ANNUAL REPORT 2017
THE 13T H TOKYO FINANCIAL EXC HANGE INC.

Ended March 31, 2017

We contribute to the sound development of financial markets
and economy of Japan by developing financial instruments
markets as public infrastructure related to financial
instruments transactions that provide a superior degree of

fairness, reliability and convenience inaccordance with the Financial Instruments and Exchange Act.

We, as a comprehensive exchange for financial derivatives,
have now listed products that cover all three major sectors offinancial derivatives: foreign
and interest rates .

exchange, stocks

Table of contents
To Our Stakeholders

03

Operating Results Highlights

05

New Medium-term Management Plan
Ⅰ. Formulation of the New Medium-termManagement Plan

07

Ⅱ. New Medium-term Management Plan08

(FY 2017-FY 2019)

Ⅲ. Points of the New Medium-termManagement Plan

09

Efforts in FY 2016
Ⅰ. Business Activities

13

Ⅱ. Relationship with Market Participants
and Research Activities, etc.

18

Ⅲ. Human Resources Development andInternal Activation

20

Corporate GovernanceⅠ. TFX’s Management Base21

Ⅱ. Directors and Statutory Auditors

23

Financial Data & Corporate Profile
Ⅰ. Financial Statements

25

Ⅱ. Corporate Information

26

Tokyo Financial Exchange Inc.

02

President and CEO

Shozo Ohta
03

Tokyo Financial Exchange Inc.

To Our Stakeholders
In fiscal 2016, the global economy stuck in a low
growth with the slowdown of advanced national
economics resulting from the increasing weak
performance of the corporate sector in the US andthe EU. However, from the fall of 2016 to 2017,
there was an increase in production and exports
mainly in the US and the EU which also had apositive effect on capital spending. Consequently,
we saw a progress in the recovery.
For Japanese economy, the capital expenditures
and the exports remained in the adjustment
phase due to the sluggish personal consumption,
whereas ongoing improvements in corporate
earnings and healthy employment conditions.
Trading volumes of Click 365, FX Daily Futurescontracts, marked a temporal surge in relation with
Brexit and the US presidential election, but they
decreased year-on-year due to a trend of the yen’s
appreciation in the first half of the fiscal year andstrengthened uncertainty about the future of US
policy management in the second half.
Trading volumes of Click Kabu 365, Equity
Index Daily Futures contracts, increased in thesecond half of the fiscal year on the backdrop of
the outlook for economic recovery and global highstock prices though they remained weak in thefirst half due to lower volatility of stock markets.
Therefore, they largely decreased year-on-year.
Trading volumes of Euroyen futures hovered
extremely at lower levels because the short-term
interest rate stated in a stalemate due to theprolonged ultra-easing monetary policy by the
Bank of Japan (BOJ), and hit a record low.

Under the above-mentioned tough situations, in
FY 2016, we secured surplus as a result of our strict
cost management.
It is anticipated that our business environment
will be continuously severe, and so we think thatstrengthening profitability is our urgent task.
In the three-year new medium-term management plan which starts in FY 2017, we will
aggressively expand Daily Futures business,
including the development of new products andentry into new business fields with the aim ofstrengthening the profitability.
We will seek to reduce costs by integrating thesystem for Interest Rate Futures contracts withthat for Daily Futures contracts.
At p r e s e n t , p o l i t i c a l c h a l l e n ge s a r e t h eimprovement in labor productivity and thea c h i e ve m e n t o f wo r k - l i fe b a l a n ce t h ro u g hWorkstyle Reforms. We will develop humanresources and introduce new personnel/pay
system for creating a vital organization.
Additionally, it is expected that the Fourth
Industrial Revolution, that utilizes AI and IoT,
will cause drastic change such as a reverse ofexisting social systems and industrial structures.
We will seriously and immediately make efforts
toward positive applications of big data and AI for
operations of the Exchange.
We sincerely ask you for your continued
understanding and support.
September 2017

Tokyo Financial Exchange Inc.

04

Ope rati ng Res u lt s High lights

Financial Accounts in FY 2016

1

Operating Revenues

Operating Income

Ordinary Income

8,647

573

658

514

Change from FY 2015

Change from FY 2015

Change from FY 2015

Change from FY 2015

▲7.2 %＋263.7%＋5.5%＋16.8%(Unit: million yen)

(Unit: million yen)

(Unit: million yen)

(Unit: million yen)million yen

9,315

million yen

million yen

469 440 514

308

157

7,627

million yen

623 658

573

8,647

Net Income

55

6,602
5,456

-333

-378

-581

-1,114-1,247

2

16

15

20

14

20

13

20

12

20

20

16

15

20

14

20

13

20

20

Operating revenues decreased 7.2% year-onyear to 8,647 million yen because of a decreasein the per-contract exchange fees, resulting froma decrease in trading volumes and a decreasei n i n c o m e f r o m m a n a ge m e n t o f s p e c i f i e dfunds associated with deterioration of the fundinvestment environment caused by introduction of
Negative Interest Rate Policy by the BOJ.

20

12

16

15

20

14

20

13

20

12

20

20

16

15

20

14

20

13

20

20

20

12

-1,855

Operating income increased 263.7% year-onyear to 573 million yen because expenses were
cut through a reduction in rent resulting from therelocation of headquarters carried out February
2016.
Ordinary income increased 5.5% year-on-year to658 million yen and net income increased 16.8%
to 514 million yen.

Operating Revenues Composition
Per-contract exchange fees 88.6%
Fixed amount exchange fees 1.6%

Income related to system equipment 2.5%
Income from information service 3.1%
Income from management of speciﬁed funds 3.7%
Other 0.5%

Per-contract exchange fees are based on trading volumes of trading members
Fixed amount exchange fees are based on the qualification for trading members.
● Income related to system equipment is based on use of exchange systems by trading
members.
● Income from information service is based on use of market information.
● Income from management of specified funds comes from interest income from term
deposits.
●●

05

Tokyo Financial Exchange Inc.

3

Trading Volume
Equity Index Daily
Futures contracts

FX Daily Futures contracts

Features

FY 2016（daily average）
Change fromFY 2015

Trend oftrading
volumesInterest Rate
Futures contracts“Click 365”

“Click Kabu 365"

Click 365 is a FX Daily Futurescontracts, which provides 29
currency pairs.
(i) Reliable FX product listed on
the public exchange market(ii) Provided by the trading
members who meet highstandard of the necessary
qualifications(iii) Margin deposit is protectedby the exchange in segreatedaccounts(iv) Competitive and transparent bid and offer prices
are offered by Market Maker
scheme(v) Swap points are fixed to bea single price, regardless ofreceipt and payment(vi) No rejection of trade orslippage

Click Kabu 365 is a Daily
Futures contracts which coverst h e w o r l d ’s m a j o r e q u i t y
indices in Japan, the US and theEurope.
(i) Tra d a b l e f o r a l m o s t 2 4hours including holidays(ii) Dividends to be paid (sameas cash stocks)(iii) L e v e r a g e t r a n s a c t i o n s
by d e p o s i t i n g m a rg i n a s
collateral(iv) No expiration date (rolling
spot contract)(v) Trading overseas equity
indices without currency risk

Three-month Euroyen
futures is an interest rate futurecontracts which is derived fromthe Japanese representative
benchmark interest rate
Japanese Bankers Association( JBA) Euroyen TIBOR(i) E n a b l e t o t r a d e T h r e e-month interest rate futures
up to five year(ii) Tr a d i n g m e m b e r s a r eleading financial institutions
who meet high financial
requirements(iii) S P A N ® , t h e i n d u s t r ys t a n d a rd r i s k a s s e s m e n tmethod is adopted for
margin calculation

39,627,814 lots

5,493,975 lots

2,154,178 lots

（152,416 lots）▲4.8%（22,357 lots）▲35.0%（8,793 lots）
▲5.7%

4,989

58,2008,454
44,556(in thousands)

41,62834,015

6,324

36,927

5,268

4,620

5,493

2,394 2,283
2,154

Trading
overview(FY 2016)

In the first half of the
fiscal year, trading volumes
temporarily surged due to anincrease in volatility affectedby the June UK referendum(Brexit). After then, the yenmarket activity was getting
lower, with yen’s appreciationin particular against US dollar,a n d c o n s e q u e n t l y t ra d i n gvolumes decreased.
In the second half, thecontracts increased due to theNove m b e r U S p re s i d e n t i a lelection and the associatedweakness in the yen. However,
the market became low-activity
due to the uncertainty of
economic operation by the US
government, and continuously
went seesaw afterwards.
Consequently, trading volumes
remained weak.

