Tokyo Stock Exchange (TSE)
Japan's largest stock exchange, with its headquarters in Tokyo, the capital city. The Japan Exchange Group runs the Tokyo Stock Exchange, which has more than 3,700 listed companies.
Tokyo Stock Exchange Details
The Tokyo Stock Exchange (TSE) is a large and complicated global enterprise. The TSE has five major sections. The first of these sections generally lists Japan's largest corporates. The second section has a listing of medium-sized companies. The two combined units comprise what the insiders refer to as "the main markets."
Further, two other sections of the TSE deal with startups. Traders call the first of these "Mothers" (this refers to Market of the High-Growth and Emerging Stocks). They call the second Jasdaq (this is further sub-divided into the standard and growth sub-sections). The Tokyo Pro Market is the last section –it's strictly dedicated to professional investors. Each of these TSE sections has a specific listing requirement.
In July 2020, the TSE's first section comprised more than 2,171 companies (nearly double the figure in 1990). The authorities plan a significant reform at the TSE, including measures to simplify the criteria for identifying the sections. There are proposals to reduce the sections to three- Standard, Prime, and Growth. The authorities plan to reduce the top-tier listed companies.
Real-World Examples of the Tokyo Stock Exchange
The Tokyo Price Index (TOPIX) is primarily a market price metric that traders use in their daily operations. TOPIX is a capitalization-weighted index that lists all the firms in the TSE's first section (this section clusters all large firms into a single group). The TSE's second section generally pools the rest of the smaller companies in the exchange.
Nikkei is a major Japanese stock index that trades on the TSE. It is a price-weighted index that comprises Japan's top blue-chip companies traded on the exchange. Nikkei lists 225 such companies.
Usually, the TSE does not allow investors to purchase an index. Still, some exchange-traded funds (like the TOPIX Core 30 ETF) facilitate investors to trade in a basket of TOPIX performance-tracking securities.
History of the Tokyo Stock Exchange
The masterminds of the Tokyo Stock Exchange first founded the entity in 1878. At that time, the stock exchange gurus introduced a public bond negotiation securities system in Japan. In May 1878, the Japanese Legislature passed the "Stock Exchange Ordinance" preceding the TSE Co. Ltd's establishment on May 15th. Among the TSE customers were some former Samurais who sought a market to trade their bonds.
On June 1st, the players began trading on the platform. More than 100 years later (in 1998), the TSE introduced an electronic trading system. Further, in 2010, the TSE launched Arrowhead, a new global digital trading platform. In 2012 the TSE ranked as the 34th largest derivatives exchange globally (considering the volume of trade).
Today the TSE ranks as the second-largest stock exchange in the world (by market capitalization). The TSE and the Osaka Securities Exchange merged in 2013 to form the Japan Exchange Group (OSE), a new holding company. The holding' Chief Executive, Akira Kiyota, has served as the TSE head since November 2020.
Significance of the Tokyo Stock Exchange
The TSE hosts Japan's best known and largest corporate giants that have a global presence- these include Toyota, Suzuki, Mitsubishi, Honda, Sony Corporation, Keyence Corporation, Softbank, and Chugai Pharmaceutica. It ranks high as Japan's largest stock exchange.
In June 2020, the TSE comprised more than 3,700 listed companies. Its combined market capitalization exceeded the US by $5.6 trillion. The TSE offers specific trading information, market statistics, and historical and real-time index quotes. Further, it provides valuable information from and about specialists.