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May 2008

Update : Jun. 03, 2008

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1.Review of Organizational Structure

The TSE group has conducted a review of its organizational structure. Specifically, as one major target outlined in the current medium term management plan, Tokyo Stock Exchange, Inc. (TSE) has decided to establish a "Derivative Strategy Development" office within the Derivatives department. By establishing this office, the TSE will be able to reinforce its organizational structure for product promotion and strategy in order to increase overall reliability and ease of use of the derivatives market for investors and outside parties. Through this new office, the TSE will work to proactively offer a variety of listed derivatives products according to investor needs.

In light of the system malfunctions that occurred in February and March 2008, the TSE has decided to shift adjustment functions that had been carried out by the Quality Control department to a new "IT Administration" office. This office will be established within the System Unit. Through this change, the Quality Control department will be better equipped to specialize in its original quality control operations to enhance the stability and reliability of the TSE's system administration.

These changes are scheduled to be implemented on June 23, 2008.

2.Listing System Improvement for FY 2008

Since the last fiscal year, the TSE has been carrying out a review of its overall listing system based on its Comprehensive Improvement Program for Listing System 2007.

In fiscal year 2008, the TSE will continue to examine issues that were identified in the improvement program. In line with the idea that "the market should protect the rights and interests of shareholders and investors," as outlined in the medium-term management plan, the TSE has made enhancing listed companies' corporate governance its top priority.

The TSE will first identify problem issues based on listed companies' actual circumstances, precedents of corporate governance, as well as items pointed out by investors. Then, taking into account the characteristics of Japanese company systems, the TSE will strive to respond to any issues with a wide ranging improvement effort. This effort is not necessarily limited to the modification of listing systems and may include revisions of laws and regulations.

In this process, any issues that are identified will be categorized as items that will be incorporated into the listing system, items to be addressed by the TSE through requests or notices outside of regulatory frameworks, items to be proposed to, or requested of administrative authorities, and other items. For those items that will be incorporated into the listing system, the TSE will move to develop concrete measures as soon as possible.

As for the remaining issues outlined in the Comprehensive Improvement Program for Listing System 2007, the TSE will classify these issues into two categories: "items to be examined with the intention of implementing concrete measures" and "items to be considered on an ongoing basis". For "items to be examined with the intention of implemenitng concrete measures," the TSE will hold discussion sessions with experts and specialists as necessary and plans to complete their implementation by the end of the current fiscal year.

In Japan corporate governance is a crucial issue which can function as a sign of the efficiency of a companies' management and can also be a measure of its quality as a target investment. The issues on corporate governance will have considerable influence over Japan's future, and whether or not it can truly revitalize itself as an attractive place for investors.

The other day, CalPERS and other leading pension funds and investment management companies in Europe and the United States made several joint proposals regarding Japanese corporate governance. It is imperative that market related parties including administrative authorities respond appropriately to these proposals and criticisms. If they are ignored, there is no denying that this may deal a fatal blow to the financial and capital market of our country.

The TSE will strive to address these issues with the earnestness and attention that they deserve.

3.Implementation Date of a Partial Revision of Tick Size Structure, etc.

The TSE will implement a partial revision of the tick size structure on July 22, 2008.

In tandem with this revision, the TSE will augment the number of orders to be processed in a day in the Stock/Convertible Bonds Trading System from the current 23 million to 28 million, assuming that the number of orders will increase at much smaller tick sizes.

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