Outline of Specifications for the Carbon Credit Market
June 9, 2023
Tokyo Stock Exchange, Inc.
I. Purpose
In order to achieve its goal of carbon neutrality by 2050, in February 2023, the Japanese government announced the introduction of an "emissions
trading system" as part of the carbon pricing system design in its "Basic Policy for the Realization of GX". Trial trading is scheduled to begin in FY2023 andfull-scale operation in FY2026, so as part of this, there are expectations for a carbon credit market to be created in FY2023.
Based on the knowledge and market operation experience gained from the "Technical Demonstration Project for Carbon Credit Market" commissionedby the Ministry of Economy, Trade and Industry (METI) in FY2022, Tokyo Stock Exchange, Inc. (TSE) will establish a carbon credit market (hereinafterreferred to as the "Market").
The Market will be separate from the financial instruments markets operated by TSE where stocks and other products are listed.

II. Outline
Items marked as (*) have changed from the demonstration project conducted in FY2022.
Item

Description

Remarks

1. Trading method, etc.
(1) Items eligible fortrading・ Items eligible for trading will be J-Credits, which are a type of carbon credit

・ A J-Credit is an amount of(used here to mean carbon dioxide equivalent quotas and similar

greenhouse gas emission reduction

frameworks).

or removal which is certified based

・ J-Credits include credits transferred from the previous Domestic Credit andon rules for global warming

Offset Credit (J-VER; Japan's verified emissions reduction) Schemes, regional J-

countermeasures in Japan, which are

Credits, and those not yet transferred from the J-VER, regional J-VER, andadministered by METI, the Ministry

Domestic Credit schemes.

of the Environment, and the Ministryof Agriculture, Forestry and Fisheries.

(2) Trading method

・ Trading will be conducted by auction.

1

Item
(3) Trading days

Description

Remarks

・ Trading shall be conducted on days other than non-business days asprescribed by TSE, as well as non-regular non-business days and non-regularmarket closures deemed necessary by TSE.
・ Non-business days as prescribed by TSE shall be Sundays, national holidays (if・ These are the same non-businessa national holiday falls on a Sunday, the closest following day that is not adays as those for the other financial

national holiday), days when the previous day and the following day are

instruments markets operated by TSE,

national holidays, Saturdays, the first three days of the New Year, andsuch as for listed stocks.

December 31.
・ TSE may specify a non-regular day of closure of the Market when operations

・ Please see 3. (1) for details on theof the trading system set up by TSE (hereinafter referred to as the "Carbon

Carbon Credit Market System.

Credit Market System") or the J-Credit Registry System are suspended due to

・ The J-Credit Registry System is amaintenance or other reasons.

system for recording holdings,
transfers, cancellations, and otherinformation on J-Credits issued after
certification of greenhouse gas
emission reductions and removals
based on the J-Credit rules. For more
information, please visit https://jcreditregistry.go.jp/toppage.html(only in Japanese).

2. Carbon Credit Market
Participants(1) Type of participant

・ A new type of trading participant, the "Carbon Credit Market Participant," will

・ General trading participants of TSE

be created to participate in the Market (these are hereinafter referred to as

are also required to go through"Participants").

procedures such as application for・ Participants shall endeavor to ensure fair price formation and stablesettlement in the Market, thereby maintaining and improving the functioning2

registration.
・ Those who participated in the

Item

Description

Remarksof carbon pricing.

demonstration are also required to・ Those looking to become Participants shall apply to and be registered with
TSE.

complete the procedures. For specificdocuments to be submitted, pleaserefer to 2. (2) (b).
- (*) Because checking to see whether acustomer is a qualified invoice issuer isdifficult, Participants may not act asagents for orders from others. This
does not include cases where a
Participant trades with a customer
outside the Market and then trades on
the Market itself.
・ A "qualified invoice issuer" is abusiness operator as defined in theConsumption Tax Law (Shōhizeihō,
Law No. 108, 1988; the same shallapply hereinafter)1 Article 2,
Paragraph 1, Item 7-2.

