日本取引所グループ（8697） – Medium-Term Management Plan 2024

Medium-Term Management Plan 2024Exchange & beyondJapan Exchange Group, Inc.March 31, 2022© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.Review of 3rd Medium-Term Management PlanWe steadily implemented measures based on our core strategies and achieved financial targets before the final year.iMajor achevements i n thepast threeyears Financial targetsI. Pursue “the shape of the market” toward the next generationII. Launch, invigorate and develop a comprehensive exchange◼ In response to the system failure, developed a framework to enable quick and smooth trading resumptions. Published the Action Program for Strengthening the Functions of Cash Equity Market◼ Revised the cash equity market structure and Japan’s Corporate ◼ Achieved IPO count of over 100 per year on average in the past three Governance Codeyears◼ Started clearing service for ETF creation/redemption◼ Launched the comprehensive exchange through business combination with Tokyo Commodity Exchange and subsequent product transfer and clearing house integration ◼ Launched new derivatives trading platform “J-GATE 3.0″◼ Developed rules and frameworks for starting derivatives holiday trading◼ Also focused on invigorating the energy market through obtaining approval for permanent listing of Electricity Futures and trial listing of LNG Futures, among other thingsIII. Diversify and propel data services into the next generationIV. Develop a foundation to support the future of our business and the society◼ Launched 12 new services and gained 304 new clients* utilizing ◼ Strengthened BCP structures such as by developing the Kansai cooperation with external partners. Started API-format distribution of stock prices and other informationbackup center◼ Agreed to develop climate indices with FTSE Russell (launch related products to investors◼ Supported listed companies’ ESG disclosure and provided ESG-scheduled for 1H 2022)*Target was 10 new services and 150 new clients. Result is as of Feb. 2022◼ Set a target of achieving carbon neutrality across Group by FY2024Financial targets for the final year set out in the management planOperating RevenueJPY 130.0 bil.Net Income**JPY 50.0 bil.ROEAt least 15%**Attributable to owners of the parent companyFY2019FY2020JPY 123.6 bil.JPY 47.6 bil.16.3 %JPY 133.3 bil.JPY 51.3 bil.16.6 %FY2021(forecast***)JPY 135.5 bil.JPY 50.0 bil.15.7%***Figures announced on March 22, 2022© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.2Major Themes in the External Environment and Long-Term Vision © 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.Major Themes in the External Environment Looking Ahead to 2030WorldwideJapan◼ Shift to a decarbonized society◼ Population growth pushing the limits of supply and demand of food and resource◼ Deepening fourth industrial revolution◼ Progression of super-aging society◼ Dwindling working-age population◼ Mounting social security expenses◼ Deteriorating social infrastructure・ AI・ Big data・ IoT etc.Asia◼ Population growth◼ Economic growth→ The center of the global economy may shift to Asia.◼ Amid these changing times, the world, Asia, and Japan itself must make the shift to a sustainable society and economy.◼ In order to support this transition from the financial and capital markets side, our business development will need to focus on providing solutions for societal issues.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.4“Target 2030” and Our Long-Term ESG Target“Target 2030”: our long-term vision to be achieved by 2030Contribute to sustainable societal and economic development by evolving into a global, comprehensive finance and information platform* which provides solutions for a wide range of societal issues, centered on the ability to raise and circulate capital*Named “G-HUB” (Heighten market integrity, Unlock opportunity, Benefit society)Long-term ESG targetContribute to sustainable societal and economic development by providing solutions for a wide range of societal issuesE n v i r o n m e n t a l V i s i o nJapan Exchange Group will maintain and further develop the capital market into one that can coexist with the environment, by creating a clear action plan on environmental issues and making ongoing efforts to reduce our environmental footprintAim for carbon neutrality in securities market operations (our value chain) by 2030© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.5Basic Policy and Three “Focus” Areas© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.Medium-Term Management Plan 2024: Basic PolicyBasic Policy of the Medium-Term Management Plan 2024◼ A three-year plan from FY2022 has been developed as the first stage of progress towards Target 2030.