Overview of Japan Exchange Group and recent developments in Japanese capital market 1 October 2015 Japan Exchange Group, Inc. © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved Establishment of JPX The January 2013 merger combined the complementary strengths of TSE and OSE in the cash equity and derivatives markets. JPX aims at market expansion and improved efficiency to improve user convenience and raise competitiveness. 【Tokyo Stock Exchange Group】 【Osaka Securities Exchange】 • A global leader boasting a comprehensive • Largest derivatives market in Japan with exchange centered on the TSE 1st Section, leading Nikkei 225 futures and options TOPIX futures and JGB futures • Operates the JASDAQ venture market • Vertically integrated group offering listing, • Japan’s only listed exchange trading, and clearing & settlement services • Dominant domestic stock market with strong brand image Japan Exchange Group Akira Kiyota, Group CEO Cash Equities Trading Derivatives Trading Self-Regulation Clearing Japan Exchange Japan Securities Clearing Tokyo Stock Exchange Osaka Exchange Koichiro Miyahara, Hiromi Yamaji Regulation Corporation President & CEO President & CEO Takafumi Sato Hironaga Miyama President President & CEO Change in trade/corporate names : Osaka Securities Exchange → Osaka Exchange (March 24, 2014), Tokyo Stock Exchange Regulation → Japan Exchange Regulation (April 1, 2014) © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 2 Markets and Products on JPX Listing examination and administration Self-Regulation Japan Exchange Group Regulation Listing Listing rules, corporate code Cash Equity Cash Equity Derivatives Trading Pro Markets Trading Trading Market operator (Venture Market) Timely disclosure Data, index calculation Trading Market surveillance, participant monitoring Tokyo Stock Exchange, Osaka Exchange Clearing cash equity/derivatives trades, Clearing (Cash Equity, Derivatives, OTC) Clearing and OTC derivatives Japan Securities Clearing Corporation Settlement (Cash Equity) Settlement Securities settlement Japan Securities Depository Center Subsidiary Affiliate Cash Equity Market Derivatives Market (Tokyo Stock Exchange) (Osaka Exchange) More than ETF/ETNs Equity Derivatives Fixed-Income Derivatives 3,400 Issues 217 Issues 1st Section (blue chips) REITs TOPIX Futures / mini JGB Futures (5/10/20yr) 2nd Section 53 Issues Nikkei 225 Futures / mini Mini-JGB Futures (10yr) Markets for Emerging Nikkei/Dividend Futures Options on 10-yr. JGB companies Listed JPX-Nikkei 400 Futures Futures Infrastructure Funds TOPIX Options etc. Market for Professionals (planned) Nikkei 225 Options Equity Options etc. As of the end of Aug. 2015 © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 3 Securities Markets in Japan (2014) There are 4 exchanges and 2 PTSs in Japan. JPX occupies more than 90% of market share. OTC, 4.08% Others, 0.02% PTS, 5.24% JPX, 90.66% Sapporo Securities Exchange Trading Value: JPY 11 bn. Fukuoka Stock Exchange Trading Value: JPY 27 bn. Japan Exchange Group, Inc. JapanTrading ExchangeValue ：322,867 Group, bil. Inc.JPY TradingTSE: 310,887 Value: bil. JPY 643,106 bn. OSE: 11,981 bil. JPY Nagoya Stock Exchange, Inc. Trading Value: JPY 131 bn. Source : JSDA and JPX © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 4 JPX’s Position in Relation to Major Exchanges (Cash Equity) Value of Share Trading (USD tn.) 35 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 30 25 20 15.9 15 12.2 10 6.1 5.9 5.4 5 2.0 1.5 1.5 1.5 1.4 0.7 0.2 0 NYSE NASDAQ Shanghai Shenzhen JPXJPX Euronext Hong Kong London Germany Korea ASX SGX Market Capitalization (End of Years) (USD tn.) 25 19.4 20 15 10 7.0 4.4 3.9 5 3.3 3.2 2.8 2.1 1.7 1.3 1.2 0.8 0 NYSE NASDAQ JPXJPX Shanghai Euronext Hong Kong LSE Shenzhen DB ASX KRX SGX Source: World Federation of Exchanges © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 5 JPX’s Position in Relation to Major Exchanges (Derivatives) Rank Exchange Region 2014 Volume 1 CME Group North America 3,442,766,942 2 Intercontinental Exchange NA / Europe 2,276,171,019 3 Eurex Europe 2,097,974,756 4 National Stock Exchange of India Asia 1,880,362,513 5 BM&FBovespa Latin America 1,417,925,815 6 Moscow Exchange Europe 1,413,222,196 7 CBOE Holdings North America 1,325,391,523 8 Nasdaq OMX North America 1,127,130,071 9 Shanghai Futures Exchange Asia 842,294,223 10 Dalian Commodity Exchange Asia 769,637,041 11 BSE