current position)
Member of the	Member of the	Jun. 2016 Outside Director of the Company
	(current position)
Nomination Committee Compensation Committee
	(Chairperson)		Chairman, ITOCHU Corporation

Apr. 2018 Senior Representative for Business Community Relations

Apr. 2020 Director Emeritus (current position)

Significant Concurrent Positions: Director Emeritus, ITOCHU Corporation Chairman, ITOCHU Foundation Outside Director, OMRON Corporation External Director, Japan Airlines Co., Ltd.

Outside Director, Nippon Venture Capital Co., Ltd. Chairman, National Federation of Corporate Taxpayers Associations

Administrative Director, The Public Interest Incorporated Foundation Tohoren Mutual Benefit Association for Specific Retirement Allowance Chairperson, Japan Overseas Educational Services

No. of Company shares held: 5,200 shares

JPX of Overview .1

Minoguchi Makoto

Director

Member of the

Audit Committee

Apr. 1984	Joined Tokyo Stock Exchange	Apr. 2017 Managing Director and Executive Officer
Jun. 2007 Director, General Administration	Jun. 2017 Director of the Company (current position)
	Department, Tokyo Stock Exchange, Inc.	Statutory Auditor, Tokyo Stock
Aug. 2007 Director, General Administration	Exchange, Inc.

	Department, Tokyo Stock Exchange	No. of Company shares held:
	Group, Inc.	8,100 shares
Jun. 2009 Director, Corporate Strategy Department
Oct. 2010	Director, Listing Examination Department,
	Tokyo Stock Exchange Regulation
	(currently Japan Exchange Regulation)
Jun. 2011	Standing Governor
Jun. 2015	Managing Director, Japan Securities
	Clearing Corporation

Value Creating to Approach .2 -Strategies Creation Value-

Mori Kimitaka

Independent Director,

Outside Director

Member of the	Member of the
Compensation Committee	Audit Committee

Apr. 1980 Joined Shinwa Accountants (currently KPMG AZSA LLC)

Jun. 2000 Representative Partner, Asahi & Co. (currently KPMG AZSA LLC)

Jun. 2004 Director of financial services, KPMG AZSA & Co. (currently KPMG AZSA LLC)

Jun. 2006 Board Member, KPMG AZSA & Co. Jul. 2011 Chairman, KPMG FS Japan

Jun. 2013 Retired from KPMG AZSA LLC

Jul. 2013 Established Mori Certified Public

Accountant Office Chairman and President,

The Japanese Institute of Certified Public Accountants

Jul. 2016 Advisor, The Japanese Institute of Certified Public Accountants (current position)

Outside Director of the Company (current position)

Jun. 2017 Outside Corporate Auditor, MITSUI & CO., LTD. (current position) Outside Corporate Auditor,

East Japan Railway Company (current position)

Jul. 2017 Outside Director, SUMITOMO LIFE

INSURANCE COMPANY (current position)

Significant Concurrent Positions:

Certified Public Accountant

Advisor, The Japanese Institute of Certified Public

Accountants

Outside Corporate Auditor, MITSUI & CO., LTD.

Outside Corporate Auditor, East Japan Railway

Company

Outside Director, SUMITOMO LIFE INSURANCE

COMPANY

No. of Company shares held: 4,000 shares

for Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

Yoneda Tsuyoshi

Independent Director,

Outside Director

Member of the	Member of the Risk
Audit Committee	Policy Committee
(Chairperson)

Apr. 1976 Joined National Police Agency

Sep. 2001 General Manager, Criminal Affairs

Department, Metropolitan Police

Department

Aug. 2003 General Manager, Kyoto Prefectural Police

Headquarters

Sep. 2007 Commissioner, Criminal Affairs Bureau

Jun. 2009 Commissioner-General's Secretariat

Oct. 2011 Deputy Director-General

Jan. 2013 Commissioner General

Jan. 2015 Retired

Jun. 2015 Outside Director of the Company

(current position)

Jun. 2017 External Audit & Supervisory Board Member,

Marubeni Corporation (current position)

Significant Concurrent Position:

External Audit & Supervisory Board Member, Marubeni Corporation

No. of Company shares held: 4,100 shares

Data Corporate and Financial .5 Sustainability

JPX Report 2020 59

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees DirectorsRisk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Japan Exchange Group, Inc. Executive Officers

Kiyota Akira		Yamaji Hiromi		Isaka Yoshihiro		Futagi Satoshi		Shizuka Masaki

Director & Representative		Director & Representative		Senior Executive Officer		Senior Executive Officer		Director & Executive Officer
Executive Officer, Group CEO		Executive Officer, Group		(Global Strategy)		(Corporate Strategy)		(Management of Japan
Miyahara Koichiro		Co-COO		Hasegawa Isao		Ishizaki Takashi		Securities Clearing Corporation)
	(Management of Derivatives
Director & Representative		Markets)		Senior Executive Officer		Executive Officer		Tabata Atsushi

Executive Officer, Group		Yokoyama Ryusuke		(General Administration and		(Management of Tokyo		Executive Officer & CFO
Co-COO			Human Resources)		Commodity Exchange, Inc.)		(Treasury, Corporate
(Management of Cash Equities		Senior Executive Officer & CIO
						Communications and Investor
Markets)		(IT Planning)						Relations)

Tokyo Stock Exchange, Inc.

Miyahara Koichiro		Yokoyama Ryusuke

President & CEO		Director & Senior Executive
		Officer
Konuma Yasuyuki		(IT Administration,
Director & Executive Vice		IT Development (Equities
	Trading, Information and
President
	Clearing) and IT Services)
(Listing, New Listings, Equities

(Client Relationship		Kiyota Akira
Management), Equities
Business Development and		Director (part-time)
Financial Literacy Support)
		Matsuzaki Hiroyuki
		Standing Statutory Auditor

Osaka Exchange, Inc.

Yamaji Hiromi		Kamiki Tatsuya

President & CEO		Director & Executive Officer
Ichimoto Hiroyasu		(IT Services)
	Maruyama
Director & Senior Executive
Officer		Masahiko
(Market Planning, Derivatives
	Standing Statutory Auditor
Business Development,

Financial Literacy Support,		Takada Atsushi1
Development of Comprehensive
Exchange and Osaka Site		Statutory Auditor
Contingency)

Tokyo Commodity Exchange, Inc.

Yamaji Hiromi		Ichimoto Hiroyasu

Representative Director & Chair,		Director & Senior Executive Officer
Chairperson of the Board		(Development of Comprehensive
Ishizaki Takashi		Exchange, General Administration,
	Business Operations)
Representative Director,		Ohishi Etsuji
President
		Standing Statutory Auditor

Japan Exchange Regulation

Hosomizo Kiyoshi2		Hirano Takeshi

President		Standing Governor
Fukuda Kazuo		(Listed Company Compliance,
	General Administration)
Managing Governor		Kagiwada Hiroshi
(Trading Participants
Examination and Inspection,		Standing Governor
Market Surveillance and		(Listing Examination)
Compliance)

Japan Securities Clearing Corporation

Shizuka Masaki		Asai Kunihiro3

President & CEO		Director (part-time)
Iwanaga Moriyuki		Izawa Nobuhiko3
Director & Senior Executive Vice		Director (part-time)
President
(JGB Clearing Services and		Ohashi Kazuhiko3
Comprehensive Exchange		Director (part-time)
Development)

Suzuki Yasushi
Director & Senior Executive Officer
(Listed Products Clearing Services
and General Administration)

Kama Kazuaki1		Hasegawa Isao		Kawai Hiroki

Statutory Auditor		Senior Executive Officer		Executive Officer
Kuroda Katsushi1		(General Administration)		(Equities, Equities Business
			Development and Financial
Statutory Auditor		Kamiki Tatsuya		Literacy Support)

Isaka Yoshihiro		Executive Officer		Takura Satoshi
	(IT Services and
		Executive Officer
Senior Executive Officer		Tokyo Site Contingency)
(Information Services)				(IT Development (Information))
	Ao Katsumi
			Hinoide Mikio
		Executive Officer
		(Listing)		Executive Officer
				(Tokyo Site Contingency)
Matsui Syunsuke1		Hasegawa Isao		Takura Satoshi