◼ We will utilize new frameworks including JPX Market Innovation & Research to take proactive action on building the foundations of the global, comprehensive finance and information platform “G-HUB”.Exchange & beyondTo contribute to improving the attractiveness of the Japanese financial and capital markets as a whole and enhance their global competitiveness, we will prioritize initiatives in three specific “Focus” areas. Focus 1Facilitating cycle of corporate innovation/growth and assetformationFocus 2Achieving market transformation (MX)Focus 3Promotingsustainability that connects society and economy© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.7Focus 1 ｜ Facilitating Cycle of Corporate Innovation/Growth and Asset Formation◼ In our role as a core infrastructure supporting fundraising by companies and asset formation by the public, as well as supporting innovation and growth at companies, we will develop the primary and secondary markets so that the profits stemming from companies’ efforts generate asset formation among the general public, leading back to further innovation and growth at companiesActions取り組む施策◼ Develop an environment that supports sustainable growth at companies• Enhancement of financing functionality for growth companies• Promotion of corporate value improvement at listed companies• Establishment of IPO ecosystem that contributes to revitalizing regional economies• Provision of trading opportunities for after delisting etc.◼ Develop products and rules to contribute to asset formation• Expansion of the ETF marketTarget: 30% increase* in average daily trading value and net assets held in ETFs, etc. in FY2024 *In comparison with FY2021. Average daily trading value excluding leveraged/inverse products. Net assets excluding BOJ purchases• Revisions to trading rules to allow smooth execution• Development of an environment enabling secure and easy investment while considering investor protection• Promotion of listings of cross-border companies, mainly from AsiaTarget: 20 listings of cross-border companies in the 3 years of the plan• Provision of comprehensive financial education including life planning, and strengthening of collaborative activities with industry playersetc.◼ Further improve convenience and resilience as a market infrastructure • Ongoing improvement of systems and their operation, and system replacementsTarget: Replacement of cash equity trading system in 2H FY2024,Extension of trading hours at the time of replacement• Strengthening of BCP function to ensure stable market operations etc.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.8Focus 2 ｜ Achieving Market Transformation(MX)◼ In order to serve as a hub for circulating capital in the Asia Pacific region while keeping focused on changes in the interest rate environment, we aim to enable optimal allocation of risk/return across society by ensuring systems for raising and managing funds function smoothly and sufficiently, not only for stocks but for other products as well.◼ In addition, to reduce the costs of raising and managing funds, we will advance digitization in all corners and enhance information usage.Interest Rates取り組む施策ActionsDerivativesDigital Securities◼ Strengthen functionality of interest rate-related markets• Revitalization of JGB-linked derivatives• Promotion of professional-oriented bond market etc.◼ Invigorate the derivatives market • Listing of small lot products linked to index futures and options• Improvement of convenience for retail investors• Expansion of flow from global investors• Launch of holiday trading etc.◼ Advance digitization and enhance information usage• Creation of a digital securities marketTarget: Creation of a market and start of trading of new products by the end of FY2024• Development of new services utilizing digital technologies for internal and external useTarget: 3 services in the 3 years of the plan• Strengthening of index businesses and enhancement of investment-related information etc. Target: 200 new clients for information services and 12 cases of creating new information services or updating existing information services and rules in the 3 years of the plan © 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.9Focus 3 ｜ Promoting Sustainability that Connects Society and Economy◼ We will assist the creation of a sustainable society by utilizing market mechanisms to provide solutions for a wide range of societal issues, through the provision of an environment where sustainability-related information, products, and services are easily accessible to all. 取り組む施策Actions◼ Strengthen dissemination of sustainability-related information• Creation and enhancement of information platformTarget: Launch of information platform for publicly offered ESG bonds in FY2022Sustainability• Support for sustainability information disclosure from issuers• Participation in international debate and standard-setting on sustainable finance etc.◼ Calculate ESG indices and list related ETFs/futures• Calculation of ESG-related indices, listing of related futures etc.Target: Launch of new ESG index and Listing of related futures in FY2022◼ Vitalize the energy market, advance the creation of an emissions trading market• Increase in trading of electricity/LNG futuresTarget: Trading volume on electricity futures in FY2024 5 times that of FY2021Target: Permanent listing of LNG futures by FY2024• Contribution to the creation of a Japanese carbon credit market etc.