Asia 725,841,680 12 Korea Exchange Asia 677,789,082 13 Zhengzhou Commodity Exchange Asia 676,343,283 14 Hong Kong Exchange & Clearing Asia 319,577,388 15 Japan Exchange Asia 309,732,384 16 JSE Securities Exchange (South Africa) Other 304,003,143 17 ASX Group Asia 244,070,858 18 China Financial Futures Exchange Asia 217,581,145 19 Taiwan Futures Exchange Asia 202,227,653 20 BATS Exchange North America 201,985,667 Source : FIA © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 6 Cash Market - Trading Volume - Average Daily Trading Value more than doubled in 2013- Aug.2015 vs. 2011-2012. Overseas investors have had the highest participation in Japanese market but the retail participation ratio has rebounded after ‘Abenomics’. Daily Average Trading Value of Cash Equity Market Trading Value by Investor type in 2014 (Jan. 2011 – Aug. 2015) (TSE 1st Section) (JPY tn.) Mr. Abe (JPY) Integration of became Cash equity Others 4.5 Prime 25,000 market Minister Japanese 5.4% Institutional 4 6.8% Nikkei 225 Index(Right Axis) 20,000 3.5 Trading Value (Left Axis) 3 Broker Prop 15,000 desk in 2.5 Japan 13.5% Overseas 2 Daily Average Investor JPY 2.82 Trillion 10,000 (2013 – Aug. 2015) 56.8% 1.5 Japanese Retail 1 17.4% 5,000 Daily Average 0.5 JPY 1.34 Trillion (2011-2012) 0 0 Source: JPX © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 7 Derivative Market - Trading Volume - Consolidated derivatives markets under OSE (Mar. 24, 2014) Facilitated trading of a wide range of derivatives products on a single platform Launched Nikkei 225 Weekly Options (May 2015) Trading Participants in OSE: 84 securities firms, and 27 banks (* Banks trade Government bond futures and Government bond futures options only.) Daily Average Contract of Derivatives Market Trading Value by Investor type in 2014 (Jan. 2011 – Aug. 2015) (Index Futures* in OSE Market) (thou. contract.) 2,500 Japanese Integration of Others Institutional Derivatives Broker Prop 2% 1% Market desk in Japan 2,000 7% 1,500 Japanese Retail 17% 1,000 Overseas Daily Average 1.41 Million contracts Investor (2013 - Aug. 2015) 500 72% Daily Average 916.8 Thousand contracts (2011 - 2012) 0 *Nikkei225 Futures, Nikkei225 mini Futures, TOPIX Futures and mini-TOPIX Futures Source: JPX © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 8 Increasing Trading Value of ETF/ETN products Trading value of ETF/ETN market increased dramatically after 2013. The Retail ratio for TSE ETF market is higher than the ratio for the TSE 1st section. Daily Average Trading Value of ETF/ETN Market (on auction) Trading Value by Investor type in 2014 (Jan. 2012 - Aug. 2015) (ETF/ETN market) (JPY bn.) 250 Mr. Abe Integration became of Cash Prime Equity Others Minister Market Japanese Institutional 3% 6% 200 Broker Prop desk in Japan Daily Average 150 JPY 133.6 Billion 8% (2013 – Aug. 2015) Overseas Investor 48% 100 Japanese Retail 34% 50 Daily Average JPY 10.5 Billion (2012) 0 Source: JPX © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 9 Increasing Trading Value of REIT products The improving real estate market has contributed to a 280% jump in average daily trading value since Jan, 2013. AUM has also increased rapidly, making the JPX J-REIT market the third largest REIT market in the world. Daily Average Trading Value of REIT Market Market Cap (as of Dec, 2014) (Jan. 2012 - Aug. 2015) (JPY bn.) (pt) 60,000 2,000 J-REIT Index(Right Axis) Trading Value (Left Axis) 50,000 1,500 SGP, 6.2Others, 16.6 40,000 CAN, 6.2 FRA, 7.9 30,000 1,000 UK, 8.0 US, 98.5 Daily Average JPY 36.4 Billion JPN, 10.6 (2013 – Aug. 2015) 20,000 AUS, 10.8 500 10,000 Daily Average JPY 13.0 Billion (2012) 0 0 Source: Bloomberg Source: JPX © 2015 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved 10 These materials are prepared solely for the purpose of providing information regarding Japan Exchange Group Inc., and as such, they are 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. These materials contain forward-looking statements. These statements are based on our assumptions and beliefs in light of the information currently available to us and are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those we currently anticipate. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of these materials. We disclaim any obligation to update any of the forward-looking statements contained in these materials to reflect future actual events or developments.