(2) Participant
registration(a) Registration

・ Applicants must meet the following a. through f. to register as a Participant.

requirements

a. Being a corporation, government or local government, or voluntary・ Individuals are ineligible forregistration.

organization ("nin-i dantai" under Japanese law)b. Having a system in place to ensure stable operations
c. Having sound management, including having sufficient social credibility to1This refers to the Consumption Tax Law after revisions implemented by Law No. 15, 2016.
3- (*) To ensure stable operations, multiple
officers and employees are required toItem

Description

Remarks

be a TSE trading participant and not being subject to the control or

be engaged.

influence of any party lacking social credibility or any other party consideredinappropriate in light of the objectives of TSE and its operation of themarkets
d. Not being insolvent
e. Having established a bank account and a J-Credit Scheme Registry account- (*) Participants shall be limited to(hereinafter referred to as a "J-Credit account") in the applicant's own namequalified invoice issuers in accordanceand being registered as a qualified invoice issuer

with the introduction of the newf. Not having representatives, directors, or important employees that fall under

qualified invoice system as the method

any of the following items:

for claiming input tax credits for(a) A person who does not have the appropriate recognition, judgement, or

consumption tax from October 1, 2023.

two-way communication abilities that are needed to carry out their business・ A J-Credit account shall be one in thedue to a mental disorder;

name of the Participant where the(b) A person for whom a decision of commencement of bankruptcy

usage authority indicated in theproceedings has been made and who has not obtained restoration of

account information in the J-Credit

rights, or a person who is treated in the same manner under foreign laws

Registry system is "account holder

and regulations; oronly."(c) A person who has been sentenced to a punishment at least as severe as
imprisonment (including equivalent punishment under foreign laws andregulations), or fines under the provisions of the Commodity Derivatives
Transaction Act or equivalent foreign laws and regulations (including
equivalent punishment under foreign laws and regulations), where lessthan five years have passed since the date of completion or cancellation ofsaid punishment.
(b) Application forregistration as a
Participant

・ Application for registration as a Participant shall be made by submitting to TSE
the application form prescribed by TSE.

・ The application form and instructions
for submitting it will be posted on the・ The application form must be accompanied by the documents listed below.
4

JPX website.

Item

Description

Remarks
・ In addition to the documents listed

a. Outline of company
b. Financial documents (balance sheet, income statement, etc.)

on the left, other documents may bec.

requested as necessary.

Details of bank accounts and J-Credit accounts

d. A written statement verifying that the applicant has a J-Credit account・ The government, local governments,

e. A written document verifying that the applicant is a qualified invoice issuer

TSE-listed companies, and trading andf.

clearing participants of JPX Group will

A list of contact persons

be exempted from submitting items
a. and b.
(c) Designation of・ Those who wish to be registered as a Participant shall, upon application,

settlement accounts

・ As a general rule, this should be adesignate a bank account and a J-Credit account in their own name to be usedsingle bank account and a single J-

for settlement of transactions in the Market.

Credit account. However, if TSE gives
permission, multiple accounts may bedesignated.

(d) Payment of・ After TSE has confirmed that an applicant meets the requirements for(*) TSE will stipulate registration fees andregistration fee andregistration and that the application form and accompanied documents aredeposit of Participant

complete, the applicant shall pay the registration fee and (if deemed

security money

necessary by TSE) deposit the Participant security money by a date designatedregistration fee and no participant

by TSE.

security money is required.

(e) Participant

・ TSE will register an applicant as a Participant when it has confirmed theregistration(f) System tests after

completion of the actions in (d).
as a login confirmation by a date designated by TSE.

(3) Participant
obligations(a) Notifications andreports by・ For the time being, there is no- (*) All names of Participants will be
published on the JPX website.

・ When a Participant has been registered, they shall conduct system tests suchregistration

Participant security money.

A Participant shall notify TSE without delay of any change in its name, changeof bank account, or similar changes.
5

Item
Participants

Description

Remarks

If a Participant no longer meets the requirements specified in 2. (2) (a),violates the Carbon Credit Market Terms and Conditions, which stipulate
items necessary for trading of carbon credits on TSE's market and processing
connected to that trading, or falls into a situation similar to these, it shallreport this fact to TSE immediately.