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.10Global Strategy,Green Strategy© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.Global Strategy Initiatives ◼ We will aim to continue as a central market for the Asia-Pacific region, and a key market globally, by attracting global investment into Japan while creating an environment that enables one-stop investment in stocks and other products from across the globeAttracting global investment into Japan Enabling one-stop investment in global products◼ Market/infrastructure functionality◼ Cross-border companiesStrengthening of market resilience and convenience through extension of cash equity market trading hours, replacement of cash equity market trading system, launch of derivatives holiday trading, enhancement of functionality in interest rate-related markets and clearing, etc.◼ PromotionDevelopment of extensive relationships with investors and information vendors and advancement of marketing and sales in trading and information services areasExpansion of campaign to attract cross-border company listings, mainly in AsiaProactive work to attract issues linked to indices covering foreign stocks, etc. ◼ ETFs/ETNs◼ BondsPromotion of TOKYO PRO-BOND Market, the market for professional investorsStrengthening the foundations of our global businessCreation of an environment and investment to enable obtainment and nurture of diverse human resources, as well as development and demonstration of employee capabilities◼ Human resource investment◼ Overseas cooperation ◼ Market/regulation trends◼ International standards, etc.◼ Overseas technology assistanceCultivation of business opportunities through collaboration with overseas companies mainly in AsiaResearch and analysis of global trends in markets and regulation, etc. through mainly the overseas officesParticipation in debate about and creation of international standards relating to sustainable financeWork to contribute to sustainable development and create business opportunities in the countries we assist© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.12Green Strategy Initiatives ◼ To support the shift to carbon neutrality in Japan, we will push forward with our environmental strategy both as a market operator and as a business corporation.Utilizing Market Mechanisms to Promote Sustainability◼ Promotion of action on sustainability issues and information disclosure at listed companies, through the Corporate Governance Code◼ Strengthening of sustainability-related information functions (launch of operation of information platform for publicly offered ESG bonds, enhancement of platform’s functions)◼ Calculation of ESG indices and listing of related ETFs/futures◼ Vitalization of the energy market, advancement of an emissions trading market (contribution to building a carbon credit market)◼ Research into issuance of a “digitally tracked green bond” utilizing digital securities◼ Enhancement of the “JPX ESG Knowledge Hub” to support listed companies’ ESG information disclosureAiming for Carbon Neutrality across Group by FY2024Aiming for Carbon Neutrality in Securities Market Operations (Our Value Chain) by 2030◼ Direct contribution to environmental conservation through owning our own renewable energy generation facilities – not just purchasing carbon credits◼ Working towards securities market operations that underpin a sustainable society by utilizing and implementing JPX’s own initiatives in cooperation with market participants◼ Endorsement of METI’s “GX League Basic Concept”© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.13Financial Policies© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.Financial Targets, CAPEX, and Capital PolicyFinancial targets for the final fiscal yearCapital policyOperating RevenueJPY 147.0 bil.Net Income(attributable to ownersof the parent company)JPY 53.0 bil.ROEAt least 15%• Support the sustainable development and evolution of the market by making constant investment while keeping a balance between shareholder returns and financial resilience for stable market operations•Irrespective of market conditions, maintain ROE of 10% exceeding capital cost over the mid- to long-termReturn to shareholders• Dividend payout ratio of approx. 60%• Flexibly implement further shareholder returns in consideration of future investments, etc.(Ref.) Past total return ratios & returns to shareholders（bil.yen）• While working on enhancing market convenience and resilience, we will invest in building the foundations of a global, comprehensive finance and information platform.Total CAPEX over 3 years Approx. JPY 50 bil.6050403020100CAPEX90.4%85.9%76.4%60.7%70.8%116.1%140%120%100%80%60%40%20%0%FY2016FY2017FY2018FY2019FY2020FY2021*ordinary dividendspecial dividendbuy-backtotal return ratio*Estimated based on earnings forecast and dividend forecast published on March 22, 2022© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.15Reference｜ Organizational Structure from FY2022 onward◼ With Target 2030 as the goal, in our role as a core infrastructure of Japan’s financial and capital markets, JPX Group companies will work as one to consistently provide the functions fundamental to market operations, from listing and Aimstrading to clearing and settlement as well as data services.