Trading volumes of all
products(Annual total)

Since the Nikkei stock
average remained in a trading
range of 15,000- 17,000 yen
with low volatility in the firsthalf of the fiscal year, trading
volumes showed a trend of
gradual decrease.
A f t e r t h e Nove m b e r U S
presidential election, stock
prices globally went on an
upward trend, in particular
the Dow Jones Industrial
Ave ra ge . T h e N i k ke i s t o c k
ave ra ge a l s o h i ke d t owa rd
the target of 20,000 yen. In
this upward process, trading
volumes of Click Kabu 365
showed a recovery. For a fullyear, however trading volumesof Click Kabu 365 resulted in alarge decrease.

47,275,967 lots

year-on-year

6
20
1

4

20
15

20
1

12

20
13

20

6
20
1

20
15

4
20
1

20
13

12
20

6
20
1

20
15

4
20
1

20
13

20

12

2,524

After the introductiono f Ne g a t i v e I n t e r e s t R a t e
Policy in February 2016, theshort-term yen interest rate
market experienced a further
weakness. Trading volumes ofinterest rate futures contracts
remained at a low level early
the fiscal year.
Toward the middle of the
fiscal year, the interest rate
futures volumes temporarily
increased due to mixturedp e o p l e ’s e n v i s i o n s o v e r
monetary policies around theglobe, the results of Brexit andthe US presidential election.
After the BOJ decided toadopt Yield Curve Control in
September, the short-term
interest rate fell in a further
stalemate.

average:▲9.7%（Daily
183,566 lots）

Tokyo Financial Exchange Inc.

06

New Mediu m-term Man ageme n t P la nⅠ. F ormulation of the New Medium-termManagement Plan
01

Results of the previous mediumterm management plan

Based on the major measures in the mediumterm management plan which was formulated in
FY 2014, we listed the currency pair of TRY/JPY,the emerging currency, on Click 365 and Click
365 Large, which expanded investor base tooverseas and corporate investors. Furthermore,
we aggressively introduced new products withstrong needs from investors such as the DJIA
Daily Futures contract which covers the wellknown the NY Dow Jones index for Click Kabu
365.
Also, we introduced a variety of measures
toward improving the convenience of investors
and market participants including introductionof the integrated management of marginaccounts for Click 365 and Click Kabu 365, as
well as combination of clearing membership.
Concurrently, we largely cut down expenses
by saving the system cost and relocating ouroffice.

02

Environment at the time offormulation of the new mediumterm management plan

Even after FY 2014, when the previous
medium-term management plan was made, theBOJ has maintained the ultra-easing monetary
policy. The BOJ adopted a Negative Interest
Rate Policy in February 2016 and determined
the introduction of Quantitative and Qualitative
Monetary Easing with Yield Curve Control in
September 2016. As the results, the interest
rate remains at an extremely low level without
fluctuations, and trading volumes of Threemonth Euroyen futures hit a new low. The
environment surrounding Interest Rate Futures
business continues to be troubled.
Also in Daily Futures business, competition
for narrowing a difference between selling
prices and buying prices in OTC FX transactions(“spread competition”) became fierce andinvestors withdrew from or refrained fromtheir transactions under yen’s appreciationand increasing uncertainty over the economic
environment. As their results, our businessenvironment remains highly challenging.

03

Basic policy for the new mediumterm management plan

Under the above-mentioned environment,
it is essential to aggressively strengthen the
profitability with immediately responding torapid changes of society and financial markets,
based on the new medium-term management
plan.
Concretely, we will diversify our listed
products, enter into new business fields andcreate a new trading market for Daily Futurescontracts. As for Interest Rate Futures contracts,
we will attract interest rate swap users bybringing in Packs and Bundles .
In addition, we will integrate the systems
for Interest Rate Futures contracts with that
fo r Da i l y Fu t u re s co n t ra c t s a n d p ro m o t e
training and utilization of human resources byintroducing new personnel/pay system.

07

Tokyo Financial Exchange Inc.

Ⅱ. New Medium-term Management Plan
(FY2017-FY2019)［ Basic strategies of the new medium-term management plan ］

1

Expansion of Daily Futurescontracts and entering
new business fields

TFX intends to not only expand Daily Futures contracts by broadening domestic and foreign investor
bases through the improvement in the convenience of investors and the creation of new trading
markets and by developing various new products, but also endeavors to enter new business fields.

2

Ensuring trading
volumes of Interest
Rate Futures contracts

Amid the harsh business environment due to the ultra easing-monetary policy, TFX not
only strives to secure as many transactions as possible but also prepares prompt responses
to the changes of market environment in the future.

3

Development of thesystem infrastructurethat utilizes the latest
technologies

In establishing the next-generation system, TFX intends to not only achieve cost reduction by
integrating the system for Interest Rate Futures contracts and the system for Daily Futures contracts but
also improves convenience by renovating the ASP.
In addition, TFX is going to consider positive application of FinTech to the operations of the Exchange.

4

Strengthening
profitability

TFX intends to strengthen our profitability by expanding Daily Futures contracts throughvarious innovations, entering new business fields and reducing system costs, etc.

［ Specific Initiatives of the new medium-term management Plan ］❶Broadening of the investor base by improving convenience

・Promote transactions by establishing integrated management of margin accounts
・Encourage the participation of new investors through the next-generation system, suchas providing the DMA environment❷Creation of a new trading market

1

Expansion of Daily
Futures contracts andentering new businessfields・Create a new market for off-market transactions for large volume investors, such as
foreign investors
・Consider the creation of the covered transactions market for OTC FX firms❸Diversification of listed products

・Expand emerging nations’ currency pairs in Click 365
・Develop new products from diversified underlying assets
・Create new index products❹Entering new business fields

・Launch clearing business of over-the-counter FX covered trades2

Ensuring trading
volumes of Interest
Rate Futures contracts❶Increase interest-rate swap users through the system development for Packs andBundles❷Acquire new foreign investors (i.e., asset management, fund, market makers, etc.).

3

Development of thesystem infrastructurethat utilizes the latest
technologies❶Reduce costs through the integration of the system for Interest Rate Futurescontracts and the system for Daily Futures contracts❷Improve convenience by renovating the Daily Futures contracts ASP❸Consider positive application of big data and FinTech, such as AI, in theoperations of the Exchange

4

Reinforcement of therisk management
system

Improve the risk management system to respond to “Principles for Financial
Market Infrastructures”

Implementation of the
new personnel/pay
system❶Achieve the work-life balance of employees through diversified workstyle reforms(to abolish the traditional membership-type employment system applied to all
employees and adopt the job-type employment system in addition)❷Improve labor productivity, foster human resources and create innovations bymodifying the seniority-based pay system and strengthening the performancebased pay system

5Tokyo Financial Exchange Inc.