Statutory Auditor		Senior Executive Officer		Executive Officer
Yokoyama Ryusuke		(General Administration)		(IT Development (Derivatives))
	Tagaya Akira		Hinoide Mikio
Senior Executive Officer
(IT Administration,		Executive Officer		Executive Officer
IT Development (Derivatives)		(Market Planning, Derivatives		(Market Operations)
and IT Services)		Business Development,
Isaka Yoshihiro		Financial Literacy Support and
	Development of Comprehensive
Senior Executive Officer		Exchange)

(Information Services)
Peter L. Jaeger		Yamada Kazuhiko1		Hinoide Mikio

Statutory Auditor		Statutory Auditor		Executive Officer
Kuroda Katsushi1		Onosato Mitsuhiro		(Business Operations
		(Market Operations))
Statutory Auditor		Executive Officer
		(Business Operations
		(excluding Market Operations)
		and Self-Regulation)
Kawakita Hidetaka2		Fujinawa Kenichi2		Matsuzaki Hiroyuki

Governor		Governor		Auditor
Kanda Hideki2		Shimomura Shosaku
Governor		Standing Auditor

Sakata Hideki3	Suzuki Yoshihiko1			Hosomura Takehiro

Director (part-time)	Standing Statutory Auditor			Executive Officer
Futagi Satoshi	Morishita Kunihiko1			(Clearing Planning and OTC
		Derivatives Clearing Services)
Director (part-time)	Statutory Auditor			Hinoide Mikio
Yoshihara	Yanaga Masao1
		Executive Officer
Masatoshi3	Statutory Auditor			(Tokyo Site Contingency)
Director (part-time)

		Note:. 1.	Statutory Auditor (Outside)
		2.	Governor (Outside)
		3.	Director (Outside)

60 JPX Report 2020

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk ManagementInternal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Risk Management

In its approach to risk management, JPX recognizes the importance of maintaining sound and stable business operations to fulfill its public role as a market operater and continue raising corporate value.

JPX of Overview .1

Risk Management Systems

JPX faces numerous risks in the course of its operations, including risks associated with system glitches, legal matters, compensation in the event of clearing participant defaults, and administrative errors. JPX has established a Risk Policy Committee, chaired by an outside director, and a Risk Management Committee, chaired by the Group CEO, to address risk. In line with JPX's Risk Management Policy, these committees are responsible for identifying risks as well as developing and implementing measures to prevent such risks. JPX also has a system in place to ensure a swift and appropriate response when risks do or are likely to materialize.
The Risk Policy Committee consists of at least five members, the majority of whom are outside directors. As a rule, the committee is chaired by an outside director.
The Risk Management Committee is composed of core members and project members who oversee the risks of specific projects. The Group CEO (who serves as chairperson), the executive officer overseeing the General Administration Department, and the director of the department make up the core members, while the chairperson of the committee assigns project members to specific cases as they arise.

The Risk Management Policy serves to prevent risks by indicating and classifying the risks JPX faces. Departments or sections are assigned to handle the classified risks, and information on the assessments of operations and issues to be addressed are periodically brought before the Risk Policy Committee and Risk Management Committee.
Each fiscal year, the Risk Policy Committee identifies the significant risks requiring priority action in JPX.
The results of this process are submitted to the Board of Directors as recommendations in the form of a Comprehensive Risk Management Statement. JPX works to reduce the possibility of realization of the risks based on the Comprehensive Risk Management Statement and responds flexibly to risks that materialize. When a major issue occurs, the Risk Management Committee gains an overall grasp of the situation and orchestrates a concerted response by giving directions for dealing with the issues as quickly as possible. The system calls for all necessary information to be reported to management promptly and without fail.

Value Creating to Approach .2 -Strategies Creation Value-

.4Value Creating to Approach .3 -Stakeholders with Created Value-

Risk Management System
Board of Directors
Advice	Report	Report	Instruction
Risk Policy Committee				Audit Committee
• Compilation of Comprehensive Risk			• Monitoring of risk management activities
Management Statement			of the Risk Policy Committee
Risk Management Committee						Internal/externalaudits	Committee)Audit(including
• Decisions on policies related to risk management		Instruction	Instruction
• Discussions, etc. related to risk management
		Report	Report
	Divisions Responsible for Risk Handling

	Advice	Report
						Monitoring
Japan Exchange	Tokyo Stock	Osaka	Tokyo Commodity	Japan Exchange	Japan Securities
Group	Exchange	Exchange	Exchange	Regulation	Clearing Corporation
Implements risk management for its own units
Based on the classification of items that are subject to regular reporting and those that must be reported immediately,
reports are submitted to the division responsible for handling the specific type(s) of risk.
Flow of regular reports and reports submitted when risks occur	Flow of instructions and advice on response

Data Corporate and Financial .5 Sustainability for Foundations

JPX Report 2020 61

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk ManagementInternal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Risk Classification

Types of Risk	Examples
Business environment and	Economic fluctuations, legal and regulatory matters, demographic changes, technological innovation,
business strategy risk	investor trends, public opinion, and failed business choices

Accidents and disaster risk	Major earthquakes, typhoons, tsunami, epidemics, terrorism, failure/stoppage of social infrastructure,
fires, and accidents


System risk	Inadequate hardware capacity and application errors

Legal risk	Violations of laws and regulations in the course of business, business partner's failure to perform on
contracts, and the possibilities of having a relationship with anti-social forces


Financial risk	Undermined reliability of financial reporting, lack of funds, and loss or damage to assets, including
deposits


Human risk	Personnel shortage, industrial accidents, and occupational hazards

Information security risk	Information leakage, unauthorized access, and computer viruses

Operational risk	Mistakes in operational procedures and misjudgments

Risk of associated companies	Emergence of risk in group companies

Reputational risk	Decline in public reputation due to acts and statements by employees and/or third parties

Credit risk and liquidity risk
arising from obligation	Emergence of losses due to default, etc. by clearing participants
assumption business

Other risks	Risks other than those mentioned above

Significant Risks

Each fiscal year, we identify the significant risks that could affect JPX. We control the possibility of the materialization of these risks by implementing necessary preventive measures. We also implement measures to ensure that we are able to respond flexibly in the event that risks materialize.
JPX approaches risk management on two levels.
First, all group companies work to identify risks in the internal environment.
Second, there is wide-ranging discussion involving the management team about potential risk factors in the

external environment, including geopolitical risk. Based on the results of these discussions, we then examine significant risks.

Many risks are detected at the discussion stage. We examine these in detail to identify the risks that require the greatest attention in each fiscal year, on the basis of the potential impact on JPX if the risk materializes and the frequency with which such risks are likely to arise.
We then take preventive measures targeting specific significant risks.

Significant Risks

Risk Phenomena	Risk Scenarios
	• Risk to business continuity resulting from damage to social infrastructure, including power grid
	failure, such as in the event of a wide-area disaster
Risks that could impact JPX	• Risk that could affect market operations, etc. due to cyberattacks on JPX's systems
• Risk to trading continuity due to pressure on system capacity caused by abnormal market
business continuity and business
fluctuations in response to sudden short-term exchange rate movements caused by economic or
operations
political events in Japan or overseas

	• Risk of an impact on market operations, etc. as a result of workers being infected or being unable to
	commute to work due to the spread of a novel virus.

