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April 2006

Update : Aug. 30, 2006

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1. Emergency System Augmentation Measures

TSE has drawn up the specifics for system capacity augmentation, the outline of which was published in February of this year.


First, for the stock / convertible bond trading system, we will increase the capacity for orders per day from the current 9 million to 12 million beginning May 22.


For the clearing system, we will increase the capacity for executions per day from the current 5 million to 8.4 million beginning May 8. Originally, we anticipated to augment the system to 7 million executions in May, but we decided to implement the plan ahead of schedule.


We also plan to continue working to augment the market information system by the end of the year. TSE will publish details on the timeframe, etc., as soon as they are drawn up.


We at TSE are committed to continue exerting our utmost efforts to secure the trust of the market through system augmentation and other measures. We ask for your understanding and support in this matter.

2. March, 2006 Earnings Report

In TSE's group earnings report for the period ending March 31, 2006, operating revenue increased 31.7% from last period to JPY 69.893 billion, reflecting the increase in the number of transactions in the market. As a result, operating profit was approximately 1.5 times that of the last period at JPY 28.751 billion, current profit was JPY 29.949 billion, and net profit for the period, with excludes taxes, etc., was JPY 18.832 billion.

3. Executive Personnel Shift

At the meeting of the Board of Directors on April 25th of this year, TSE decided on the candidates for Executive to be discussed at the regular meeting of shareholders scheduled for June this year and the subsequent Board of Directors meeting.


The current CIO and Executive Officer Yoshinori Suzuki was nominated as standing Board member, and three people - Mr. Yasuhiro Sato from Kirin Brewery Co., Ltd., lifestyle and economic journalist Ms. Nobuko Takahashi, and Mr. Charles Lake from American Family Life Assurance Company of Columbus (Aflac, Inc.) - were nominated as external directors.


Furthermore, in consideration of their experience as Executive Officers, the titles of current Executive Officers Toshitsugu Shimizu and Tomoyoshi Uranishi have been changed to Senior Executive Officer.


Also, Taizo Nishimuro was named as a candidate for Chairman/CEO at the Board of Directors meeting in March of this year, but from a corporate governance standpoint, it is not desirable for one person to hold both the position of President/CEO - who leads the execution of business activities - and the position of Chairman of the Board of Directors - who is in the position of monitoring the execution of business activities. In consideration of this, the candidacy was revised to President/CEO only, and the position of Chairman will remain open for the time being.

4. Partial Revision, Etc. of Advisory Committee Regulations to Strengthen the Function of the Self-Regulation Committee

This is a revision made to strengthen the function of the Self-Regulation Committee, one of TSE's Advisory Committees. The contents are comprised broadly of two parts.


The first part is "strengthening the independence of the Self-Regulation Committee." TSE will commission as members of the committee people who are deemed to be capable of making decisions independent of TSE Executive Officers, trading participants, listed companies, large shareholders, and other stakeholders so that there are no conflict of interest concerns. Moreover, the number of committee members will be reduced to within 9 from the present 15 in order to increase the maneuverability of the Committee.


The second part is "expanding the areas subject to advisory by the Self-Regulation Committee." In addition to the areas of market surveillance and trading participant inspection advised on until this point, listing examination, steps taken against improper disclosure of company information by listed companies, and delisting-related areas will also be made subject to advisory. Also, except for cases of emergency or in which the content is minor, TSE will also require advance advisory by the Self-Regulation Committee whenever a resolution is made by the Board of Directors with regards to these areas.


TSE plans to implement this measure at the regular General Shareholders' Meeting scheduled for June 22 of this year.

5. Partial Revision, Etc. of TSE Business Regulations Relating to Disclosure of Erroneous Order Information

This measure is a regulation revision based on the "System Adjustments Relating to Erroneous Orders" structural outline announced on March 22 of this year.


Implementation is scheduled for May 1 for the information disclosure aspect, and October 1 for the order administration framework development aspect, taking into consideration the time required for trading participants to prepare system response measures and develop the internal framework.

6. Partial Revision, Etc. of TSE Business Regulations With the Enactment of the Company Law

This measure is a regulation revision based on the "Adjustments to Listing System, Etc. Accompanying Enactment of Company Law" structural outline announced on March 22 of this year. Implementation is scheduled for May 1 of this year.

7. Towards Full-Fledged Introduction of XBRL Into Consolidated Earnings Digests

XBRL is the abbreviation for eXtensible Business Reporting Language - a next generation standard language for financial information which has unique characteristics such as suitability for data processing and multilingual compatibility.


TSE has made many various efforts towards diffusion and introduction of XBRL, such as being the first in the world to practically apply the language in the exchange's Timely Disclosure network (TDnet) in July of 2003. TSE has made it our basic strategy to fully introduce XBRL into consolidated earnings digests and other information by 2008 in order to improve investor convenience and other market functions by maintaining an environment in which earnings information is even easier for investors to use. We will proceed to consider further details in the future in accordance with this basic strategy.


Also, in order to raise awareness and support the introduction of XBRL in Japan, TSE has created an XBRL site on our home page, and offers users an opportunity to experience XBRL through trial publication of XBRL consolidated earnings digest data.

8. Development of a Customized Index That Takes Into Account Corporate Social Responsibility (CSR)

TSE has decided to calculate a custom index (i.e. an order-made stock price index in which the requests of specific users are incorporated in calculation - these indices have different qualities than those such as TOPIX that are aimed at an unspecified number of users) that integrate the element of CSR into calculation.


TSE currently calculates the "TOPIX 1000 Float" custom index, which is comprised of 1000 issues that are selected based on liquidity and market capitalization. The specific method by which the element of CSR will be integrated is by excluding from this index those component issues that are deemed to be lacking in a legal and/or ethical sense of responsibility, the effects of which have a significant impact. The name of the index will be changed to "TOPIX 1000 CSR," and implementation is scheduled for fall of this year.

9. Convening of Japan-China Securities Conference

China and Japan already share a close economic bond, but have reached a level in which the relationship between the securities markets in both countries should truly deepen from now on. With this in mind, TSE will hold the Japan-China Securities Conference, inviting institutions involved in administration and establishment of markets in Japan and China to participate with the purpose of deepening mutual understanding between related parties, as well as provide an arena to display to Japanese investors, etc. various opinions on capital exchange between the two countries.


TSE anticipates the participation of over 200 attendants who are associated with business between China and Japan, such as people from Japanese securities companies, auditors, law offices, and companies related to the network of Chinese residents of Japan.

10. Acquirement of Information Security Management Standard BS7799-2 / ISMS ver. 2.0 Certification

As a business that provides the highly public service of a securities exchange, TSE has made many efforts in safety measures, such as formulating an information security policy and a business continuation plan (BCP).


On April 10 of this year, TSE was the first major exchange in the world to acquire certification for the Information Security Management System (ISMS) international standard. On the same day, TSE was also the first exchange in the country to acquire certification for the "ISMS compatibility evaluation system" domestic standard.

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