08

New Medium-t erm Man ageme n t P la n

Ⅲ. Points of the New Medium-termManagement Plan
01

Point ❶: Expansion of Daily Futures contracts and entering new business fields（1）
Expansion in emerging currency pairs
We will launch MXN/JPY, which has attracted
higher interest since the start of the Trumpadministration, as a new currency pair of Click365.
Fo r C l i c k 3 6 5 , h i g h - y i e l d i n g e m e rg i n g
c u r r e n c i e s i n c l u d i n g Z A R / J PY c o n t ra c t s
a n d T RY / J PY c o n t ra c t s wo n t h e f avo r o f
investors, appreciated with respect to thesafety of transactions at the exchange and thecompetitiveness of swap points.
The MXN is a high-interest-rate currency
same as the ZAR and TRY. In Mexico, the policy
interest rate stands at 7.00% (as of the end of
July 2017) which is higher than that in South
Africa.
The MXN/JPY will be listed on October 30,
2017.
（2）Development of new products with a wide
variety of underlying assets
We aim at listing new products for Daily
Futures contracts, following FX and equity index
products.
Specifically, we will develop new productswith underlying assets of ETF and new index
products.
Among others, ETF has recently attracted
higher interest as investment products

effectively to build stable assets.
We expect that the development will lead toexpansion of Daily Futures business.
（3）
Entry into clearing business of OTC FX covertradesThe Japanese FX market has developed into
the largest market in the world, with monthly
trading volumes of 300-500 trillion yen. Alongwith the expansion of the FX market, OTC FX
firms largely increase an amount of cover trades.
Monthly cover trades amount to 172 trillion
yen*, a market scale equal to more than 60% ofTokyo interbank market*.
To secure the liquidity of cover trades madeby FX firms, Tokyo Financial Exchange who isthe public infrastructure is making an effort toestablish a system for clearing cover trades madeby FX firms (“FX Clearing”).
The FX Clearing contributes to the soundnessof the entire FX market in Japan and is consistent
with the global trend of central clearing of OTC
derivative contracts after the collapse of Lehman
Brothers. We will introduce the system as soon
as possible and have many FX firms use thesystem.
*Actual results for April 2016 (surveyed by the Financial Futures
Association of Japan)［ Interest rate of high-interest-rate currency ］■ List of policy interest rate (as ofthe end of July 2017)■ Trend of policy interest rate
15%Country09■Mexico（Overnight interest rate target）■Turkey（1 Week Repo Rate）■South Africa（Repurchase Rate）

Policy interest rate

Mexico7.00％

Turkey8.00％

South Africa

6.75％

Tokyo Financial Exchange Inc.

10%

5%

0%
2013/1

2014/1

2015/1

2016/1

2017/1

02

Point ❷: Ensuring trading volumes of Interest Rate Futures contracts（1)TIBOR Reform
Three-month Euroyen futures is a financial
product which is derived from the Euroyen
TIBOR ("Tokyo InterBank Offered Rate")published by Japanese Bankers Association( JBA) TIBOR Administration.
In the Financial Stability Board (FSB)’s report“Reforming Major Interest Rate Benchmarks”(p u b l i s h e d i n J u l y 2 0 1 4 ) , F S B r e q u i r e dadministrators of major financial benchmarks
to consider the introduction of alternative
benchmarks which are more anchored in an
actual transaction. This reform was also applied
to JBA TIBOR, and on July 24, 2017, the revised“JBA TIBOR Code of Conduct” came into effect.
It is expected that this will provide a furthertransparency of the calculation/determination
process of the rate offered by reference banks,and helps to reflect the actual transaction from awider range of data.
It is also expected that reflection of actual
market transactions into JBA TIBOR will
revitalize Three-month Euroyen futures market.

（2）Introduction of Packs and Bundles trades
In tandem with the above-mentioned TIBOR
reform, we will add Packs and Bundles toStrategies by the end of November 2017 toinclude the needs for interest rate swaps into
Euroyen futures market.
We expect that packs and bundles trades will
increase transparency of prices in the Threemonth Euroyen futures market.
Specifically, Packs and Bundles trades havefollowing benefits:❶Packs and Bundles execute multiple contractsof Three-month Euroyen futures in the lumpand have the same economic benefits asinterest rate swaps. Therefore, it is possible
to use Packs and Bundles as a substitute forinterest rate swaps.
❷P acks and Bundles are futures contracts
which provide simplified operation and easier
management of positions and margins.
❸The hedge accounting is applicable for Packs
and Bundles same as interest rate swap.

［ Packs and bundles trades ］●

Pack trades enable
to execute four
consecutive quarterly
contract months as awhole.

●

Bundle trades enable
to execute quarterly
contract months
consecutive after the
first nearest contract
month as a whole

1st contract month
2nd contract month
3rd contract month
4th contract month
5th contract month
6th contract month
7th contract month
8th contract month
9th contract month
10th contract month
11th contract month
12th contract month
13th contract month
14th contract month
15th contract month
16th contract month
17th contract month
18th contract month
19th contract month
20th contract month

1 yearbundle
Red
pack
Green
pack

2 yearbundle

3 yearbundle

4 yearbundle

5 yearbundle

Blue
pack
Gold
pack

Tokyo Financial Exchange Inc.

10

New Medium-t erm Man ageme n t P la n

03

Point ❸: Development of the system infrastructure that utilizes the latest
technologies（1）Reducing cost by integrating the base forsystem for Interest Rate Futures contracts
and that for Daily Futures contracts
We h av e s t a r t e d d e v e l o p i n g t h e n e x t generation system for Interest Rate Futurescontracts and Daily Futures contracts. The
renovation will be completed in the first quarterof FY 2019.
Basic policy for the next-generation system
includes the following three points:❶Reducing cost by integrating systems
Employ the same developer for developing
the systems for Interest Rate Futures contracts
and Daily Futures contracts and integrate thebase for those systems for the purpose of cost
reduction❷Necessary and sufficient system scale
Ensure the necessary and sufficient processing
ability and capacity possible to accommodate
rapid market fluctuations in view of thecurrent assumption of market environment
after system renovation❸Ensuring scalability
Ensure the scalability possible to strengthen
the system in a short period in case of an
unanticipated increase in the processing（2）
I mproving the convenience by renovating
Daily Futures ASP
In tandem with renovating the nextgeneration system, we will renovate the orderingsystem (ASP), which is offered to Daily Futurescontracts trading members.
While the existing ASP offers the minimum
function necessary for contracts, the new ASP
will offer a higher level of convenience throughimproved operability and additional functions
including chart presentation function, newordering method and prepared ledger sheets for
tax return.
B y t h e n e w A S P, t ra d i n g m e m b e r s c a n
customize functions and performance moreeasily according to their needs.
（3）
Examining proactive application of FinTech
including big data and AI to Exchange
operation
We seek to use FinTech including big data
and AI in real-time monitoring of clearing risk,
product development and market monitoring
operation.

［ Use of FinTech including big data and AI ］

11

Use of big data

Use of AI

The base of big data built into the nextgeneration system will enable us to use
both historical and real-time data. Using thebase, we realize real-time monitoring andsimulation of clearing risk.
We examine future use of the big data for
product development and sales activities.