(b) Fees for market
participation

・ Fees for market participation shall be as follows:a. Basic fee

participation.

b. Transaction fee

・ For the time being, these feesc.
(4) Cancellation ofregistration(5) Monitoring andinvestigations by TSE

Settlement fee

will all be zero.

・ TSE will stipulate procedures by which a Participant can request thecancellation of its registration as a Participant.
・ TSE shall monitor the status of orders, trades, and settlements of Participantson the Market from the perspective of ensuring fair price formation andsmooth settlements.
・ TSE may, if it deems it necessary in light of the aforementioned monitoring or
operation of the Market, request a Participant to submit reports or
documents that provide information on trading or settlement by said
Participant in the Market or its operations or assets pertaining to carbon
credits. Upon receiving such a request, the Participant shall submit reports or
documents without delay in a manner prescribed by TSE.

(6) Sanctions against
Participants, etc.
(a) Sanctions against
Participants- (*) TSE will stipulate fees for market

・ If a Participant:➢No longer meets the requirements specified in 2. (2) (a),➢Defaults on a settlement or has other difficulties as prescribed in 5., or➢

Violates the Terms and Conditions,

TSE may, after requesting an explanation from the Participant as necessary,
6

Item

Description

Remarks

cancel or suspend its registration, suspend its permission to trade, or request
improvements (hereinafter collectively referred to as "sanctions").
(b) Regulatory

・ TSE shall request that a Participant who has caused a settlement default or

measures against

other issue that leads to cancellation of a trade reports on information such as

Participants inthe background of the issue, the cause and its analysis, and measures tosettlement default

prevent recurrence.

(c) Publicannouncement of・ If TSE applies sanctions, it may publicly announce the name of the relevant
Participant and related information.

- (*) TSE will stipulate measures for publicannouncements of sanctions.

sanctions
3. Auction trading(1) Trading method

・ Auction trading will be conducted on the Carbon Credit Market System.
・ A call auction is conducted once in the morning (11:30 a.m.) and once in theafternoon (3:00 p.m.). (All times in this document are in JST.)・ The Carbon Credit Market System is asystem dedicated to carbon credit
trading, which is separate fromexisting trading systems for stocks,
derivatives, and other products. Users
can log in, place orders, and perform
other operations via the Internet.
・ A User ID to log in to the Carbon
Credit Market System will be provided
to each Participant.

(2) Settlement date・ The settlement date will be the sixth trading day (excluding non-businessdays, non-regular non-business days, and non-regular market closures asprescribed in 1. (3); the same shall apply to the calculation of numbers of days
hereinafter) counting from the trading day on which the trade is executed.

(3) Order type・ Only orders at pre-specified prices (limit orders) will be accepted.

・ Market orders, for which prices are
not specified, will not be accepted.

(4) Categories of・ Considering the price formation and supply and demand situation around
7

Item

Description

trading

Remarks

carbon credits, TSE will set standardized trading categories for carbon credit
trading on the Market based on the credits' characteristics and otherconditions.
・ The categories shall be as stipulated in the Appendix.

・ For the time being, J-Credits shall not
be traded using the "subcategories"
as trading categories.

(5) Method of bids andoffers

A Participant shall make a bid or offer when it intends to conduct auction

・ Making a bid or offer means

trading.

indicating the details of an order, such

Participants shall make clear the following matters to TSE when making bids

as whether it is a sale or a purchaseor offers:

and its price, when placing said ordera. Category of tradingin the TSE market.

b. Whether the order is a sale or a purchasec.

If a sale, the credit certification number of the carbon credits to betransferred if said sale is executed・ The credit certification number for a
J-Credit is assigned to each project at

d. Order quantity

the time of certification.

e. Order price(6) Execution method

・ Auction trading in the Market is conducted by aggregating sell orders and buy
orders for each trading category and executing trades between matching bids

・ The Zaraba method (continuous
auction) will not be used.

and offers in accordance with the precedence of bids and offers as follows(the Itayose method).
(a) A lower offer shall have precedence over higher offers, and a higher bid
shall have precedence over lower bids;(b) Where two or more bids or offers are made at the same price, precedence
shall be determined in the order of the time at which such bids or offers were
made: i.e., an earlier bid or offer shall have precedence over later bids oroffers.
When either of the following converge at a particular price through8

