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September 2006

Update : Dec. 01, 2006


1. Outline of Plan for Constructing Next-Generation System

The TSE reported on the interim circumstances regarding construction of the next-generation system last July. Having held energetic debates with many working-level personnel since then, the TSE has now drafted a final outline of the plan for constructing the next-generation system.

In this outline there are four points in the basic concept for constructing the next-generation system: first, the TSE will ensure adequate capacity and scalability to facilitate trading. For example, the system will be able to respond appropriately within a week should the predetermined conditions for expansion be realized. The second point is to realize a high level of speediness by reviewing the system specifications and trading rules. Specifically, the current target for response time is below 10 milliseconds for sending an order acceptance message. The third point is to design a system with a high level of flexibility to respond in a short period of time to the listing of new financial products or the addition or alteration of trading rules and regulations. For example, the TSE will construct a system that will respond to the extension of trading hours and establish a framework under which the system is able to appropriately monitor new trading including algorithm trading. Finally, the fourth point is to aim to ensure an extremely high system activity rate of over 99.999%, as the exchange system provides an important backbone of the social infrastructure and is expected to work correctly at all times. As such, the TSE will also newly develop a back-up site at the same time.

The TSE will construct the next-generation system in line with the above mentioned concept. Ultimately, the TSE aims to realize the world's highest level of performance and function. To realize this goal, it will be necessary to review the current system specifications and trading rules adequately. To be specific, the TSE will make efforts to enhance processing efficiency, such as improving methods of sending/receiving order messages and simplifying the content of messages. For the trading systems, the TSE will simplify execution rules and loosen requirements for matching conditions so as to reduce excessive burdens on the system.

At the same time, the TSE will review tick sizes, daily price limit and quote parameters of a special quote in order to facilitate executions as some have expressed a desire to improve the trading rules. Furthermore, half-day trading sessions will be abolished so as to reduce the burden on system operations, etc. In addition to revising the trading rules, etc., the TSE will launch a service for providing market information, such as complete order information, on a real-time basis.

The TSE held the application document screening for the next-generation trading system developer competition from August 22nd until last weekend. The competition attracted a great deal of public attention with the number of applicants totaling approximately 20 companies, including European / Asian companies as well as SI vendors in Japan. As a result of the application document screening, the TSE selected six companies from among the applicants. These six companies have moved to the initial selection. The TSE is scheduled to decide the developer in the final selection by the end of the year at the latest.

2. Revision of the IT Master Plan

The TSE published the IT Master Plan in tandem with the new medium term management plan last March. Taking into account the fact that a plan for constructing the next-generation system has taken shape, the TSE drew up a revised version of the IT Master Plan by employing the concept of "EA" (Enterprise Architecture) connecting management with IT.

In this revised version, there are six themes identified as key issues. First, the TSE will strengthen our corporate structure with regards to system development and operations. To be specific, one major theme is to develop a corporate structure that integrates operations that are currently performed separately according to system, and to improve the quality and operation of the systems. Other important themes include constructing the next-generation system, augmenting current system capacity, constructing an information-related integrating system, constructing a back-up site, and replacing the whole derivatives trading system with a new one. The TSE will conduct these themes one by one in the near future.

The TSE will promote the construction of our systems from the perspective of comprehensive optimization connecting management with IT so as to maximize the reliability, convenience, and efficiency of the market.

3. Partial Revisions to Special Treatment for REITs with Adjustments Made in REIT Certificate Listing Rules

With regards to the partial revisions to special treatment for REITs accompanying the adjustments made in REIT certificate listing rules, The TSE announced the basic outline of the rules last July and gathered public opinion on the subject. Taking these opinions into account, the TSE has decided to make formal regulations out of this basic outline after making necessary revisions.

4. Others

The TSE will hold an international CRO symposium and an international CRO conference at the Hotel Okura on November 6 and 7. The TSE is scheduled to invite Mr. Richard Ketchum, CRO of the New York Stock Exchange, to deliver a keynote speech on efforts for strengthening self-regulatory functions and panel discussions will be held.

The TSE will invite chief regulatory officers from securities exchanges across the world to join the international CRO conference to discuss each country's efforts and international cooperation.


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