To secure reliable markets, we constantly
monitor the markets and identify orders
which may prevent appropriate price making
and we implement countermeasures required
to respond to changes in the market liquidity
and extreme and rapid fluctuations in prices.
Now, we assess abnormalities based on
predetermined reference values. We seek toimplement AI technology to increase theaccuracy and efficiency in market monitoring
operation by detecting abnormalities based on
analysis of orders from past to present, market
liquidity and price fluctuations.

Tokyo Financial Exchange Inc.

04

Point ❹: Implementation of the new personnel/pay system（1）Background of implementation of the new
system❶The government established the Council for
the Realization of Work Style Reform andindicates an increase in labor productivity andrealization of work-life balance by Work Style
Reforms as a political challenge.
❷We had adopted the Japanese employment
system, which includes seniority-based
pay system and lifetime employment(membership-type employment), irrespectiveof non-carrier track position and carrier track
position.
However, we face the task of responding
to changes in social structures and labor
environment and a future plan of employees
and realizing diversified work styles in orderto ensure excellent human resources.

（3）Summary of the system❶Adjust the membership-type employment
system, where all employees are uniformly dealt,
and add the job-type employment system❷Establish three job categories based on work
styles❸Set qualifications of finance and IT areas andlanguage skill as requisites for promotion（2）
Intents of the new personnel/pay system❶Enable diversified work styles and realize
work-life balance❷Promote the performance-based pay systemand seek to increase labor productivity,
development and use human resources andcreate innovation in order to establish a vitalorganization（4）
Environmental improvement for introductionof the system
We make efforts to increase labor productivity
along with the introduction of the new personnel/
pay system.
To thoroughly promote the efficiency ofoperations, we comprehensively review existingprocess of operations of all departments.

■ Three job categories
Job category

Details of job

Job Ｍ

There are no limitations on details of jobs
and it is required to work overtime.

Job Ｊ

There are limitations on details of jobs andbasically it is not required to work overtime.

Job Ｓ

The job consists of certain specialist jobs
and it may be required to work overtime.

［ Review of the process of operations (efforts to increase labor productivity) ］
Efforts in FY 2016

Efforts in FY 2017

❶Simplify and reduce the documents to beprepared including reports❷Rationalize statistical materials❸P r o g r a m a n d e x e c u t e c o n v e n t i o n a loperations❹Reduce unnecessary printed materials❺Discontinue formal office procedures❻Promote the efficiency of running meetings❼P r o m o t e t h e e f f i c i e n c y o f f l o w s o foperations❽Discontinue low-value added operations❶Computerize internal procedures❷Introduce ERP (Enterprise Resource
Pr o c e s s i n g ) , t h e s y s t e m i n t e g r a l l y
m a n a g i n g o p e ra t i o n s ra n g i n g f r o m
personnel and labor to accounting❸Renovate groupware and promote theefficiency of operations with the latest
a p p l i c a t i o n s s u c h a s wo r k f l ow a n d
information sharing❹Use the remote access to groupware andsmart deices

Tokyo Financial Exchange Inc.

12

Efforts i n FY 2016

Ⅰ. Business Activities
Listing of DJIA Daily Futurescontract

01

In June 2016, we listed DJIA Daily Futurescontract on Click Kabu 365.
（1）
Features of DJIA Daily Futures contract
The DJIA Daily Futures contract, which isbased on well-known index, has a feature thatinvestors can trade in yen without currency risk.
In FY 2016, trading volumes reached 1,010,000
lots. The DJIA Daily Futures contract become thesecond most popular product following Nikkei
225 Daily Futures contract.
With its capability for gain high dividend
equivalents, we expect that DJIA Daily Futurescontract will increase trading volumes.

■ Percentage of contracts by product of Click Kabu
365 (FY 2016)

1%

2%■ Points of DJIA Daily Futures contract

1

Trade theDJIA index
in yen

The world equity indexies canbe traded without currency
risk.

2

Almost 24
hour trades
includingholidaysMarket opens from 8:30 AM to
6:00 AM on the next day. (JST,Regular Hours)

3

Dividends
to be paid

Dividend equivalents is paid tolong position holders.

4No
Expiration
date

There is no expiration date.

5

Leveraged
trading

Customers can make a tradealmost 20-30 times the amountof values by depositing margin.

1.01million（18%）

4.32 million（79%）■Nikkei 225 Daily Futurescontract■DJIA Daily Futures contract■DAX® Daily Futures contract■FTSE 100 Daily Futures contract

13

Tokyo Financial Exchange Inc.

（2）Holding of the seminar for commemorating
the listing of DJIA Daily Futures contract
On June 2016, we held the seminar forcommemorating the listing of DJIA Daily
Futures contract at three sites in Tokyo, Osakaand Nagoya for the purpose of having investors
understanding DJIA Daily Futures contract which
was newly listed and cover the globally major US
equity index (the number of visitors: 750).

02

New Market Participants（1）
Trading members
The leading online broker SBI Securities
acquired the qualifications of trading
membership and clearing membership in Click
Kabu 365 in November 2016 and started offering
services in January 2017.
The company has aggressively executed avariety of promotional activities since the start ofoffering services (campaign for commemorating
the start of handling, holiday trading campaign,premium Friday campaign and campaign
for commemorating the first anniversary oflisting DJIA Daily Futures contract) and largely
increased the number of accounts and trading
volumes. It contributes to the market expansionof Click Kabu 365.

（2）Intermediate brokers
In June 2017, ALPHIX Co, Ltd. joined as anintermediate broker of OKAYASU SHOJI in
Click 365. The company aggressively executesa variety of promotions including holding
seminars at TFX Plaza.
As of the end of June 2017, the number ofall providers for Click 365 is 27 (17 trading

members, 6 intermediate brokers and 4 financial
instruments intermediary service providers) and
16 for Click Kabu 365 (12 trading members and4 financial instruments intermediary service
providers).

03

Combining of clearing
membership in Click 365 andClick Kabu 365

Excluding the underlying assets, there arecommon details of market systems between
Click 365 and Click Kabu 365. Many trading
members join both markets, but their
qualifications of clearing membership differ
from each other. Therefore, clearing members
bore clearing deposit (prepared for losses
incurred at the collapse of clearing members)
for each market.
In February 2017, the qualifications of clearing
membership were unified in Click 365 and Click
Kabu 365, and clearing deposit was aggregated.
This reduces the amount of clearing deposit per
clearing member.
This also reduces an amount incurred bysurviving clearing members at the time ofcollapse of the clearing members. Consequently,
the stability of clearing system was increased.

［ Effect of unification of the qualifications of clearing membership ］
Clearing deposit
in Click 365

Uniﬁcation of the qualiﬁcationsof clearing membership

Contribution

Member A

Member B

Member C

Clearing deposit
in Click Kabu 365
Contribution

Member D

Member A

Member B

Member E

Member F

Member E

Member F

Clearing deposit ofDaily Futures contracts
Contribution

Member A

Member B

Member C

Member D

Tokyo Financial Exchange Inc.

14

Efforts i n FY 201604

Introduction of Integrated
Management of Margin Accounts
for Click 365 and Click Kabu 365

Conventionally, investors were not allowedby the law to combine Click 365 and Click Kabu
365 in calculating margins and profit/loss.
Accordingly, if the margin for Click 365 falls
short, a loss-cut trading may take place for Click365 even if the margin remains for Click Kabu
365, or investors cannot start new trading ofClick 365 with evaluated profit from Click Kabu
365, which was inconvenient.
Recently, the law was revised to allow the
integrated margin management whereby themargins for Click 365 and Click Kabu 365 can be
combined.
Consequently, clients who established an
account for integrated margin management canplace an order if the margin in one account falls
short but the margin in another account exceeds
the shortage, which has made the trading moreconvenient and enabled clients to use theirfunds more effectively.
Also, the loss cut is determined by a
combination of Click 365 and Click Kabu 365
accounts in the calculation of margins andevaluated profit and loss, which enabled more
appropriate risk control.

conventionally calculated in accordance withthe position of the clearing members.
In February 2017, we sophisticated the risk
control in order to reflect the investor’s attributein the calculation of clearing deposit because
the size of risk taken by clearing houses depends
on the investor’s attribute, such as individuals,
corporations and market makers, etc.