Risks that could affect JPX	• Risk of a decline in trading due to medium- to long-term market stagnation resulting from changes
business performance and	in political and economic conditions in the U.S., the EU, or other major economies
financial position	• Risk that the financial position of JPX will be impacted by a clearing participant default

62 JPX Report 2020

Systems Capacity Management

In recent years, with faster systems and the growing prevalence of co-location services, there has been an increase in the number of orders processed by JPX trading systems. In view of these changes, JPX is monitoring market trends and system usage and working to manage overall system capacity across the corporate group by utilizing projections to prepare for and prevent any system capacity issues that may arise.
Capacity management is not conducted by IT departments alone, but also by the Capacity Management Committee chaired by the CIO. The cross-

Contingency Plan

Alongside the need for exchanges to provide opportunities for trading, in order to maintain fair price formation in the market, it is also necessary for securities companies and other market participants who place orders to the exchange market to maintain a certain level of preparedness. JPX formulates contingency plans for disseminating and publishing its basic response policies when it becomes difficult to continue trading, such as

Actions on Cybersecurity

As JPX holds responsibility for key financial market infrastructure, it views cybersecurity as a significant management risk, and accordingly actively advances cybersecurity measures, as well as implementing a variety of measures to provide safe and secure services to investors and other market participants. As an example, we have built a multi-layered security system that detects and blocks any and all cyberattacks against JPX, including unauthorized access to the website and targeted emails. We have also constructed a 24-hour monitoring and response system, centered mainly around the in-house Computer Security Incident Response Team (CSIRT). This system conducts regular diagnostic checks looking for vulnerabilities in JPX security and works to improve our countermeasures to these threats.
In addition, we are working to strengthen our corporate group's capabilities in cybersecurity through the creation of cybersecurity manuals and procedures, as well as response drills held multiple times a year for a range of scenarios. At the same time, to raise awareness of

divisional committee is made up of executive officers and departments involved in market operations. Geared toward realizing even better systems, the committee monitors, analyzes, and assesses system operation conditions, works on improvements for current systems, and provides feedback on the design and development of next-generation systems. The committee employs the PDCA cycle in its activities, while reporting to management periodically and on an as-needed basis to make swift and appropriate decisions on priority or emergency issues related to system capacity.

when there is a glitch in a JPX or external system, a natural disaster or terrorist act, or when parts of the social infrastructure cease to function. For example, when trading participants that account for approximately 50% or more of securities trading can no longer participate in the market, the policy is to decide whether to suspend trading after comprehensively considering the impact on liquidity and fair and reliable price formation.

cybersecurity among employees, we are providing education through regular e-learning courses and training to combat targeted email attacks. We are also committed to working in a timely and appropriate manner with public institutions such as the Financial Services Agency, the National center of Incident readiness and Strategy for Cybersecurity, the Tokyo Metropolitan Police Department's association for responses to cyberterrorism, and the Information-technology Promotion Agency, Japan. At the same time, we have created a system to keep track of and share information on the latest trends in cybersecurity based threats, which includes sharing in-depth information with the Nippon CSIRT Association and security companies.

Cyberattacks are becoming increasingly sophisticated and precise with each passing year, so we will continue to be vigilant, conducting regular checks of our security measures and revising and reinforcing them whenever necessary.

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholders with Created Value-

JPX Report 2020 63

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk ManagementInternal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Business Continuity in Emergencies

JPX's core responsibility as a market operator within the social infrastructure is to provide reliable markets for market users to trade with confidence. Therefore, even when major risks do materialize, such as in the form of natural disasters or terrorist acts, JPX must be prepared to answer the call of society and continue operations. To be ready for such situations, JPX established its Business Continuity Plan (BCP) to define its response to materialized risks.
The basic concept of the BCP is to continue operations as far as possible even in times of emergency. If suspension is unavoidable, then the affected operations should be resumed as soon as

possible. For instance, even if a serious incident, such as a major earthquake, occurs and operations are suspended, in principle, JPX aims to resume clearing operations in about two hours and trading operations within 24 hours to prevent the loss of a trading day to the greatest extent possible.

To achieve said targets, in addition to its primary data center where operations normally take place, JPX also maintains a secondary (backup) center, which is located in a different area to avoid having both centers be simultaneously affected. If the primary center is affected by a disaster and cannot continue operations, operations are switched over to trading and other core

Procedures for Restoring Trading Operations based on BCP after Disaster Occurs

Business	Trading	To the maximum extent possible, prevent
loss of an entire trading day and aim for
Continuity Plan	Operations
full recovery within approximately 24 hours

		Business	recovery objective target
		within	approximately 24 hours

Disaster	Commence	Implement		Resume		Resume	Resume
		information
(operations	emergency				group-wide
	BCP	trading		provision
disrupted)	measures				operations
				services

System for Responding when BCP is Implemented

Securities companies and other users

Securities	Dedicated-
companies	circuit
and	other	VPN,
users	etc.
Securities
companies
and other
users

Disaster

Participant connection

Business systems

Participant connection

Core Ring

Network

arrownet

Business systems

Participant connection

JPX

When the primary center is affected by a disaster, switch-over occurs, and it is possible to continue operations at the secondary center.

64 JPX Report 2020

systems in the backup center to allow trading to resume as quickly as possible. Furthermore, in a bid to help further enhance the reliability of the Japanese market, the decision was made to construct a new secondary (backup) center away from Tokyo in the Kansai region, where in the case of a disaster such as a major large- scale earthquake in the Tokyo Metropolitan area, there would be little or no fear of damage to societal infrastructure causing a shortage of essential services such as electricity. The new secondary (backup) center is scheduled to come online progressively from FY2021.

Furthermore, in preparation for a large-scale earthquake and other wide-area disasters, the core

telecommunications network, arrownet, is designed as an optical ring network that surrounds the Tokyo metropolitan area. Even if a part of the network is severed by a disaster, transmissions will be re-routed immediately, ensuring that connections are maintained. The BCP also defines the response policy for each type of identified risk, as well as detailed plans for establishing the BCP emergency headquarters and securing personnel and communication methods. JPX reviews its BCP at least once a year and revises it accordingly in light of changes in the environment.

JPX of Overview .1

Web Business Continuity Plan

https://www.jpx.co.jp/english/corporate/governance/risk/bcp/index.html

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020 65

4. Foundations for Sustainability

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

Internal Control Systems and Compliance

Besides maintaining well-designed business operating systems for stable and appro- priate execution of business, all officers and employees observe laws and regulations and demonstrate a strong sense of ethics in the performance of their daily tasks.

Internal Control Systems

JPX has a Basic Policy on Establishment of Internal Control System and develops internal control systems based on this policy. To ensure the proper operation of business processes throughout the Group, JPX creates systems for ensuring compliance with laws and regulations, safeguarding and managing information,

managing risk of loss, ensuring efficient operations, and for internal controls. To ensure that these systems are functioning properly, the Internal Auditing Office, an independent unit that reports directly to the Group CEO, periodically confirms and assesses the status of internal controls.

Web Basic Policy on Establishment of Internal Control System

https://www.jpx.co.jp/english/corporate/governance/internal-control/index.html

Compliance Program

JPX has a Charter of Corporate Behavior in place as a set of standards for ethics and morals, which clearly states the expected corporate behavior. In order to ensure the effectiveness of internal controls, JPX

continues to increase awareness of compliance among management and employees by continually renewing internal systems, as well as through education and training.

Web Compliance Program

https://www.jpx.co.jp/english/corporate/governance/compliance/index.html

Charter of Corporate Behavior

The Charter of Corporate Behavior serves to make clear JPX's social responsibilities as an open and transparent corporation positioned in harmony with society.
The Charter states the basic policies for corporate behavior in terms of ethics and morals. It also clearly indicates JPX's investor-centric stance and reflects our commitment to being an open company.

Organizational System

The Group CEO assumes responsibility for compliance and oversees all compliance-related matters. The Group CEO is assisted by the officer responsible for compliance and the Compliance Secretariat. JPX has a Compliance Hotline in place to provide a channel for reporting information and making inquiries regarding clear or suspected violations of laws and internal rules, including against the Charter of Corporate Behavior. When certain behavior involving JPX officers or employees is suspected to be in violation of compliance,

the hotline makes it possible to detect such acts promptly from an incoming call and introduce measures and frameworks to address them.

Activities for Continued Awareness

JPX engages in a number of activities to maintain awareness of compliance issues. These include cross- divisional meetings among all staff in charge of compliance matters, distributing compliance handbooks, communicating knowledge on compliance through the intranet, and holding e-learning courses.