◼ Furthermore, we will increase the added value we provide to society while working to create new services, stabilize profits, and maintain robust financial foundations. Cash equity market operations• We have been seeing stable revenue growth in this area• We will continue to focus on stable development as one of the world’s prominent markets Current status of and outlook for businessDerivative market operations • With continued anticipation of the latent growth potential of the market, reflecting the situation overseas and • We have been working on expanding the market in this areaother factors, we will continue to act determinedly • We have increased revenue in this area that is not affected by Japanese stock market movementsMarket-related services• We will work towards entering new fields in addition to developing the existing index, data, and IT services, by nurturing a company culture that encourages more positive, proactive action and leveraging M&AsJapan Exchange GroupTokyo Stock ExchangeOsaka Exchange/Tokyo Commodity ExchangeJapan Securities Clearing CorporationJapan Exchange RegulationCash equity market operationsDerivative market operations Clearing servicesSelf-regulatory operationsJPX Market Innovation & ResearchMarket-related services• Index• Data• Digital© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.16Reference｜ JPX Market Innovation & Research, Inc. ◼ JPX Group has established JPX Market Innovation & Research, Inc. (JPXI) as a new subsidiary parallel to the exchanges, the self-regulatory organization, and the clearing house. It will start business on April 1, 2022. ◼ As well as taking on JPX Group’s index, data, and digital-related services, thereby enabling us to provide all market-related services from under one roof, JPXI will play a key role in creating the global, comprehensive financial and information platform “G-HUB” as set out under Target 2030.◼ Furthermore, JPXI will contribute to bolstering the competitiveness and status of Japanese financial and capital markets by enriching services on ESG, listed company, and others considered necessary to enhance the attractiveness of the market, as well as envisioning how financial and capital markets should look with the use of new technologies. Bolstering the competitiveness of Japanese financial and capital markets • Through the development of new indices and support for information provision and corporate value enhancement at listed companies, we will facilitate companies’ capital raising by creating an environment where domestic and overseas funds flow easily into the Japanese financial and capital markets, thereby supporting proactive investment and business development among listed companies.• We will contribute to the efficiency of asset management by providing an environment that enables efficient investment in an array of products, including digital assets, green financial products, bonds, and foreign assets.• We will contribute to making the financial and capital market more sophisticated by enriching data services, advancing digitalization, and providing infrastructure such as refined network and IT solutions, thereby supporting the operations of investors, securities companies, asset management companies, financial institutions, and information vendors.Expansion of index lineup,enrichment of data services, advancement of digitalizationProvision of refined network and IT solutionsProactive creation ofvarious marketservicesExpansion of listed company servicesResponses to new needs, including green-related servicesHub for new partnershipsDrawing on experience gained as a market infrastructure• We will aim to become a hub for new partnerships through the utilization and nurture of highly skilled personnel, as well as M&As and capital investment. • We will proactively create markets and services that have connections and commonalities with exchange market operations, built on the foundations and know-how we have gained as a market infrastructure. © 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.17These materials are prepared solely for the purpose of providing information regarding Japan Exchange Group, Inc., and as such, they are not intended as an offer or sale of securities or other similar action whether inside or outside Japan. Our securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.These materials contain forward-looking statements. These statements are based on our assumptions and beliefs in light of the information currently available to us and are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those we currently anticipate. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date ofthese materials. We disclaim any obligation to update any of the forward-looking statements contained in these materials to reflect future actual events or developments.This translation may be used for reference purposes only. This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. This translation is subject to change without notice.Japan Exchange Group, Inc., its subsidiaries, and/or its affiliates shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with regard to this translation.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.© 2022 JAPAN EXCHANGE GROUP, Inc. All Rights Reserved.