06

Evaluation to Utilize AI
Technology

In March 2017, we agreed with Fujitsu Limited(based in Minato-ku, Tokyo and represented by
Tatsuya Tanaka, President; hereinafter referred
to as “Fujitsu”) to integrate our expertiseon market monitoring and Fujitsu’s on AI
technology (anomaly detection technology) tojointly evaluate the improvement in accuracy
a n d e f f i c i e n c y i n t h e m a r ke t m o n i t o r i n g
o p e ra t i o n . B y u s i n g a n o m a l y d e t e c t i o ntechnology that allows automatic detectionof “unusual status” via machine learning of
normal market data, we examine the capability
to capture a change (or sign) of condition which
may cause abnormality very accurately without
use of sophisticated analysis know-how.

Account for integrated margin management
Account for
Click 365

Account for
Click Kabu 365

07
05

Sophisticated Risk Control by
Review of Clearing Deposit
Distribution Method

The amount of clearing deposit for daily
futures contracts that should be depositedby clearing members to the Exchange was

15

Tokyo Financial Exchange Inc.

Domestic Promotion Activities

In FY 2016, we held the following seminars
and events of Click 365 and Click Kabu 365 forpurposes of increasing the market recognitionof Click 365 and Click Kabu 365, appealing
products to investors, expanding business, etc.

（1）Holding of “Click Festival 2016”
In November 2016, we held “Click Festival
2016” in Shinjuku under cooperation with Nikkei
CNBC, Stock Voice TV, Nikkei Money, FOREXPRESS and other media and many investors
attended there (around 1,000 visitors).
11 trading members ran booths at the event
venue and appealed their products.
On the day, the event began with a keynote
speech followed by a talk show by commentatorsfrom Nikkei CNBC/Market Analyze and otherprograms to meet investors’ needs.
Many media covered the event scene wasfeatured by TV Asahi and TV Tokyo in theirnews shows. Also, the investors questionnaire
indicated that they were highly satisfied with thefestival.

（2）
Promotion of trading by “Click 365 Large”
and exploration of trading needs fromprincipal transaction divisions of securities
firms❶In order to increase trade with “Click 365
Large,” we renewed our webpage exclusive toit, enhanced the dispatch of information on
merchantability and held seminars for firms❷In order to explore trading needs fromproprietary trading divisions of securities
firms, we contacted such divisions individually,
held joint briefing sessions for dealers andprovided seminars with support by Bloomberg
As a result, securities companies interested inprincipal transactions have started it（3）Support to “Market Forum 2016”
In October 2016, we supported, and set up
a booth in, the “Market Forum 2016 (Tokyo
and Osaka)” sponsored by Market Forum, anon-profit organization, in order to enhance
our presence in the financial industry, makeour listed products well known and build a
relationship with financial market players(i.e. self-dealers from securities companies,
prospective new participants, etc.).
（4）Provision of a program to “Stock Voice TV”
As a sponsor of a program “Tokyo Market
Wide (Tokyo MX-TV)” produced by “Stock VoiceTV” which is a media specialized in the market,
we are trying to awareness appeal our products
to investors.
In October, 2016, we supported the “Stock
Voice Forum 2016 (Tokyo, Osaka and Nagoya)”sponsored by the above company and promoted
it in collaboration of TV and seminars.
（5）S upport to investment seminars held by
providers
We worked on the market promotion incooperation with the providers of Click 365 andClick Kabu 365 by sending lecturers 20 times
or more in the year to the investment seminars
held by such providers.

Tokyo Financial Exchange Inc.

16

Efforts i n FY 2016

（6）
Holding “TFX Plaza Seminars”
We leased a promotion space called “Financial
Exchange Plaza” to the providers of 400 or more
“TFX Plaza Seminars.”
We are working on organizing seminars in fullcooperation with the providers.

（1）Overseas Trade Show
We participated in “FIA EXPO 2016
(Chicago)” and “FIA Asia Derivatives Conference(Singapore)” respectively in October 2016 andDecember 2016.
In Chicago, we hosted a reception alongwith the schedule of trade show Three-month
Euroyen futures and other listed products andJapanese financial market were promoted toover 300 market players in the reception.

International Marketing
Activities

08

In the current interest rate futures market,
foreign-based participants have over 70% shareof the market volume. We have been puttingemphasis on overseas marketing and improving
accessibility to the market for those investors.
■ Trading ratio between domestic players andforeign-financed players in the yen interest rate
futures market
100%■Domestic■Foreign

9

19

19
8

91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
20
15
20
17

0%

17

About 20% of Three-month Euroyen futurest ra d i n g i n F Y 2 0 1 6 wa s m a d e by n e w l y participated investors from overseas, including
without limitation China and Singapore.

Tokyo Financial Exchange Inc.

（2）Educational Seminars on Yen Interest Rate
We held seminars at multiple locations
globally to capture the interest from investors
which has been increased since introduction ofnegative interest rate by the BOJ.

Ⅱ. Relationship with Market Participants
and Research Activities, etc.
01

Click Association

information vendors and ISVs exchanged theiropinions vigorously.

We establish “Click Association” for purposesof sharing of business strategies, exchange of
opinions, promotion of communication among
the trading members of Click 365 and Click
Kabu 365.
In December 2016, we held Click Association
meeting at the Imperial Hotel to which 50
persons attended.
President Ota made a speech that TFX andtrading participants will cooperate with eachother in having united efforts to promote andenhance the market.

03

02

Traders ClubAn annual event “Traders Club” was heldin June 2016 to honor participants for theircontributions and to have an opportunity
to expand relations. We held a presentationr e g a r d i n g m a r ke t t r e n d , a n d m o r e t h a n
30 attendees including trading members,

Financial Derivative Market
Research GroupWe establish “Financial Derivative Market
Research Group” as a place of research on issues
about financial derivative market by academic
experts specialized in finance and economics.
The Group consists of five university
professors led by Mr. Kazuto Ikeo (professor of
Keio University, Faculty of Economics).

Tokyo Financial Exchange Inc.

18

Efforts i n FY 201604

Financial Market Study GroupWe set up “Financial Market Study Group”
consisting of 10 members, including thosefrom financial institutions and think tanks
and university professors, for purposes of
information gathering and exchange of opinions
about timely topics on domestic and overseas
economies and finance as reference for themarket operation.

05

Public Lectures for Financeand Economy

As a public infrastructure, TFX has a mission
to contribute to a sound development of financeand economy of Japan. As a part of it, we arecommitted to the educational activities.
To enable the attendees to understandderivative trading more closely and correctly, we
are holding lectures for finance and economy inaffiliation with local community and educational
institutions similarly in the last year.
In FY 2016, we held 26 lectures for finance andeconomy on topics such as foreign exchange,
the Nikkei Stock Average and so on in local
community centers.
Municipalities[Days of lectures]

19

Facilities

Held in:

Chiba city,
Chiba
prefecture

Konakadai community center
and Kotehashidai community
centerApril andJuly, 2016

Narashinocity, Chiba
prefecture

Kikutacommunity center

May to June,
2016

Saitama city,
Saitamaprefecture

Harigaya community center,Okubo community center, Ryoke
community center, Miyahara
community center, Suzugaya
community center, Kitaurawa
community center, Yonohommachi
communit y cent er , Uekisaki
community center, Shimoochiai
community center andHigashiomiya community center

May to July,
September
andNovember
2016
January andMarch, 2017

Urayasu city,
Chiba prefecture

Horie community center andMiama community center

June 2016

Kawaguchi city,
Saitama prefecture

Kawaguchi Citizen’s College(Nishi community center）

September to
October 2016

Toda city, Saitama Misasa community center
Prefecture

October
2016

Shiki city, Saitama Iroha Yugakukan
prefecture

November
2016

Tokyo Financial Exchange Inc.