66 JPX Report 2020

Corporate Governance Messages from the Chairpersons of the Nomination, Compensation, and Audit Committees Directors Risk Management Internal Control Systems and Compliance PICK UP Toward ESG Disclosure based on International Debate

PICK UP Toward ESG Disclosure based on International Debate

JPX is committed to disclosing ESG information that can be used in decision-making by investors and other stakeholders. The company considers that it will be most useful to disclose with reference to frameworks which have been formulated based on international debate: in particular, the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), for which JPX has expressed its support, and the standards of the Sustainability Accounting Standards Board (SASB), which set out disclosure points for separate industries from an investor's point of view.
JPX has only just started to disclose ESG information. However, we aim to enhance our disclosure by enacting dialogue with investors and other stakeholders to understand what kind of ESG-related information is necessary, while at the same time enhancing our responses to ESG issues in a way that leads to improved corporate value for the company.
For additional information on sustainability initiatives at JPX and ESG information, please visit the JPX website.

Web Sustainability

https://www.jpx.co.jp/english/corporate/sustainability/index.html

TCFD Recommendations

Below are JPX's sustainability initiatives disclosed in line with the TCFD Recommendations published in June 2017.

JPX has established a Sustainability Committee, headed by the Group CEO, and is progressing

with analysis of the impact of ESG issues, including climate change, on the company's business

Governance/ and how to respond to those issues.

Risk Management In FY2019, the Risk Policy Committee included discussion on climate change within the process of identifying "significant risks" which are addressed by JPX Group as a priority. The Committee

reported the results of this discussion to the Board of Directors.

JPX is currently studying and discussing the possible impact of climate change on its business

Strategy over the medium to long term. As part of the Medium-Term Management Plan update carried out for FY2020, we revised our core strategies based on the importance of sustainability issues

including climate change.

SASB Standards

Below are JPX's sustainability initiatives in line with the Standards for Security and Commodity Exchanges as published by SASB in November 2018.

Topics for Disclosure as
Recommended by	Examples of JPX Initiatives
the SASB Standards
	• Corporate philosophy (p. 2)
	• Trading rules based on the principles of time priority and price priority
Promoting transparent and	https://www.jpx.co.jp/english/equities/trading/index.html
• Distribution of market information and provision of a timely disclosure
efficient capital markets	information service (TDnet)
	https://www.jpx.co.jp/english/markets/index.html
	https://www.release.tdnet.info/index_e.html
	• Publication of the Practical Handbook for ESG Disclosure (p. 31)

	• Self-regulatory operations carried out by Japan Exchange Regulation
Managing conflicts of interest	https://www.jpx.co.jp/english/regulation/index.html
	• JPX Corporate Governance system (p. 50)

Managing business continuity	● System capacity management and actions on cybersecurity (p. 63)
● Maintenance of backup centers (p. 64)
and technology risks
● Formulation of the Business Continuity Plan (p. 64)

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020 67

5. Financial and Corporate Data

Review of Operations and Financial ConditionConsolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market Data Corporate Data

Review of Operations and Financial Condition

Financial Highlights of FY2019 (IFRS)

								(JPY mil.)

		FY2015		FY2016		FY2017	FY2018	FY2019
Operating Revenue		114,776		107,885		120,711	121,134	123,688
Operating Expenses	50,925	50,185	50,902	54,111	58,532
Operating Income	66,271	59,377	71,791	69,535	68,533
Net Income Attributable to Owners of the Partner Company	44,877	42,124	50,484	49,057	47,609
EBITDA	77,791	71,595	82,505	82,568	85,683
Dividends per Share1 (JPY)	50.0	47.0	67.0	70.0	54.0
ROE	18.2%	16.4%	19.0%	17.6%	16.3%

Note: 1. The amounts shown reflect the stock split (2 for 1) that became effective on October 1, 2015. The dividend figure for FY2017 includes a commemorative dividend of JPY 10 per share, and the dividend figure for FY2018 includes a special dividend of JPY 15 per share.

Average Daily Trading Value/Volume of Main Products

			FY2015		FY2016		FY2017		FY2018		FY2019

Cash Equities (trading value)1	JPY 3,412.6 billion		JPY 2,998.7 billion		JPY 3,446.2 billion		JPY 3,306.8 billion		JPY 3,081.1 billion
TOPIX Futures (trading volume)	93, 824 contracts		89,966 contracts		105,287 contracts		103,896 contracts		121,034 contracts
Nikkei 225	Futures2 (trading volume)	230,435 contracts		184,250 contracts		200,646 contracts		205,046 contracts		232,821 contracts
Nikkei 225	Options3 (trading value)	JPY 30.7 billion		JPY 24.8 billion		JPY 27.0 billion		JPY 23.0 billion		JPY 26.8 billion
10-year JGB Futures (trading volume)	34,658 contracts		28,569 contracts		35,978 contracts		42,087 contracts		39,640 contracts

Notes: 1. Average daily trading value of common stocks on TSE 1st/2nd Sections, Mothers, JASDAQ, TOKYO PRO Market, and ETFs/ETNs, REITs, etc. in auction and off-auction trading.

Includes trading volume of Nikkei 225 mini, which is calculated using a conversion factor of 1/10.
Excludes weekly options.

Monthly Average Daily Trading Value/Volume of Main Products

(JPY tril.) L Cash Equities (trading value)1 (left axis)

TOPIX Futures (trading volume) (right axis)

Nikkei 225 Futures (trading volume)2 (right axis)

(10,000 contracts)

5																	FY2019				5.0		60

																				57.4
4						3.9										(Apr. 2019-Mar. 2020)					50

				3.6																3.6
	3.4					3.5	3.5
3.3
3.2											3.2											40
	3.1							3.1	3.1					3.1		3.1
3		2.9					3.0	2.9				2.9		2.9

													2.7			2.6
						29.5		29.4						2.5	2.5				32.3
																	30
																		27.4
					24.8																20.6
						19.7		19.8		23.5		22.5			22.9
2										22.0		21.3
	20.4					19.2	18.4					19.0				20
17.1		16.4	15.2	18.6					15.3						17.2
								13.5			15.8		10.1
13.1

					10.0											19.6
1	5.9	15.8	6.7	5.5		6.9		7.5	6.9	17.6	7.0	8.1	16.8	6.5	8.7	8.1	7.6	17.0	7.9			10

6.1
0	5	6	7	8	9	10	11	12	1	2	3	4	5	6	7	8	9	10	11	12	1	2	3	0
4
2018									2019												2020

Notes: 1. Average daily trading value of common stocks on TSE 1st/2nd Sections, Mothers, JASDAQ, TOKYO PRO Market, and ETFs/ETNs, REITs, etc. in auction and off-auction trading. 2. Includes trading volume of Nikkei 225 mini, which is calculated using a conversion factor of 1/10.

68 JPX Report 2020

Adoption of IFRS

JPX has adopted the International Financial Reporting Standards (IFRS) to facilitate comparisons of financial results of JPX with those of other exchanges located overseas and to increase investor convenience.

Summary of Performance

In FY2019 (from April 1, 2019 to March 31, 2020), JPX recorded operating revenue of JPY 123,688 million (up 2.1% year on year) and operating expenses were JPY 58,532 million (up 8.2% year on year). As a result, JPX recorded operat- ing income of JPY 68,533 million (down 1.4% year on year ) and income before income tax of JPY 69,095 million (down 2.4% year on year).
In addition, net income attributable to owners of the parent company after tax was JPY 47,609 million (down 3.0% year on year).

Overview of Performance

Operating Revenue

Operating revenue in FY2019 increased by 2.1% from FY2018 to JPY 123,688 million.

Breakdown of Changes in Operating Revenue

(JPY mil.)

