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May 2007

Update : Jun. 08, 2007

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1.Selection of Candidates for Officers, Etc. and Partial Revisions to Organizational Structure

The TSE has selected the following people as candidates for TSE's Senior Executive Officers: Mr. Hiroyuki Iwakuma, and Mr. Hironaga Miyama, both of whom currently work as executive officers. Also, Mr. Masaki Shizuka, the current director of the Corporate Planning Department, and Mr. Kiyoyuki Tsuchimoto, the current director of the Listing Department, have been selected as candidates for executive officers. These four people are scheduled to assume the posts on June 22, 2007. In addition, Mr. Eisuke Nagatomo will retire as managing director at the completion of the annual general shareholders meeting to be held on June 22, 2007.

As for directorships, etc. of the self-regulatory corporation, Mr. Atsushi Shimizu, a professor of Toin University of Yokohama Law School, will serve as outside director. Mr. Koichiro Miyahara, a current executive officer of the TSE, and Mr. Kiyoyuki Tsuchimoto, the current director of the Listing Department of the TSE, have been selected as directors. Also, Mr. Kenji Sato, the current director of the Listing Examination Department of the TSE, and Mr. Toshiaki Katsushima, a current statutory auditor of the TSE, have been selected as auditors. The executives of the self-regulatory corporation will be selected separately as required by law.

The purposes of the partial revisions to the organizational structure are to smoothly transfer from the current system to a new one, slated for October 2007, strengthen the IT promotion system, and further promote social contribution activities through the "TSE Academy", etc.

The outline of the restructuring is as follows: the current Market Operation Unit will convert to the Market Service Unit, in which the Customer Service Division will be newly established. Under the Customer Service Division, the Listing Services Department and the Trading Participants Services Department will be set up. The Listing Services Department will prescribe listing rules, plan the listing of new financial products, collect listed companies' corporate information, and conduct the operations currently carried out by the existing Listing Promotion Department.

The TSE will strengthen the IT promotion system by establishing the IT Development Department and the IT Services Department under the System Unit through separating the development and operations of the systems.

A portion of operations managed by the current Listing Department will be transferred to the Listing Services Department which will be newly established under the Customer Service Division, and at the same time, the name of the current Listing Department will change to the Listed Company Compliance Department. The department will be in charge of disciplinary actions for violation of listing rules, items related to delisting examinations, etc.

Under the Corporate Management Unit, the International Planning Department, the Corporate Communications Department, and the CSR Promotion Department will be newly set up.

With these structural changes, the Market Service Unit and the Self-Regulation Unit will jointly conduct operations.

2.Adjustments to Trading Participant Rules Accompanying the Enactment of the Financial Instruments and Exchange Law

The Financial Instruments and Exchange Law will come into effect most likely in September 2007. In tandem with the enactment of the law, the TSE will make technical revisions over the entire span of the rules regarding the Trading Participant System, particularly in the wording of the rules. Implementation of the revisions will be timed to coincide with the enactment of the law next September, before which the Exchange will set forth a period for suggestions and comments by the public.

3. 6th Annual General Shareholders Meeting

The TSE voted at the board of directors meeting held on May 22nd to convene the 6th Annual General Shareholders Meeting at the "TSE Hall" at 10 a.m. on Friday, June 22, 2007. The agenda of the shareholders meeting will include "Establishment of a Holding Company by Stock Transfer", "Disposal of Surplus Money", and "Selection of Board Members". The TSE will send invitation notice of the meeting to its shareholders by the end of May 2007.

4. Progress in Global Strategies

Although there has been a nascent trend towards mergers, alliances, etc. among US and European exchanges for some time now, we can see that convergence on an international scale has been gaining momentum since last year with the announcement of a business alliance between the New York Stock Exchange (NYSE) and Euronext. As other mergers, alliances, etc. between exchanges are certain to pose a significant threat for the TSE, the Exchange has become keenly aware of the necessity to proactively develop global strategies in order to not be left behind in the global community. Over the past year, the TSE has improved its market infrastructure, such as strengthening self-regulatory functions and augmenting system capacity on one hand, and energetically worked to deepen ties and develop relationships with overseas exchanges on the other.