06

Education for Students

As an activity targeting young generation
who will play important roles in the future,
we organized lectures and tours to TFX for
university students, etc.
We provided the following lectures in FY 2016.
SchoolContents

Held in:

Union of Student
Investment Clubs(USIC)

Lectures for economy
and finance and tour
to the Exchange

July and
October 2016

Hokuriku University

Lectures for economy
and finance and tour
to the Exchange

September
2016

Yamaguchi
Prefectural Hofu
High School

Lectures for economy
and finance and tour
to the Exchange

December
2016

Meiji University

Visiting lectures forexchange and stockindex

December2016

Ⅲ. Human Resources Development andInternal Activation
Human Resources
Development

01

03

（1）
Human Resources Vision
We have established a vision for positive
human resources development.
■ TFX’s Human Resources Vision

System to Support Child Careand Nursing Care

We are working to enrich a system to support
employees who face a time constraint due to child careor nursing care so that they can maintain a work-lifebalance.
Especially for child-care leave, we permit employees
to take leave more than permitted by laws.
Details

1

Those who voluntarily learn with a strong sense ofadvancement and keep challenging with high aim

2

Those who always pursue creativity and respond to allenvironmental changes flexibly and promptlyChild-care leave

Can be taken from a day next to the day when a leave afterchildbirth ends as long as a child is less than three years old,provided that the leave can be taken till a child reaches the age ofelementary school only if the child is not admitted to a nursery
center for any reason.

3

Those who have a wide field of view to enhance personalquality, accept diversity and settle problems in unified
cooperation with others

Exemption fromovertime work or
holiday work

Exempted as long as a child is less than three years old.

Short-time work

Daily work hours can be reduced to six as long as a child is lessthan three years old.

Child-custodyleave

Can be taken on half-day basis, up to five days in a year (or tendays for more than one child) until a child reaches the age ofelementary school.

（2）
Training programs, etc.
We introduce the following trainings toachieve our vision.
Also, we have a system to support humanresources development to foster expertise of
employees.
Systems
Training by
employee’s
position

Businesstraining

Outsidedispatch
System tosupportpersonal
development

02

Details

Training of new
employees

Basic training for member of society, training
for corporate practices, basic job training,
follow-up training, and man-to-man training
systemTraining ofmanagement

Training of evaluators and assessors, anddispatch to outside training institutions

Dispatch toseminars

Dispatch to seminars to acquire new staff andlatest information, etc.

Correspondence
study

Correspondence lectures for derivatives must
be taken.

Language study

Dispatch to overseas short-term intensive
language study

Loan

Loan to financial authorities and privatecompanies

Subsidy for
qualificationacquisition

Subsidy for qualification and examination fee
in language, finance, IT, legal and other wide
range of fields

Recommendation to Take Paid
Leave

As a part of creating an employee friendly
workplace, we recommend employees to takepaid leave. We are making efforts to achieve theentire company’s numerical target of 70% as therate of paid leave taken.
Also, we permit employees to take paid leaveon half-day basis.

Can be taken up to 93 days for one family member each time

Nursing care leave nursing is needed, up to three times.
Short-time work

Daily work hours can be reduced by one hour by reason ofnursing, up to for three years.

Nursing leave

Can be taken on half-day basis, up to five days for one family member
who needs nursing or ten days for more than one family member.
In addition, the accumulated leave can be used up to 50 days.

04

Initiative for Internal
Activation

We h ave a vo l u n t e e r g ro u p sys t e m fo r
purposes of increasing communication among
employees and fostering corporate culture to
explore diversified ideas and solutions.
In the volunteer groups, all employees
participate in activities, such as “sports
promotion”, “corporate event planning”, “social
contribution and charity”, “improvement ininternal hygiene, environment and facilities”
and “support to company newsletter production”
and each team give variety to their activities.

05

Raising Retirement Age

We raised the retirement age from 60 to 63.
Also, we permit employees to have sidebusiness during employment with us except
business that cause a conflict of interest or
business with our competitors.
We accept diversified ways of working andexpect employees to widen their fields ofview and have various experiences during
employment with us.

Tokyo Financial Exchange Inc.

20

Corporate Govern an ce

Ⅰ. TF X’s Ma nagement Base01

of Internal Control System” to ensure the proper

Governance Structure❶ The Board of Directors makes decisions onimportant matters regarding fundamental
management policy and business activities, andsupervises the director’s performance of duties. In
order to be able to make decisions from a broader
standpoint and supervise execution of duties froman objective standpoint, Outside Directors accountfor the majority of the Board of Directors.
❷ The Board of Auditors, of which Outside Statutory
Auditors account for the majority, audits the
director’s performance of duties, and submits
an audit report to the shareholders’ meeting in

conduct of the business operations.
❷ Based on its social responsibilities and public
mission, TFX established “Standard of Conduct,”which both officers and employees are required
to observe and holds regular training programs
designed to enhance understanding andawareness of the importance of compliance for
officers and employees.
❸ A helpline for employees has been establishedto facilitate internal reporting concerning any
improper acts as well as consultation to confirm
whether the acts fall under violation of laws andregulations.

accordance with the internal control policy.
❸ The Nomination and Compensation Committee, of

03

which Outside Directors account for the majority,
deliberates on the election and dismissal of officers
and remuneration for officers.
❹ The Self-regulatory Committee, of which Outside
Directors account for the majority, makes decisions
on self-regulatory operations to ensure the fairness,transparency and credibility in the market, based ondelegation from the Board of Directors.

Risk Management Framework❶ We establish the General Risk Management
Policy, which specifically prescribes, major risks
subject to management, the definition of risk
management, risk management framework, andrisk management method.
❷ We establish the Risk Management Committee,
which discusses any important matters about therisk management and makes quarterly and annual

Corporate
Organization

Company with a Board of Auditors

Number of
Directors

9 Directors(including 5 Outside Directors)

Number of
Statutory Auditors

3 Statutory Auditors（including 2
Outside Statutory Auditors）

Advisory
Committee

The Nomination and Compensation
Committee, Market Operation
Committees

Self-regulatory
Committee

3 Directors(including 2 Outside Directors)

reports to the Board of Directors.
❸ We establish a rigorous risk management system
in order to respond to “Principles for Financial
Market Infrastructure”, etc.

04

Business Continuity Plan (BCP)❶ We formulate the “Contingency Plan on System

02

Internal Control System/
Compliance❶ We formulate “the Basic Policy for the Creation

21

Tokyo Financial Exchange Inc.

Failures and Other Emergencies” and establisheda system for continuing operations in the event ofsystem failure or other emergencies.
❷ We set up the “Business Continuity Plan (BCP)”

and established a system for business continuity
in case of the occurrence of any risks which［ Frameworks and Infrastructures

threaten TFX’s business continuity, such as major

in Event of Disasters ］

earthquakes or terrorisms.