				Information	Others
				Services
	Clearing	Listing	+948	(258)		123,688
	Services
	Services
	+296
	+1,638

	Trading

	Services
121,134	(71)


• Cash equities: -2,301
• Derivatives: +996
	• Income from new and		Year on year
• Adjustments arising from
consolidation of Tokyo		additional listings: -29		+2,553
Commodity Exchange:		• Annual listing fees: +325		(+2.1%)
+1,234

FY2018	FY2019
(full year)	(full year)

JPX Report 2020 69

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

5. Financial and Corporate Data

Review of Operations and Financial ConditionConsolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market Data Corporate Data

Operating Revenue

				FY2015		FY2016		FY2017	FY2018	FY2019
				Amount (JPY mil.)		Amount (JPY mil.)		Amount (JPY mil.)	Amount (JPY mil.)	Amount (JPY mil.)	Ratio

Trading Services Revenue	52,471	45,703	51,766	48,660	48,589	39%
	Transaction Fees	43,294	36,523	42,430	39,248	39,118
		Cash Equities	30,783	26,168	30,652	28,084	25,757	66%1
		Financial derivatives	12,510	10,354	11,777	11,163	12,255	31%1
			TOPIX Futures	1,934	1,841	2,106	2,031	2,254
		Nikkei 225 Futures (incl.	5,136	4,231	4,691	4,523	5,101
			Nikkei 225 mini)

			Nikkei 225 Options	3,543	2,834	3,149	2,563	2,888
			10 -year JGB Futures	1,597	1,329	1,672	1,945	1,811
			Others	298	117	157	99	200
		Commodity derivatives	-	-	-	-	1,104	3%1
	Basic Fees	1,061	1,044	1,043	1,017	1,020
	Access Fees	5,165	4,985	4,851	4,800	4,701
	Trading System Facilities	2,854	3,066	3,341	3,499	3,646
	Usage Fees

	Others	95	84	98	95	101

Clearing Services Revenue	23,140	21,454	23,473	24,788	26,427	21%

Listing Services Revenue	13,250	12,903	14,547	14,025	14,322	12%
	Initial/Additional Listing Fees	5,330	4,317	5,002	3,994	3,965
	Annual Listing Fees	7,919	8,586	9,544	10,030	10,356

Information Services Revenue	17,706	18,112	19,878	21,029	21,977	18%

Others		8,208	9,711	11,045	12,630	12,371	10%

Total		114,776	107,885	120,711	121,134	123,688	100%

Note: 1. Figures indicate percentage of Transaction Fees.

Reference: Major Stock Indices

As of March 31	FY2015	FY2016	FY2017	FY2018	FY2019

TOPIX	1,347. 20 pts.	1,512.60 pts.	1,716.30 pts.	1,591.64 pts.	1,403 .04 pts.
Nikkei 225	JPY 16,758.67	JPY 18,909. 26	JPY 21,454.30	JPY 21,205.81	JPY 18,917.01
JPX-Nikkei 400	12,161.79 pts.	13,522.45 pts.	15,180.09 pts.	14,176.82 pts.	12,573 .18 pts.

70 JPX Report 2020

1. Trading services revenue

Trading services revenue consists of "Transaction Fees" based on the value of securities traded or the volume of financial and commodity derivatives traded, "Basic Fees" based on the trading participant's type of trading qualification, "Access Fees" based on the number of orders, "Trading System Facilities Usage Fees" based on the types of trading system facilities used, and other similar fees.
For the fiscal year ended March 31, 2020, trading services revenue maintained the same level year on year at JPY 48,589 million.

Trading services revenue

(JPY mil.)

60,000
						48,589
40,000
20,000
0	(FY)	2015	2016	2017	2018	2019

JPX of Overview .1

Creating to Approach .2 Strategies Creation Value-

2. Clearing services revenue

Clearing services revenue is comprised of clearing fees related to the assumption of obligations of financial instrument transactions carried out by Japan Securities Clearing Corporation, the assumption of obligations of commodity transactions carried out by Japan Commodity Clearing House Co., Ltd., and other similar fees.
For the fiscal year ended March 31, 2020, JPX recorded clearing services revenue of JPY 26,427 million (up 6.6% year on year).

Clearing services revenue

(JPY mil.)

30,000						26,427

25,000
20,000
15,000
10,000
5,000
0	(FY)	2015	2016	2017	2018	2019

Value -

.4Value Creating to Approach .3 -Stakeholders with Created Value-

3. Listing services revenue

Listing services revenue is comprised of "Initial/Addi- tional Listing Fees" that are received based on the issue amount when a company initially lists or when a listed company issues additional shares, and "Annual Listing Fees" which are made up of fees received from listed companies based on their market capitalization and other similar fees.
For the fiscal year ended March 31, 2020, listing services revenue increased 2.1% year on year to JPY 14,322 million due to an increase in annual listing fees.

Listing services revenue

(JPY mil.)

15,000						14,322
10,000
5,000
0	(FY)	2015	2016	2017	2018	2019

Data Corporate and Financial .5 Sustainability for Foundations

JPX Report 2020 71

5. Financial and Corporate Data

Review of Operations and Financial ConditionConsolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market Data Corporate Data

4. Information services revenue

Information services revenue consists of market information fees, which are comprised of revenue related to the provision of market information to information vendors, etc., as well as revenue related to the index business, and revenue related to the provision of corporate action information and other information.
For the fiscal year ended March 31, 2020, JPX recorded information services revenue of JPY 21,977 million (up 4.5% year on year) due mainly to increases in market information fees and index business revenue.

Information services revenue

(JPY mil.)

24,000						21,977
18,000
12,000
6,000
0	(FY)	2015	2016	2017	2018	2019

5. Other operating revenue

Other operating revenue includes the following main items:
- Usage fees for arrownet, which connects trading, market information, and other systems to trading participants and other users;
- Usage fees related to co-location services that allow trading participants, information vendors, and other users to install devices in the system center for the purpose of improving trade execution efficiency by shortening order transmission time, etc.;
- Revenue from provision of services including trading systems; and
- Revenue from system development and operations conducted by consolidated subsidiary TOSHO SYSTEM SERVICE CO., LTD.
For the fiscal year ended March 31, 2020, JPX recorded other operating revenue of JPY 12,371 million (down 2.1% year on year) due mainly to a decrease in revenue from provision of services including trading systems.

Other operating revenue

(JPY mil.)

15,000						12,371

10,000
5,000
0	(FY)	2015	2016	2017	2018	2019

72 JPX Report 2020

Operating Expenses*1* 2

During FY2019, personnel expenses increased to JPY 17,512 million (up 5.6% year on year).
Real estate-related expenses increased to JPY 4,275 million (up 8.6% year on year).
System maintenance and operation expenses include expenses related to maintenance and management/operations of various systems including the cash equities and derivatives trading systems. System maintenance and operation expenses increased to JPY 12,071 million (up 5.8% year on year).
Depreciation and amortization increased to JPY 13,354 million (up 9.6% year on year).
Other operating expenses increased to JPY 11,318 million (up 13.3% year on year).

Breakdown of Changes in Operating Expenses

(JPY mil.)

JPX of Overview .1

Approach .2 Value-

Personnel

Expenses

+927

54,111

	System	Depreciation &
	Maintenance &	Amortization
Real	Operation	+1,170
Estate-Related	Expenses
Expenses	+657

+336

Increased expenses were mainly system- related due to:

• Development of Kansai backup center

• Start of accelerated amortization in connection with TOCOM integration (from Aug. 2019)

• Upgrades to arrowhead (Nov. 2019)

Other

+1,328 58,532

Financial advisory fees, etc. in connection with TOCOM integration

Year on year

+4,420

(+8 . 2%)

Value Creating to -Strategies Creation

to Approach .3 Value-

FY2018	FY2019
(full year)	(full year)

Operating Expenses

								(JPY mil.)

	FY2015* 3	FY2016		FY2017		FY2018	FY2019
Personnel Expenses	16,437		15,614		16,329		16,584	17,512
Real Estate-Related Expenses	4,620		4,062	3,904	3,939	4,275
System Maintenance and Operation Expenses	11,923		10,813	12,100	11,413	12,071
Depreciation and Amortization	9,973		10,983	9,431	12,184	13,354
Other	7,970		8,711	9,136	9,989	11,318

Total	50,925		50,185	50,902	54,111	58,532

Notes: 1. The new accounting standard for leases under IFRS is applied from Q1 FY2019, and consequently, an amount previously included under "Real estate-related expenses" is now included under depreciation. For the purpose of comparison, this amount is included under "Real estate-related expenses" in these columns.