As for exchanges in Asian countries, the TSE has signed a Memorandum of Understanding (MOU) on joint cooperation to promote cross-border trading with Korean Exchange, Inc. (KRX) in July 2006 and the Taiwan Stock Exchange Corporation (TSEC) in August 2006. The TSE has jointly held investment seminars with these exchanges and now practitioners from each exchange are conducting deliberations focusing on the cross-listing of ETFs based on each market's stock indices.

Coincidentally, the TSE also signed an MOU with Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) for examining the possibility of a business alliance.

The TSE has stationed staffers in Beijing to establish an office with government approval since last summer. On May 10, 2007, the Chinese government concluded its public hearing on regulations regarding the establishment of offices by overseas stock exchanges. As these regulations are expected to come into effect in July 2007, the TSE will make every effort to receive approval from the Chinese government to establish an office at the earliest possible stage at the same time as the NYSE and NASDAQ. Through the establishment of this office, the TSE will be able to begin developing promotional activities in China in earnest.

In October 2006, the TSE and National Stock Exchange of India signed an MOU on comprehensive mutual cooperation. Also, on the 10th anniversary of the establishment of the TSE's Singapore representative office in December 2006, the TSE and the Singapore Exchange Limited (SGX) agreed on a business alliance for cooperation particularly in ETFs and derivatives trading. Since Singapore is located in the center of the ASEAN region and plays an important role as a gateway for India and the Islamic region, the TSE expects this country to become a critical strategic partner.

With regards to exchanges in the US and Europe, the TSE signed an agreement on strategic business alliance with NYSE Group, Inc. (NYSE Group) in January 2007 and London Stock Exchange plc (LSE) in February 2007 to enhance its mutual international presence.

NYSE Group and the TSE have been continuously holding working-level discussions since both exchanges agreed to work together. Specifically, NYSE Group agreed to support the TSE in making NYSE-listed financial products tradable on the TSE market, and both exchanges agreed to conduct mutual promotional activities after listing. Such products will include commodity-related funds and REITs-related products.

With regard to the listing system, the TSE will set up a working group comprised of practitioners for holding discussions towards developing information sharing rules pertaining to the listing system, in an effort to make the examination process more efficient when companies list on more than one exchange.

As for trading services, NYSE Group and the TSE will conduct collaborative research on the market structural changes brought about by proprietary trading systems (PTSs) and crossing networks, which are assuming greater prominence. Taking the results into account, both exchanges will examine the possibility of cooperation in terms of enhancing trading infrastructure for expanding off-auction trading.

With respect to information-related services and information technologies, working level staffers at both exchanges are now conducting deliberations.

Both exchanges will clarify basic ideas on a capital alliance. The exchanges also plan to publicize these cooperations, etc above as an interim report by July 2007.

The TSE held the first meeting with the LSE at the end of April 2007. In the future, the TSE will establish a practitioners' working group to conduct deliberations on a regular basis regarding (1) operating and regulating a market for emerging companies, (2) cross-listing of new products, and (3) strengthening of cross access between both markets.

The TSE has continued to hold working-level consultations with the Chicago Mercantile Exchange (CME) on a cooperative scheme regarding JGB futures trading. Basically, the CME and the TSE will jointly cooperate to meet the global needs for JGB futures trading and aim to enhance liquidity. Both exchanges are now energetically debating the measures.

As the TSE develops a specific plan for a business alliance that contributes to increased profits, it must also actively explore the possibility for capital alliances with NYSE Group and other overseas exchanges based on such a business alliance. Also, the TSE will consider conducting joint-ventures in specific business areas.

The TSE hopes to provide market users with as much benefit as possible through these alliances with overseas exchanges.

For instance, an increase in the number of listed foreign financial products on the TSE market will offer investors a wider variety of choices over products to be added to their portfolio. Cooperation in the area of listing would enable listed companies to raise funds more smoothly.

Stock exchanges are entering a period in which they are required to live up to their expected role as public goods not only on the national level but also at the global stage. The TSE hopes to meet the needs of market users by sufficiently fulfilling its market function as a focal point for efficient circulation of funds around the world, and the Asian region in particular.

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