Tokyo Stock Exchange (TSE)
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Overview
Currently, there are six stock exchanges in Japan – Tokyo, Osaka, Nagoya, Sapporo, Fukuoka and JASDAQ (over the counter) securities exchanges. Stock exchanges used to be membership organizations consisting of securities companies, however, with the amendment of the Securities and Exchange Law in 2000, the stock exchanges are authorized to change their status as joint-stock companies. The Tokyo Stock Exchange, the Osaka Securities Exchange, the Nagoya Stock Exchange, and the JASDAQ Securities Exchange have already converted their status as joint-stock companies.
Tokyo Stock Exchange (TSE)
Tokyo Stock Exchange Co. Ltd. was established on May 15, 1878 and began trading in June the same year. The Hiroshima and Niigata regional exchanges merged with the TSE in March 2000.
In 2005, the TSE had approximately a 91% share of the total value of all trading on the domestic stock exchanges. The TSE is split into the First Section, Second Section, Mothers Section (high growth and emerging stocks), and Foreign Equity Section with the Second Section trading mainly newly listed companies. Every year the TSE reviews the securities listed on the Second Section to see if they meet the listing criteria in the First Section and if so, the stock will be allowed to transfer from the Second Section to the First Section.
As of December 29, 2006 there were 1,738 stocks were listed on the First Section, 491 on the Second Section, 187 stocks on the Mothers Section including 25 foreign stocks (23 foreign stocks listed on First Section and 2 foreign stocks listed on Mothers).
The TSE is currently in discussion with nine major exchanges regarding the creation of a Global Equity Market with a capitalization in excess of USD20 trillion. The exchanges involved are: New York Stock Exchange, Hong Kong Exchanges and Clearing, Australian Stock Exchange, Toronto Stock Exchange, Bolsa Mexicana de Valores, Bolsa de Valores de São Paulo and Euronext (Amsterdam, Brussels and Paris Exchanges).
Trading System
Trading is electronic. Orders are matched by open auction with precedence given to sale orders at the lowest prices and purchase orders at the highest prices (time precedence issued for same price orders). Orders are conveyed to the trading floor by computer order-routing systems:
* Stock Trading System for stocks
* Bond Trading System for bonds
ToSTNET-1 (TSE Trading Network System) is a computerized off-hours trading system for large block orders and basket cross orders. ToSTNET 2 is the trading system for closing price orders and VWAP orders. All transactions are fed into the TSE’s computer system and are disseminated instantly to members’ offices.
In February 2003, the TSE also appointed Japan Securities Clearing Corporation (JSCC) as its clearing organization for futures and options transactions. With this appointment, clearing and settlement of all transactions on the TSE are unified under a single organization, thus further improving convenience and efficiency.
The TSE has adopted a daily price limit system, and special bid/offer quote measures, which act as “circuit breakers” to prevent excessive short term price volatility.
Recently, TSE has announced its plan to revamp its system in conjunction to the recent system failure due to sharp increase in trading volume, it will increase its processing capacity up by 40% to 7 million executed orders by May 2006. Also, in conjunction with its findings on system malfunction related to the erroneous orders which took place in December 2005, TSE has reviewed its Market Supervision Framework in order to take swift measures in case that the bourse has received any abnormal order(s).
Trading Hours
Cash products - Auction
Morning Session 9:00-11:30
Afternoon Session 12:30-15:00
Cash products - ToSTNeT
8:20-17:30 (*Single stock trading)
Futures - Auction
Stock price index futures
Morning Session 9:00-11:35
Afternoon Session 11:45-15:15
T+1 16:30-23:30
Futures - Auction
JGB futures
Morning Session 8:45-11:02
Afternoon Session 12:30-15:02
T+1 15:30-23:30
Futures - ToSTNeT
Stock price index futures
Regular Session 8:20-16:00
T+1 16:20-23:30
Futures - ToSTNeT
JGB futures
Regular Session 8:20-15:15
T+1 15:25-23:30
Options (OP) - Auction
Individual securities OP
Morning Session 9:00-11:30
Afternoon Session 12:30-15:10
Options (OP) - Auction
Stock price index OP
Morning Session 9:00-11:30
Afternoon Session 11:45-15:10
T+1 16:30-23:25
Options (OP) - Auction
JGB futures OP
Morning Session 8:45-11:00
Afternoon Session 12:30-15:00
T+1 15:30-23:25
Options (OP) - ToSTNeT
Individual securities OP
Regular Session 8:20-16:00
Options (OP) - ToSTNeT
Stock price index OP
Regular Session 8：20-16：00
T+1 16:20-23:30
Options (OP) - ToSTNeT
JGB futures OP
Regular Session 8:20-15:15
T+1 15:25-23:30
Pre-open 8:45 to 9:00 am
Morning Session 9:00am to 11:00am
Restricted Period 11:30am to 12:30am
Afternoon Session 12:30pm to 3:30pm
T+1 Session 3:30pm to 6:00pm
Last trading day of contract
Pre-open 8:45am to 9:00am
Day Session 9:00am to 11:00am
ISIN Yes
Instruments
Equities: Ordinary shares, preferred shares, warrants, preferred subscription certificates, Exchange Traded Fund (ETF), Real Estate Investment Fund (REIT), listed investment trusts
Debt: Public bonds, convertible bonds, government bonds (JGBs), municipal bonds, bank debentures, corporate bonds, samurai bonds (foreign bonds in JPY), shogun bonds (issued in domestic market by foreign institutions in foreign currency)
Money Market: Certificates of deposit, commercial paper, treasury bills, finance bills, bankers acceptances, gensaki, REPO
Other: Unit-type investment trusts, open-type investment trusts, bond investment trusts, stock investment trusts
Board Lots
Equities: Shares are traded in Units. The number of shares per unit is determined by the issuing company, ranges from 1 to 3,000 shares.
Debt:
Government Bonds: Minimum lot - JPY 50,000 par value
Convertible Bonds: JPY 500,000 or JPY 100,000 par value