In March 2019, the OTC clearing system was transferred from TOSHO SYSTEM SERVICE to Tokyo Stock Exchange. With that, an amount which was previously recorded as system maintenance and operation expenses is now recorded as depreciation and amortization expenses. For ease of comparison, the corresponding expenses from the same period the previous year have also been reclassified into depreciation and amortization expenses.
Starting FY2015, a portion of expenses relating to subsidiary TOSHO SYSTEM SERVICE Co., Ltd. is included under "System Maintenance & Operation Expenses" rather than "Other."

Basic Policy for Allocation of Profit

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 following purposes:
• Maintaining sound financial health as a financial instruments exchange group;
• Preparing for risks as a clearing organization; and
• Enabling the corporate group to pursue investment opportunities to raise the competitiveness of its markets as they arise. In line with this policy, the dividends for FY2020 are expected to be JPY 48 per share (JPY 24 per share at the end of the second quarter). (As of April 2020)

JPX Report 2020 73

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating -Stakeholderswith Created

5. Financial and Corporate Data

Review of Operations and Financial Condition Consolidated Statement of Financial PositionConsolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market Data Corporate Data

Consolidated Statement of Financial Position

						(JPY mil.)
				As of March 31,		As of March 31,
				2019	2020

	Assets
		Current assets
		Cash and cash equivalents	63,891	71,883
		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 clearing participants	3,795,086	6,549,099


3		Specified assets for legal
		guarantee funds	490	762


			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
			Property and equipment	7,293	14,798
			Goodwill	67,374	67,374
			Intangible assets	33,435	35,045
			Retirement benefit assets	5,872	5,642
			Investments accounted for
			using the equity method	12,474	14,703
5		Specified assets for default
		compensation reserve funds	27,948	27,948


			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

	(JPY mil.)
As of March 31,	As of March 31,
2019	2020

Liabilities and equity

Liabilities
Current liabilities

	Trade and other payables	4,421	6,643
	Bonds and loans payable	32,500	32,500

1			Clearing business		60,329,672
		financial liabilities	49,886,377


2			Deposits from clearing		6,549,099
		participants	3,795,086

3		Legal guarantee funds	490	762

4			Trading participant security		8,248
		money	8,384

			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
		Bonds and loans payable	19,946	19,953
			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
			Share capital	11,500	11,500
			Capital surplus	39,716	39,716
			Treasury shares	(1,213)	(1,548)
			Other components of equity	7,688	5,602
6		Retained earnings	227,317	242,958

Total equity attributable to owners of the parent

company	285,009	298,228
Non-controlling interests	6,441	7,146

Total equity	291,450	305,375

Total liabilities and equity	54,069,405	67,286,302

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.

Collateral that JSCC and JCCH require clearing participants to deposit to cover any loss JSCC or JCCH incur in the event a clearing participant defaults.

Collateral that TSE, OSE and TOCOM require trading participants to deposit to cover any loss incurred by an entrustor of securities trading, etc. in the event a trading participant defaults.

Collateral that TSE and OSE require trading participants to deposit to cover any loss TSE and OSE incur in the event a trading participant defaults. Reserve funds to cover losses resulting from the clearing business.

This figure includes the amount of reserve funds in the above 5.

74 JPX Report 2020

Review of Operations and Financial Condition Consolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive IncomeConsolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market Data Corporate Data

Consolidated Statement of Income/ Consolidated Statement of Comprehensive Income

Consolidated Statement of Income

		Fiscal year ended
		March 31, 2019
Revenue
	Operating revenue	121,134
	Other revenue	248
	Total revenue	121,383
Expenses
	Operating expenses	54,111
	Other expenses	16
	Total expenses	54,127
Share of income of investments accounted for using
the equity method	2,279
Operating income	69,535
Financial income	1,333
Financial expenses	82
Income before income tax	70,786
Income tax expense	21,253
Net income	49,533
Net income attributable to
Owners of the parent company	49,057
	Non-controlling interests	476
	Net income	49,533
Earnings per share
	Basic (JPY)	91.58
	Diluted (JPY)	-

(JPY mil.)

Fiscal year ended

March 31, 2020

123,688

975

124,663

58,532

58,587

2,457

68,533

665

103

69,095

20,781

48,314

47,609

705

48,314

88.91

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Value Creating to Approach .3 -Stakeholders with Created Value-

Consolidated Statement of Comprehensive Income

(JPY mil.)

Fiscal year ended	Fiscal year ended
March 31, 2019	March 31, 2020

Foundations .4

Net income

Other comprehensive income

Items that will not be reclassified to profit or loss
Net gain (loss) on revaluation of financial assets measured at fair value through other comprehensive income
Remeasurements of defined benefit plan
Share of other comprehensive income of investments accounted for using the equity method

Other comprehensive income, net of tax

Comprehensive income

49,533

48,314

87	1,930
(102)	(49)
(0)	0
(14)	1,881
49,518
50,195

Financial .5 Sustainability for

Comprehensive income attributable to
Owners of the parent company	49,042	49,490
Non-controlling interests	476		705
Comprehensive income	49,518	50,195

Data Corporate and

JPX Report 2020 75

5. Financial and Corporate Data

Review of Operations and Financial Condition Consolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in EquityConsolidated Statement of Cash Flows Economic Data/Market Data Corporate Data

Consolidated Statement of Changes in Equity

									(JPY mil.)

			Equity attributable to owners of the parent company

							Other components of equity

							Net gain (loss) on
							revaluation of financial
							assets measured
							at fair value through		Remeasurements of
							other comprehensive
	Share capital		Capital surplus		Treasury shares		income		defined benefit plan

Balance as of April 1, 2018	11,500	39,716	(953)	10,816		-
Net income	-		-		-		-		-
Other comprehensive income, net of tax	-		-		-	87	(102)
Total comprehensive income	-		-		-		87		(102)
Acquisitions of treasury shares	-		-	(264)		-		-
Dividends paid	-		-		-		-		-
Transfer from other components of equity to
retained earnings	-		-		-	(3,215)	102
Other	-		-	4		-		-
Total transactions with the owners	-		-		(260)		(3,215)		102
Balance as of March 31, 2019	11,500		39,716		(1,213)		7,688		-
Net income	-		-		-		-		-
Other comprehensive income, net of tax	-		-		-		1,930		(49)
Total comprehensive income	-		-		-	1,930	(49)
Acquisitions of treasury shares	-		-	(350)		-		-
Dividends paid	-		-		-		-		-
Transfer from other components of equity to
retained earnings	-		-		-	(4,016)	49
Other	-		-		15		-		-
Total transactions with the owners	-		-		(334)		(4,016)		49
Balance as of March 31, 2020	11,500	39,716	(1,548)	5,602		-
									(JPY mil.)