1. Secure necessary manpower❸ In the BCP, we clarify the approach and response

2. Ensure means of telecommunication

policies of business continuity at the time of

3. Set up backup offices

occurrence of risk events leading to suspensionof business functions, and aims to restore

4. Set up secondary data center

vital information systems for TFX’s important
operations within two hours and transactions

5. Organize manuals

within 24 hours.

6. C onduct testing and educational
training❹ In preparation for the occurrence of a disaster,
we implemented the following systems andinfrastructure development.

［ Message from an Outside Director ］

Approaches to Corporate GovernanceIn recent years, strengthening the effectivenessof corporate governance have been hailed
as highly significant among even averagecompanies, but for exchanges, which are
public infrastructures, have a great influenceon the market as well as the economy andthus have a social responsibility to conduct
market operations with fairness, credibility,
and convenience, it is critical to maintainmore strict governance systems than averagecompanies. At TFX, five of the nine directors
are outside directors, and the Market Operation
Committee has also been set up as an advisory
body to the Board of Directors, composed of
directors and officers of major trading members
and academic experts, and renders opinions asneeded. This framework enables TFX to reflect
broad objective opinions from external parties
on the exchange operations.
In addition, TFX sets up a governance and risk
management system in accordance with the“Principles for Financial Market Infrastructure”(“PFMI”) published by the International
Organization of Securities Commissions (IOSCO),
composed of financial supervisory authorities
all over the world, as governance standards.
Discussions and decisions at the Board of
Directors meeting also comply with PFMI. This
strict governance system is unique to exchanges
playing a public role.
As an example, the Board of Directors establishes
the General Risk Management Policy, and receives
reports as needed in addition to quarterly andannually. We realized that the role of outside
directors in corporate governance is becoming
increasingly important, such as an annual reviewof the risk management system in various aspects
including risks of credit, liquidity, systems, andoperations.

Junko Hirakawa
Partner of City-Yuwa Partners

Tokyo Financial Exchange Inc.

22

Corporate Govern an ce

Ⅱ. Directors and S t at ut ory Audit or s
Directors

Wataru
Ito

Shozo
Ohta

Senior Managing
Director

President & CEO

Managing Director

July 1969

April 1980

April 1979

Joined Ministry of Finance

Joined the Sanwa Bank, Ltd. (currently the Bank ofTokyo-Mitsubishi UFJ, Ltd.)

Joined Daiichi Kangyo Bank, Ltd. (currently
Mizuho Bank, Ltd.)

August 1999
Vice Chairman, Bio-oriented Technology Research
Advancement Institution

July 2002
Senior Managing Director ＆ COO, The TokyoI n t e r n a t i o n a l F i n a n c i a l Fu t u re s E xc h a n ge
(currently Tokyo Financial Exchange Inc. )April 2004
Senior Managing Director of the Company

October 2009
President, CEO and Senior Managing Director

June 2010
President and CEO (Present)

January 2006

April 2005

Market Sales Manager, Tokyo Financial Futures
Exchange Inc.(currently Tokyo Financial ExchangeInc.)

M a n a ge r o f I n t e g ra t e d R i s k M a n a ge m e n t
Department

April 2007

M a n a ge r o f I n t e g ra t e d R i s k M a n a ge m e n t
Department, Head New BIS Promotion OfficeIntegrated Risk Management Department

Market Manager of the Company

October 2009Market Manager and Executive Officer

June 2011

TakashiImaiApril 1952

June 2006

June 1993

System Manager, Executive Officer

June 2013
System Manager, Senior Executive Officer

June 2016
Managing Director (Present)

Director (Outside)
August 1974

Assistant Professor, Department of Economics,
University of Illinois at Champaign-Urbana

Representive Director and President of Nippon
Steel Corporation (currently Nippon Steel &Sumitomo Metal Corporation)

April 1989

April 1998

April 2010

Representive Director and Chairman of the Boardof Directors

May 1998

Chairman of the Japan Federation of Economic
Organizations (currently The Japan Business
Federation)

Professor, Faculty of Economics, the University of
Tokyo
Professor, Faculty of Economics, Ryutsu Keizai
University

June 2010

Professor Emeritus, the University of Tokyo(Present)

May 2002

June 2012

June 2003

April 2013

June 2008

June 2015

Honorary Chairman (Present)
Senior Advisor, Honorary Chairman, Nippon SteelCorporation

Co m p a n y f r i e n d a n d H o n o ra r y C h a i r m a n(Present)

June 2009

Director of the Company (Present)

Tokyo Financial Exchange Inc.

Masahiro
Okuno

Director (Outside)

Joined Fuji Iron & Steel Co., Ltd.

June 2011

Standing Statutory Auditor

Senior Managing Director and COO (Present)

Joined Fujitsu Ltd.
System Manager of the Company

April 2008

Managing Director of the Company (Present)

June 2016

Managing Director
April 1983

March 2006

June 2011

Managing Director

Ryuji
Obara

23

Takuo
HirotaDirector of the Company (Present)
Professor, Faculty of Political Economy, Musashino
University
Chairman of Foundation for the Welfare and
Education of theAsian People (Present)Shusaku
Tsuhara

Junko
Hirakawa

Director (Outside)

Shin
Yoshidome

Director (Outside)

Director (Outside)

April 1983

April 1973

April 1974

April 2012

Joined Yuasa and Hara Law & Patent Office

April 2007

Joined Fuji Bank, Ltd. (currently Mizuho Bank, Ltd.)Managing Executive Officer in charge of sales
branches, Mizuho Bank, Ltd.

April 2015

Licensed as an attorney-at-law admitted in Japan

February 1979

President, Daiwa Securities SMBC Co., Ltd.
Deputy President & COO and Director of theBoard, Daiwa Securities Group Inc.

October 1983

Chairman, Daiwa Securities Capital Markets Co., Ltd.

Licensed as an attorney-at-law admitted in theState of New York, U.S.A.

Senior Managing Executive Officer, Mizuho
Financial Group, Inc.,
Senior Managing Director, Mizuho Bank, Ltd.

Partner of Yuasa and Hara

June 2015

July 1997

Member of the Board of Directors, Mizuho
Financial Group, Inc.

April 2017

Deputy President and Deputy President & Executive
Officer
Head of Sales division, Mizuho Bank Co., Ltd.
(Present)

June 2017

Joined Daiwa Securities Co., Ltd.

June 2011

April 2012

Special Advisor, Daiwa Securities Co., Ltd.

Founding Partner of Hirakawa, Sato & Kobayashi(currently City-Yuwa Partners)

June 2013

February 2003

April 2014

Partner of City-Yuwa Partners (Present)

June 2011

Director of the Company (Present)

Director of the Company (Present)
Special Advisor, Daiwa Institute of ResearchBusiness Innovation, Ltd.

April 2016

Advisor, Daiwa Securities Co., Ltd. (Present)

Director of the Company (Present)

Statutory Auditors

MakotoFukuchiStanding
Statutory Auditor

Toshiyuki
Tsukasaki

Statutory Auditor(Outside)

April 1981

April 1970

October 1991

Deputy Director-General

Joined the Chuo Trust and Banking Co. Ltd.
(currently the Sumitomo Mitsui Trust Bank Limitd.)
Joined Tokyo Financial Futures Exchange Inc.
(currently Tokyo Financial Exchange Inc.)

Joined the Finance Ministry

July 1998
September 2001

Head of Self-Regulation Bureau of the Company

Senior Managing Director, Facilitation Fund for
Industrial
Structural Adjustment

January 2010

April 2009Manager, General Administration Department

Attorney at Sakai, Aizawa, Mimura Law Firm

July 2007

January 2012

June 2011

Manager, Accounting Department

Discipline Committee member of the Company

June 2017

June 2015

Statutory Auditor of the Company (Present)

Shigeyuki
Maeda

Statutory Auditor of the Company (Present)

April 2016

Special adviser, Uryu & Itaga Law Firm (Present)

Statutory Auditor(Outside)
April 1967

Assistant to Law Department, the University ofTokyo

April 1993

Head of law department, Hosei University

April 1997
Professor of social science, University of Tsukuba

April 2004

Professor, Graduate School of Law, Gakushuin
University

July 2007
Discipline Committee member of the Company

June 2011
Chairman of Discipline Committee

February 2013
Licensed as an attorney-at-law

June 2015

Statutory Auditor of the Company (Present)

Tokyo Financial Exchange Inc.

24

Fi nanci al Dat a & Corporat e Prof ile

Ⅰ. F ina nci a l Stat ement s (Summary)［ Income Statement(Summary) ］ ［ Blance Sheet (Summary) ］(in million yen, rounded off to milions)(in million yen, rounded off to milions)

Account Titles

FY2015FY2016

As ofMarch 31,
2016

As of
March 31,
2017

9,315

8,647

139

136

Operating Revenues
Fixed amount exchange fees
Per-contract exchange fees

Account Titles

FY2016

As ofMarch 31,
2016

As of
March 31,2017

Account Titles

FY2015FY2016

As ofMarch 31,
2016

As of
March 31,2017

(Liabilities)(Assets)
Current Assets

7,664

8,187

FY2015

Cash and bank deposits

15,86019,96914,65019,058

1,200

1,085

Accounts payable - trade

632

494

Accounts payable - other

395

329

Income taxes payable

765

Current LiabilitiesI ncome related to systemequipment

217

215

A
 ccounts receivable - trade

776

667

Other exchange fees

35

36

A
 ccounts receivable - other

227

80

Consumption taxes payable2433

Prepaid expenses

34

35

Others140

161

Deferred tax assets

170

124

537,177

456,846

536,536

456,139 ember registration feesMand others

817

I ncome from information
services271

263

I ncome from managementof specified funds

447

322

Operating Expenses
 elling, general andSadministrative expenses

9,158

8,073

9,158

8,073

Operating income

157

573

Non-operating Revenues

471

88

Non-operating Expenses

54

Ordinary Income

623

658

Extraordinary Losses

234－

Income before income taxes

389

658

Income taxes - current

69

93

▲120

49

440

514

Income taxes - deferred
Net Income

12

543,786

459,814

OthersNon-current Assets

Non-current Liabilities
 eposits received fromD
members

641

707

538,378

457,931

Shareholders' Equity

21,565

21,864

Common stock

5,844

5,844

Capital surplus

6,045

6,045

Retained earnings

9,674

9,973

4,600

4,600

Others1,232

947

Total Liabilities

Buildings

464

443

（Net Assets）

Furniture and equipment

767

503

2,217

1,629

2,205

1,455

Tangible fixed assets

Intangible fixed assets
Software oftware development
Sin progress

－

163

D
 efault compensation
reserve

Others11

10R etained earnings
brought forward

5,074

5,373

3,800

1,098

Valuation/Translation
Adjustments

▲297

▲12

536,536

456,139

Total Net Assets

21,26821,852479,783

Total Liabilities and Net
Assets559,646

479,783I nvestment and other assets
 ssets held for guranteeAfrom members

559,646

Total Assets［ Statement of Changes in Net Assets Fiscal Year 2016 (from April 1, 2016 to March 31, 2017) ］(in million yen, rounded off to milions)Shareholder's Equity
Capital surplus

Valuation/translation
adjustments

Retained earnings
Other retained earnings

Common
stock

Total

Valuation

Total

Total net
assets

9,674

21,565▲297▲297

21,268

▲215

▲215

▲215

－

－

▲215

－

3,600

3,600

－

－

3,600

－ ▲3,600▲3,600－－ ▲3,600

514

514

－

－

514

－

－

285

285

285

Total shareholder's difference valuation /of other translation
retained
equitysecurities adjustments
earnings

Capitalreserve

Total
capitalsurplus

5,844

6,045

6,045

1,000

2,808

792

－

5,074

－

－

－

－

－

－

－

－

－

－

－

－

－

3,600

－

－

－

－ ▲2,808▲792－

Net Income

－

－

－

－

－

－

－

514

The amount changed during this

－

－

－

－

－

－

－

－

－ ▲2,808

▲792

3,600

299

299

299

285

285

584

－

3,600

5,373

9,973

21,864▲12▲12

21,852

Balance as of April 1, 2016

Default
Default
Default
Default
Retainedcompensation compensation compensation compensation
earnings
reserve forreserve for FX reserve for Equity reserve forbrought
Interest Rate Daily Futures
Index Daily
Daily Futures
forward
Futures contracts
contracts Futures contracts
contracts

Changes during the term
Dividend paidTransfer to default
compensation reserve
Default compensation
reserve withdrawn

term except shareholders' equity item

－

－

－

5,844

6,045

6,045

Total amount changed during the term
Balance as of March 31, 201725

Tokyo Financial Exchange Inc.

1,000

－

Ⅱ. Corporate Informat ion
Company NameTokyo Financial Exchange Inc.

April 25, 1989
Founded	(In April 2004, TFX changed from a membershiporganization to a stock company)

Capital5,844,650,000 yen

Fiscal Term

From April 1 every year to March 31of the following year

Number of Employees

89 (as of June 30, 2017)

Number of Shares
Issued and Outstanding

862,750

Number of Shareholders

75

Organizational Chart
Board of Auditors

Statutory Auditor

General Administration
Department
Finance and Accounting
Department

Shareholder’sMeeting

Board ofDirectors

President& CEO

Fixed Income Products
Development andMarketing Department
Financial Derivatives
Planning Department
Financial Derivatives
Marketing Department
Clearing and Settlement
Department
Market Surveillance
Department
System Department

Major shareholders

Compliance and Risk
Management Ofﬁce

Name

Shares held

Shareholding ratio (%)

The Bank of Tokyo- Mitsubishi UFJ, Ltd.

43,130

4.99

Sumitomo Mitsui Banking Corporation

43,0604.99

Mitsubishi UFJ Trust and Banking Corporation

41,3204.78

Mizuho Bank, Ltd.

32,4003.75

Expert Committee/

Sumitomo Mitsui Trust Bank, Limited

31,3203.63

Discipline Committee

Daiwa Securities Co. Ltd

30,6603.55

Mizuho Securities Co., Ltd.

26,937

3.12

Goldman Sachs Japan Co., Ltd.

26,320

3.05

The Shinkin Central Bank

20,6602.39

The Norinchukin Bank

20,6602.39

Mizuho Trust & Banking Co., Ltd.

20,6602.39

The Bank of Yokohama,Ltd.

20,6602.39

Internal AuditingOfﬁce
Self-Regulatory Committee

Self-Regulation Bureau

Advisory Committee･Nomination and Compensation Committee･Interest Rate Futures etc. Market Operation Committee･FX/Equity Index Market Operation Committee

・The Nikkei Stock Average is a copyrighted index calculated by a method independently developed by Nikkei Inc. Nikkei Inc holds the copyright, the intellectual property rights, and all other rights
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Tokyo Financial Exchange Inc.

26

Tekko Building 8th Floor, 1-8-2 Marunouchi, Chiyoda-ku, Tokyo 100-0005
Tel: +81-3-4578-2400 Fax: +81-3-3212-5780 https://www.tfx.co.jp

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