・ When an order is amended, time

Item

Description

Remarks

competition among offers, competition among bids, and competitive

precedence will be based on the pre-matching of bids and offers, this shall be the execution price, and trades shallamendment order for changes tobe effected between corresponding bids and offers in accordance with thevolume (decreases) and on the post-

precedence of bids and offers.

amendment order for changes toa) The total volume of all offers lower than the matching price and the total

price and changes to volume

volume of all bids higher than the matching price(increases).

b) For bids and offers at the matching price, the total volume of all bids or all
offers.
(7) Order acceptance・ Orders shall be accepted from 9:00 a.m. to 11:29 a.m. and from 12:30 p.m. totime and validity
period

14:59 p.m.

・ Placed orders will be carried over tothe next call auction (including the・ Placed orders shall be valid until otherwise cancelled.

next trading day's auction) and will・ Orders which exceed the price limits on bids and offers will be cancelled.

continue to be so unless they arecancelled.

(8) Tick size and tradingunit(9) Base prices andprice limits on bids

・ Tick sizes and trading units will be established for carbon credit trading.
・ The tick size and trading unit of J-Credits shall be as follows:➢

Tick size: JPY 1➢

Trading unit: 1 t-CO2

・ A trading unit is the smallest unit thatcan be traded with a single bid oroffer.

・ Price limits on bids and offers will be established for carbon credit trading.
・ The price limits on bids and offers for J-Credits shall be 90% above or below- (*) From the perspective of preventing

the base price (any fraction less than JPY 1 shall be rounded down).

erroneous order placement while notand offers

hindering fair price formation, the pricelimits on bids and offers will be reduced
from 100%, as they were at the end of thedemonstration project, to 90%.
・ The base price for J-Credits shall be as follows:a.

The first call auction on a trading day(a) For trading categories for which trades were executed on the previous
9

Item

Description

Remarks

trading day, the final execution price of the previous trading day(b) For trading categories for which trades were not executed on the previous
trading day, the base price of the previous trading day(c) Where the price specified in (a) or (b) is deemed inappropriate by TSE, theprice deemed appropriate by TSEb.

The second and subsequent call auctions on a trading day(a) For trading categories for which trades were executed at the most recent
auction on the same trading day, the execution price at that auction(b) For trading categories for which trades were not executed at the mostrecent auction on the same trading day, the base price at that auction(c) Where the price specified in (a) or (b) is deemed inappropriate by TSE, theprice deemed appropriate by TSE(10) Notification

・ When a trade is executed, TSE will notify the selling and buying Participants ofthe details.

(11) Temporary

・ If a system failure occurs in the Carbon Credit Market System or the Credit

suspension andRegistry, or when operations are suspended due to system maintenance orregulatory measuresother reasons, TSE may temporarily suspend all or part of trading, or, when it
deems necessary for reasons other than the above, temporarily suspend all orpart of trading or conduct extraordinary trading.
・ If TSE deems it necessary to ensure stability in the operations of the Market,
TSE may take the following measures and any other regulatory measures
regarding trading or settlement that it deems appropriate:➢

Restrictions on the total selling quantity or total buying quantity➢

Restrictions on the quantity or value per order➢

Restrictions on the number of orders able to be placed by one Participant
or by all Participants➢

Restrictions on the transfer of carbon credits
10

Item

Description➢

Remarks

Moving of settlement date or settlement cut-off time either forward orback(12) Publication of
trading information

・ When a trade is executed, the execution price will be published in themanners described in a. and b. below, as specified by TSE.
・ This will be at around 16:00 p.m. on

a. Publication on the JPX website
Execution prices and trading volume of trades executed during the two calleach trading day.

auctions on each trading day will be posted by trading category on the JPX
website.
b. Publication through the Carbon Credit Market System
Participants can check the status of orders by trading category, as well as all
execution prices and trading volumes for each call auction.

- (*) There will be no provisions for nonParticipant "Viewers," who were able
to view information such as execution
prices during the demonstration, and"Designated Participants," whoprovided price information for
calculating reference prices.