	Equity attributable to owners of the parent company

	Other components of
	equity						Non-controlling


	Total		Retained earnings		Total		interests		Total equity

Balance as of April 1, 2018	10,816	212,691	273,771	5,965	279,736
Net income	-	49,057	49,057	476	49,533
Other comprehensive income, net of tax	(14)		-	(14)		-	(14)

Total comprehensive income	(14)	49,057	49,042	476	49,518
Acquisitions of treasury shares	-		-	(264)		-	(264)
Dividends paid	-	(37,544)	(37,544)		-	(37,544)
Transfer from other components of equity to
retained earnings	(3,113)	3,113		-		-		-
Other	-		-	4		-	4

Total transactions with the owners	(3,113)	(34,430)	(37,805)		-	(37,805)

Balance as of March 31, 2019	7,688	227,317	285,009	6,441	291,450
Net income	-	47,609	47,609	705	48,314
Other comprehensive income, net of tax	1,881		-	1,881		-	1,881

Total comprehensive income	1,881	47,609	49,490	705	50,195
Acquisitions of treasury shares	-		-	(350)		-	(350)
Dividends paid	-	(35,935)	(35,935)		-	(35,935)
Transfer from other components of equity to
retained earnings	(3,966)	3,966		-		-		-
Other	-		-	15		-	15

Total transactions with the owners	(3,966)	(31,968)	(36,270)		-	(36,270)

Balance as of March 31, 2020	5,602	242,958	298,228	7,146	305,375

76 JPX Report 2020

Review of Operations and Financial Condition Consolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash FlowsEconomic Data/Market Data Corporate Data

Consolidated Statement of Cash Flows

	Fiscal year ended
	March 31, 2019

Cash flows from operating activities
Income before income tax	70,786
Depreciation and amortization	12,196
Financial income	(1,333)
Financial expenses	75
Share of income of investments accounted for using
the equity method	(2,279)
(Increase) decrease in trade and other receivables	439
Increase (decrease) in trade and other payables	(628)
(Increase) decrease in retirement benefit assets	83
Increase (decrease) in retirement benefit liabilities	339
Other	(1,073)

Subtotal	78,606

Interest and dividends received	1,546
Interest paid	(75)
Income taxes paid	(27,298)

Cash flows generated from operating activities	52,778

Cash flows from investing activities
Payments into time deposits	(147,300)
Proceeds from withdrawal of time deposits	120,100
Purchase of property and equipment	(4,143)
Purchase of intangible assets	(9,542)
Proceeds from sales of investment securities	9,741
Proceeds from redemption of investment securities	1,000
Payments for acquisition of subsidiaries	-
Other	77

Cash flows used in investing activities	(30,066)

Cash flows from financing activities
Proceeds from loans payable	9,000
Repayments of loans payable	(9,000)
Repayments of lease liabilities	-
Dividends paid	(37,544)
Purchase of treasury shares	(264)

Cash flows used in financing activities	(37,809)

Net increase (decrease) in cash and cash equivalents	(15,097)

Cash and cash equivalents at the beginning of the year	78,999

Effect of changes in exchange rate on cash and cash equivalents	(10)

Cash and cash equivalents at the end of the year	63,891

(JPY mil.)

Fiscal year ended

March 31, 2020

69,095

16,499

(665)

(2,457)

(5,246)

420

230

(424)

77,560

899

(96)

(21,482)

56,881

(117,400)

113,100

(1,199)

(12,379)

11,585

(3,165)

(9,434)

9,000

(9,000)

(3,125)

(35,935)

(350)

(39,411)

8,035

63,891

(43)

71,883

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

JPX Report 2020 77

5. Financial and Corporate Data

Review of Operations and Financial Condition Consolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market DataCorporate Data

Economic Data/Market Data

Stock Market Performance

(JPY)

40,000	ADTV during	Bubble peak	ADTV during


	bubble era JPY 1 tril.	JPY 38,915	IT bubble JPY 0.9 tril.
35,000	(Dec. 1986-Feb. 1991)	(Dec. 29, 1989)	(Jan. 1999-Nov. 2000)

30,000

25,000

20,000

15,000

10,000

5,000

Nikkei 225 (left axis) LL TSE 1st Section average daily trading value (ADTV) (right axis) Note: The highest and lowest prices of the Nikkei 225 are based on closing prices.

Derivatives Trading Volume and Ratio of Night Session Trading

(mil. contracts)

Jul. 2011Jul. 2011

80Night sessionNight sessionlaunchedlaunched (until 3:00(untilJST3:00the JSTnexttheday)next day)

70
				Jul. 2010
60		Oct. 2008	Trading hours extended
		(until 23:30 JST)
50	Sep. 2007	Trading hours extended
(until 20:00 JST)
	Evening session launched

40	(until 19:00 JST)

	Jul. 2006
30	Nikkei 225 mini launched

10
0	2005	2006	2007	2008	2009	2010	2011	2012

Monthly trading volume (left axis) Ratio of night session trading (right axis) Note: Total trading volume for all financial derivatives

78 JPX Report 2020

(JPY tril.)

IT bubble peak JPY 20,833 (Apr. 12, 2000)

ADTV between Japan postal reform snap election and global ﬁnancial crisis JPY 2.7 tril.

(Sep. 2005-Sep. 2008)

Post-crisis bottom

JPY 7,054

(Mar. 10, 2009)

ADTV in FY2019 JPY 2.6 tril. (Apr. 2019-Mar. 2020)

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

JPX of Overview

Value Creating to Approach .2 -Strategies Creation Value-

14 15 16 17 18 19 20

Value Creating to Approach .3 with Created Value-

							(%)
							60
			Jul. 2016				50
			Trading hours extended
			(until 5:30 JST the next day)
							40
							30
							20
							10
							0
2013	2014	2015	2016	2017	2018	2019	2020

JPX Report 2020 79

Data Corporate and Financial .5 Sustainability for Foundations .4 -Stakeholders

5. Financial and Corporate Data

Review of Operations and Financial Condition Consolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market DataCorporate Data

IPOs in Japan

(companies)
120
								104
100					98				98

				91		91
							85
80
60		54	57

40	37
23
20
0
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
									(FY)

Financing by Listed Companies

(JPY tril.)

FY2010 saw an increase in large ﬁnancing deals by ﬁnancial institutions looking to strengthen their capital bases.

4
3
2
1
0
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
									(FY)

Offerings to shareholders L Public offerings (including IPOs)
Private placements L Warrants and stock options exercised
Preferred stocks, etc. L Convertible bonds

Note: Excluding straight bonds (domestic and foreign)

ETF/ETN Trading Value

(JPY tril.)									(issues)
80									250
									200
60
									150
40
									100
20
									50
0									0
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
									(FY)

L Trading value (left axis) Number of ETFs/ETNs (right axis)

REIT Trading Value

(JPY tril.)									(issues)
20									70
									60
15									50

									40
10
									30
5									20

									10
0									0
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
									(FY)

L Trading value (left axis) Number of REITs (right axis)

80 JPX Report 2020

Market Position

Domestic Market Capitalization,

Stock Trading Value Rankings

New York Stock Exchange														23.3

									9.0

Nasdaq
											13.0
												14.2

Tokyo Stock Exchange
					6.2
					5.1

Shanghai Stock Exchange
				5.1
								7.8

Hong Kong
				4.9
Exchanges & Clearing		1.8
Euronext
			4.7
	1.9

London Stock Exchange
			4.2
Group		1.8
				3.4								LL

Shenzhen Stock Exchange										Domestic market capitalization
										11.3
												(USD tril.)

TMX Group			2.4										LL
		1.4											Stock trading value

Saudi Stock											(USD tril.)
	2.4
Exchange (Tadawul)	0.2

0	5			10	15	20	25	(USD tril.)

Note: Market capitalization of domestic stocks as of the end of Dec. 2019 Stock trading value includes only auction and electronic trades in 2019.

Source: WFE statistics

Derivatives Volume Rankings

National Stock Exchange of India																	6.0
CME Group																4.8

B3															3.9

Intercontinental Exchange														2.3

Eurex													2.0

CBOE Holdings												1.9

Nasdaq											1.8

Korea Exchange										1.6

Moscow Exchange									1.5

Shanghai Futures Exchange								1.5

Dalian Commodity Exchange							1.4

Zhengzhou Commodity Exchange						1.1

BSE India						1.0

Miami International Holdings				0.4

Hong Kong Exchanges & Clearing				0.4

Istanbul Stock Exchange			0.4

Japan Exchange Group			0.4

Multi Commodity Exchange of India		0.3

Taiwan Futures Exchange	0.3

ASX	0.3


0		1	2		3	4	5	6 (bil. contracts)

Note: Trading volume in 2019. JPX trading volume combines figures from Osaka Exchange and Tokyo Commodity Exchange.

Source: Futures Industry Association

JPX of Overview .1

Value Creating to Approach .2 -Strategies Creation Value-

Approach .3 Value-

Competitive Landscape of Main Products

Other stock exchanges

0.1%

OTC		Tokyo Stock
8.4%	Japan's	Exchange1
	cash equity	86.4%
PTS2	trading value
in FY2019
5.1%

Notes: 1. Total value of auction and off-auction trading of common stocks on TSE 1st/2nd Sections, Mothers, JASDAQ, and TOKYO PRO Market, ETFs/ ETNs, REITs, etc.

2. The figure for PTS is the total of figures for SBI Japannext and Chi-X Japan. Sources: TSE, SBI Japannext, Chi-X Japan, and JSDA statistics

Chicago Mercantile

Exchange

9.9%

		Osaka
Singapore	Nikkei 225	Exchange
Exchange	futures	73.1%
17.0%	trading volume
	in FY2019

Note: Conversion factors of 1/10 for OSE mini, 1/2 for SGX large

(incl. USD-denominated),1/10 for SGX mini, and 1/2 for CME USD- and JPY-denominated contracts were used in calculations.

Sources: Statistics from each exchange

Sustainability for Foundations .4Value Creating to -Stakeholderswith Created

Gold Derivatives Volume Ranking

Commodity Exchange								109

Istanbul Stock Exchange							57

Shanghai Futures Exchange						46

Moscow Exchange				20

Multi Commodity Exchange of India			11

Tokyo Commodity Exchange			11

Thailand Futures Exchange		8

Pakistan Mercantile Exchange	1

India International Exchange	1

Hong Kong Exchanges & Clearing	1


0	20	40	60	80	100	120

Data Corporate and Financial .5

Note: Total volume of gold futures and gold options in 2019

Source: Futures Industry Association

(Unit: Millions)

JPX Report 2020 81

5. Financial and Corporate Data

Review of Operations and Financial Condition Consolidated Statement of Financial Position Consolidated Statement of Income/Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Economic Data/Market Data Corporate Data

Corporate Data (as of March 31, 2020)

Corporate Information

Company Name: Japan Exchange Group, Inc.

Number of Directors: 14 directors, 10 executive officers (as of June 17, 2020)

Location of Head Office: 2-1Nihombashi-kabuto-cho, Chuo- ku, Tokyo 103-8224, Japan

Foundation:	April 1, 1949
Amount of Capital:	JPY 11,500 mil.

Number of Employees: 1,208 (consolidated)
Japan Exchange Group, Inc.	223
Tokyo Stock Exchange, Inc.	420
Osaka Exchange, Inc.	142
Tokyo Commodity Exchange, Inc. 50
Japan Exchange Regulation	188
Other consolidated subsidiaries	185

Business Description: Management and administration of a financial instruments exchange holding company group, and other ancillary businesses

Information on the Corporate Group

JPX consists of seven subsidiaries and three companies accounted for under the equity method, and its primary operations are the provision and operation of exchange-traded financial instruments markets.
Specifically, these include operations such as (i) providing market facilities for securities trading, securities index futures trading, securities options trading, commodity futures trading, and commodity index futures trading, (ii) publishing market quotations and ensuring the fairness of securities trading, etc. and (iii) providing financial instruments obligation assumption services, etc.

Japan Exchange Group, Inc. [Management and administration of subsidiary ﬁnancial instruments exchanges and a subsidiary self-regulatory organization]

100.0%

Tokyo Stock Exchange, Inc. [Market operations]

100.0%

TOSHO SYSTEM SERVICE CO., LTD. [Systems development, etc.]

50.0%

35.0%

ICJ, Inc. [Operation of electronic voting platform for institutional investors]

Tosho Computer Systems Co., Ltd. [System operations]

100.0%

24.6%

Subsidiary

Osaka Exchange, Inc. [Market operations]

Tokyo Commodity Exchange [Provision and operation of the market]

Japan Exchange Regulation [Self-regulatory operations]

Japan Securities Clearing Corporation [Clearing operations for trading in marketable securities]

Japan Commodity Clearing House3 [Obligation assumption services for commodities trading]

Japan Securities Depository Center, Inc. [Book-entry transfer and custody operations for securities]

Companies accounted for under the equity method

Notes: 1. Percentages indicate share of voting rights.

Class A shares: 99.2% / Class B shares: 100.0% / Class C shares: 60.4% / Class D shares: 52.9%
On July 27, 2020, Japan Commodity Clearing House Co., ltd. (JCCH) merged with Japan Securities Clearing Corporation (JSSC) and JCCH was dissolved accordingly.

Website

About JPX	Investor Relations
https://www.jpx.co.jp/ (Japanese)	https://www.jpx.co.jp/corporate/investor-relations/(Japanese)
https://www.jpx.co.jp/english/ (English)	https://www.jpx.co.jp/english/corporate/investor-relations/(English)

82 JPX Report 2020

Stock Information

Stock Code: 8697

Listed Market: Tokyo Stock Exchange (1st Section)

Business Year: April 1 to March 31

Annual General Shareholders Meeting: June

Record Date: March 31 for Annual General Shareholders Meeting and for Year-end dividend and September 30 for Interim dividend

Number of Shares
per Share Unit:	100 shares
Number of Shares:	Total number of shares authorized to
	be issued: 2,180,000,000 shares
	Total number of shares issued:
	536,351,448 shares

Number of Shareholders: 55,147

JPX of Overview .1

JPX's Shareholders

Distribution of Shareholders	Major Shareholders

Individuals and Others					No. of	Shareholding
3.20%									Shares Held	Ratio (%)
				Financial		1	The Master Trust Bank of Japan, Ltd. (Trust Account)	32,784,300	6.11
Foreign
				2	Japan Trustee Services Bank, Ltd. (Trust Account)	23,489,500	4.38
				Institutions
Corporations
					3	SMBC Nikko Securities Inc.	19,228,400	3.59
and Others					28.52%
					4	Japan Trustee Services Bank, Ltd. (Trust Account 7)	14,572,600	2.72
41.32%	shares issued

Securities		5	NORTHERN TRUST CO. (AVFC) SUB A/C NON TREATY	14,424,513	2.69
Other	536,351,448
	Companies	6	THE BANK OF NEW YORK 134104	13,157,100	2.45

Corporations					and Others
					7	Japan Trustee Services Bank, Ltd. (Trust Account 5)	11,527,700	2.15
in Japan					23.61%
3.35%						8	JP MORGAN CHASE BANK 385151	9,431,300	1.76


							9	STATE STREET CLIENT OMNIBUS ACCOUNT OM02	7,687,200	1.43
							10	MUFG Bank, Ltd.	7,557,000	1.41

Note: JPX does not hold any treasury shares

JPX Stock Price (rebased to 100 on April 1, 2019)

	JPX		TOPIX									L Trading Volume (right axis) (mil. shares)
160														6
140														5

120
100														4

80														3
60														2

40
20														1

	0	4		5	6	7	8	9	10	11	12	1	2	3	0

							2019						2020

About JPX Logo

The Logo expresses dynamic and global growth and development.
The four rising bars represent the Four C's of our creed-adopting a "Customer First" approach of prioritizing customer needs, building "Credibility" and public confidence, pursuing "Creativity" in innovative solutions, and

achieving "Competency" by harnessing employee potential.

JPX Report 2020 83

Value Creating to Approach .2 -Strategies Creation Value-

Data Corporate and Financial .5 Sustainability for Foundations .4Value Creating to Approach .3 -Stakeholderswith Created Value-

2-1Nihombashi-kabuto-cho,	Corporate Communications
Chuo-ku, Tokyo 103-8224, Japan	Tel: +81-3-3666-1361 (Switchboard)

Printed in Japan

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Japan Exchange Group Inc. published this content on 26 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2020 08:34:03 UTC

Delayed Japan Exchange Other stock markets 02:00:00 2024-05-01 am EDT			5-day change	1st Jan Change
3,557 ^JPY	-4.05%		-8.32%	+19.24%

Apr. 30	Japan Exchange Group's Attributable Profit Up 31% in Fiscal Year 2024	MT
Apr. 29	Kikkoman Lifts Year-End Dividend as Fiscal 2024 Attributable Profit Jumps 29%	MT

Japan Exchange Group, Inc.

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