Overview of Revisions ofTOPIX and Other Indices
JPX Market Innovation & Research, Inc.
June 19, 2024

© 2024 Japan Exchange Group, Inc., and/or its affiliates

Background•

TOPIX (calculated from 1969) is widely used both in Japan and overseas as a market average benchmark for the overall Japanese market.

•The revisions currently in progress, using the opportunity provided by TSE's market restructuring in April 2022 to enhance TOPIX's functionality as aninvestable index (the first stage of revisions), are set to be completed in January 2025.
Following this, a second stage of revisions will commence to further enhance TOPIX‘s broad coverage and its functionality as an investable index.

•While ensuring the index’s continuity, the second stage of revisions will take into account the large amount of assets that are linked to TOPIX (overJPY 83 trillion (as of March 2023)) and its wide usage. Periodic reviews of issues in all market segments (Prime Market, Standard Market, andGrowth Market) will be conducted with a greater emphasis on liquidity.
As in the first stage of revisions, the transition will be conducted in phases and sufficient time will be ensured for public awareness and•transitioning in order to smoothly transition to the next-generation TOPIX and mitigate the impact on the market.

Overall flow of TOPIX revisions:First stage

2021/4

22/4 - 6

22/4
Informati

Publication
onof rules provision

Link tomarket
segments
abolished

22/10 – 25/1
Revisions focusing on liquidity

Cross-shareholdings
excluded from freefloat shares

In progress

Phased weighting reductions**Of constituents with tradable share market cap of under JPY 10 billion

Second stage(Ref.) Related changes tolisting rules▲Restructuring of marketsegments (2022/4)© 2024 Japan Exchange Group, Inc., and/or its affiliates

2024/6

24/9*

Index
consultation

Publicationof rules

Information
provision

26/10

26/10 – 28/7

28/10

First
periodic
review

Phased transition to nextgeneration TOPIX

Secondperiodic
review**Around the end of 24/9

*To be conducted annually from this point▲Request for management thatis conscious of cost of capital, etc.
(2023/3)▲End of improvement period for March FY-end
companies subject to market restructuring transition
measures (2026/3)
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Next-Generation TOPIX (Main Changes)
Current TOPIX
Prime Market

EligibleMarkets

Periodic
Review

Selection
Criteria

Nonperiodic
Inclusion

Next-Gen TOPIX
Prime Market, Standard Market, and Growth Market(Companies that were constituents at the timeof the market restructuring and chose theStandard Market or Growth Market areincluded.)

None

Annually, on the last business day of October (base date: last business day of August)

None•(Phased weighting reductions of constituents
which had a tradable share market
capitalization of under JPY 10 billion at the timeof the market etc. are in progress)

New listings on or segment transfers to thePrime Market

Periodic review of constituents based on the following liquidity criteria
Indicator

Inclusion Criteria

Continuation Criteria*

Annual Traded Value
0.2 or more
0.14 or more
Ratio
Percentage ofCumulative Free-Float
In the top 96%
In the top 97%
Adjusted Market
Capitalization•The inclusion criteria will be applied to issues that are not TOPIX constituents. The
continuation criteria will be applied to issues that are TOPIX constituents.
* Continuation criteria (buffer rules) will be adopted in order to ensure index stability
and investment efficiency
New listings on the Prime, Standard, and Growth Markets whose free-float adjusted
market capitalization exceeds the minimum for issues with a percentage of cumulative
free-float adjusted market capitalization in the top 95%

 There are no changes to non-periodic removals (Delistings, Securities to be Delisted, Securities on Special Alert) or the weight cap (10%).
 For the annual traded value ratio, the sum of the monthly traded value ratios for the previous 12 months including the month containing the base date for the periodic review will be used. The monthly traded value ratio isdefined as "(the median daily traded value in TSE's trading sessions for the month x the number of business days in the month) / free-float adjusted market capitalization on the last business day of the month." Percentage of cumulative free-float adjusted market capitalization is defined as "the cumulative free-float adjusted market capitalization of the issues starting with the largest free-float adjusted market capitalization in thegroup of issues that meet the criteria for the annual traded value ratio and that are not Securities to be Delisted or Securities on Special Alert / the total free-float adjusted market capitalization of said group of issues."© 2024 Japan Exchange Group, Inc., and/or its affiliates

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Transitional Measures to Next-Gen TOPIX•To ensure a smooth transition to the next-generation TOPIX and to mitigate the impact on the market , JPXI
will provide sufficient time for public awareness and transitioning, and perform the transition in phases.
 The first periodic review will be in October 2026 and the second will be in October 2028.
 Issues that are no longer selected as constituents after the first periodic review (issues subject to transitional
measures) will have their weightings reduced in eight stages on a quarterly basis (see below).

Phased weighting reduction of issues subject to transitional measures:Transition Factor
100％

Oct. 2026
87.5%

Jan. 2027 Apr. 2027
75.0%

62.5%

July 2027
50.0%

Annual periodic reviews fromthis point

Oct. 2027 Jan. 2028 Apr. 2028
37.5%

25.0%

12.5%

July 2028

Oct. 2028

Oct. 2029

0.0%

Secondperiodic
review

Third
periodic
review

・・・

Phased weighting reduction in eight (equal)
stages on a quarterly basis from October 2026

© 2024 Japan Exchange Group, Inc., and/or its affiliates

4Other Revisions
Launch of "TOPIX Next-tier"•Coinciding with the first TOPIX periodic review (October 2026), JPXI will launch a new "TOPIX Next-tier“ composed of issues notselected for TOPIX (including those subject to transitional measures) which have a certain level of liquidity.
Next-Gen TOPIX

Current TOPIX
TOPIX Core30
TOPIX Large70

TOPIX Core30

TOPIX 100(large-cap)

TOPIX Large70

TOPIX 500

TOPIX Mid400(mid-cap)
TOPIX 1000

TOPIX Small500

TOPIX 100(large-cap)

TOPIX Mid400(mid-cap)

TOPIX Small(small-cap)

TOPIX Small(small-cap)

TOPIX 500

TOPIX 1000

TOPIX Small500

TOPIX Micro Cap
TOPIX Micro Cap

TOPIX Next-tier
Annual Traded Value Ratio 0.1 or more
Percentage of cumulative free-float adjusted market
capitalization In the top 99%

Revision of Tokyo Stock Exchange Growth Market 250 Index
Current
Constituents
Handling of TOPIX constituents© 2024 Japan Exchange Group, Inc., and/or its affiliates

Planned revision
Top 250 Growth Market issues by market capitalization

Excluded from selection

Eligible for selection (overlap with TOPIX possible)
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