4. Settlement(1) Settlement units,etc.

・ For settlement of trades executed on the Market, the following shall be
conducted in a manner prescribed by TSE separately for each execution
determined through the method specified in 3. (6) (hereinafter referred to asa "settlement unit"):(a) transfer of carbon credits that are in the same trading category as
specified in 3. (4) and have a quantity equivalent to that of the relevant
executed trade;(b) delivery/receipt of the amount of money equivalent to the trading valueof said executed trade (that is, the amount equivalent to the total of trading
value and related consumption tax (including local consumption tax; the same
shall apply hereinafter. This amount is calculated using the execution price11- (*) The counterparty of settlement shallnot be shown.

Item

Description

Remarks

multiplied by the executed quantity as a tax calculation base; any amount lessthan JPY 1 shall be rounded down)).
・ TSE will, for each settlement unit, notify the Participants who were involved in
the relevant executed trade of the quantity of carbon credits, the credit

via the Carbon Credit Market System

certification number, and the trading value through the Carbon Credit Market

from 8:00 a.m. on the day after that

System.

on which the trades were executed.

・ If, on viewing this notification, a selling Participant becomes aware of an error・ This report shall be made by 1:00

in the credit certification number it has designated in 3. (5) c. or cannot

p.m. on the third day after that of thetransfer the volume of credits that were executed, it must promptly report

execution (two days before thethis to TSE along with the information in a. or b. below.

settlement date).

a. If said Participant holds separate carbon credits of at least the same
volume as the relevant executed trade and relating to a different credit
certification number in the same trading category, and wishes to settle
said trade with these credits, this fact and the credit certification numberof the new credits
b. If said Participant does not hold separate carbon credits of at least thesame volume as the relevant executed trade and relating to a different
credit certification number in the same trading category, or does holdthese but does not wish to settle said trade with them, that they will not
be able to transfer all or some of the Credits for Delivery.
・ If a selling Participant reports the information in a. above, the relevant
executed trade shall be settled using the carbon credits related to the newcredit certification number.
(2) Funds for Delivery
and Receipt(a) Funds for Delivery

・ Participants may view this notification・ "Funds for Delivery" refers to the total amount equivalent to the trading
volume of carbon credits bought on a single day by each Participant (or12・ Please submit the report form
prescribed by TSE.

Item

Description

Remarks

settlement account if a Participant has multiple settlement accounts).
(b) Funds for Receipt

・ "Funds for Receipt" refers to the total amount equivalent to the trading・ Participants will be able to view theirvolume of carbon credits sold on a single day by each Participant.

own Funds for Delivery and Receipt
via the Carbon Credit Market System
at 8:00 a.m. on the trading day
following the trading day on which
the trades were executed.
・ Funds for Delivery and Funds for
Receipt will not be offset.

(3) Credits for Delivery
and Receipt(a) Credits for Delivery

・ Of the carbon credits executed in a single day, "Credits for Delivery" refers to
the total amount relating to each selling Participant and credit certification
number specified in 3. (5) c.

(b) Credits for Receipt

・ Of the carbon credits executed in a single day, "Credits for Receipt" refers to・ If the same Participant sells andthe total amount relating to each buying Participant and credit certification

purchases J-Credits which have thenumber.

same certification number, there will
be no netting with respect to Credits
for Delivery and Receipt.

(4) Pre-transfer of・ A selling Participant shall transfer Credits for Delivery to TSE by means of acarbon credits fromtransfer to a J-Credit account in the name of TSE in the Credit Registry Systemselling Participant toby 11:00 a.m. of the trading day preceding the settlement date.

TSE・ TSE shall hold the transferred carbon credits on behalf of the selling
Participant until the buying Participant pays Funds for Delivery.

(5) Payment of Funds

・ A buying Participant shall pay Funds for Delivery to TSE on the settlement

・If the money is received in the accountfor Delivery by buying

date, and no later than 11:00 a.m., by depositing them into a bank account indesignated by TSE prior to theParticipant

the name of TSE at a financial institution designated by TSE.

settlement date, TSE will return it to the

13

Item

Description

Remarks

・ TSE shall receive Funds for Delivery in this way on behalf of the selling
Participant. