November 2006

TFX Outlook in November 2006

About TFX, Home Market for Euroyen
Tokyo Financial Exchange (TFX) has been widely known as the home market for Euroyen futures to awide range of domestic and international investors since its foundation in 1989. In addition, Euroyen
options have been traded since 1991 to accommodate further needs of investors.
TFX has been Japan’ s most innovative exchange and adding worldwide standard functions to its
operations. To meet the diversified needs of investors, TFX has listed 5 year \ Swapnote™, 10 year \Swapnote™ and Exchange FX Margin Contracts.
In April 2004, TFX demutualized to more readily adapt to rapidly changing market conditions and userneeds. TFX continues to reinvent its infrastructure to improve market environment.

Market Overview of Euroyen
Bank of Japan (BOJ) has decided to lift an ultra­easy monetary policy in March, 2006
and zero interst rate policy in July, 2006. Now, the Japanese economy and financial
markets has been recovering from a long­time deflation for years after a collapse ofbubble­economy.

5,000,000

Monthly Trading Volume
Futures

Options4,000,000

3,000,000

2,000,000

In 2006, the trading volume of Euroyen futures and options has been dramaticallygrowing on the strength of the recent economic development.
Under such circumstances, Euroyen serves extremely well as tool of a financial risk
control and the demand for the contract is boosted.

1,000,0000

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 102005

5,000,000

2006

Open Interest (Month­end)
Futures

Options

4,000,000

06’ AMV

Year­to­year Comparison

Euroyen futures

2,556,790( x 2.8 )Euroyen Options

341,637( x 99.5)2,000,000* AMV ­ Average of Monthly trading Volume

1,000,000

3,000,0000

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 102005

2006

Edges of TFX, 89% Euroyen Share among World Exchanges
TFX is the world's largest market for Euroyen and called as “Mother Market for Euroyen” . As the growthof worldwide Euroyen trading expands, the TFX’ s market share is rapidly increasing with TFX ‘s edges.

The edges of TFX market are:
­ A number of clearing members with wealth of resources­ Availability of world standardized facilities and systems such as SPAN ® and Give­ups­ Enhanced architecture and trading facility supported by LIFFE CONNECT TM

continued overleaf

November 2006

Future Strategies of TFXJiro Saito, President & CEO of TFX, expressed future strategies of the exchange at a press
conference held in Japan in November 2006. These strategies attempt to increase the level ofconvenience and provide more liquidity to TFX Euroyen market.

1. Upgrading of Trading Architecture
TFX plans to upgrade the trading system and the whole system architecture to the most advanced level in theworld. This will enhance a convenience of TFX market and keep a stability for processing increasing incomingorders.
Implementation of advanced IT technologies will significantly enhance a speed and capacity of system processing.
In the strategic plan, the new system will be able to process up to 6 million incoming orders in a day, which is about
300 times as many as the current one. The go­live date of the new enhanced system is targeted in April, 2008.

2. Establishment of Global Network, Support of ISVs
TFX plans to establish a new dedicated line network. At present, the connection between TFX and the trading
members is limited to use of an exclusive line. The construction of TFX’ s dedicated line network will enhanceconnectivity and flexibility to TFX market. Moreover, overseas hubs will be set up to promote access from foreign
investors.
To suppport diversified range of connectivity to TFX market, TFX prompts to support ISVs. The restriction thatISVs retain ISV’ s branch or office in Japan was eliminated in September, 2006. Many overseas ISVs will access
TFX market, in addition to GL Trade and Patsystems.

3. Vitalization of Euroyen Option Market
To increase further liquidity and convenience of Euroyen Option market, a new market­maker scheme will belaunched early 2007. Introduction of market maker scheme will contribute to facilitate strategy trades of options aswell as the outright trades with the current advanced technology functions of implied­in/out, .

4. Improvment of Trading Procedures
In order to improve a diversified trading method and harmonize a worldwide standard procedure, the matchingalgorithm will be changed from the current “price­time priority” principle to “pro­rata” principle, to be planned in 2008.
In a similar view of harmonization among global exchanges, TFX has changed conditions to approve execution ofBlock Trades in November 2006. Now, block trades with “a fair and reasonable price” can be executed.

5. Extension of Trading Hours
To provide a convenience for foreign investors, trading hours of Euroyen will be extended by two hours until
20:00, to be planned in early 2007.

Tokyo Financial Exchange Inc.
21 Ichiban­cho, Chiyoda­ku, Tokyo 102­0082
Tel: 81­3­3514­2418 Fax: 81­3­3514­2425 URL: http://www.tfx.co.jp/en E­Mail: info@tfx.co.jp
The copyright for this publication is held by Tokyo Financial Exchange Inc. (TFX).
This publication has been compiled by TFX for general inforamtion purpose only. Although every attempt has been made to ensure the accuracy of theinformation, TFX assumes no responsibility for any errors and omissions. All matters pertaining to rules and procedures herein are made subject to andare superseded by official TFX rules.
The descriptions in this publication are onlt intended to commentary and none of them aims to provide ivestors or asset management advice. TFX
reserves the right to change the contents of this publication without prior notice.
SPAN® used herein is a registered trademark of Chicago Mercantile Exchange and used herein under license. Chicago Mercantile Exchange assumes
no liability in connection with the use of SPAN® by any person or entity.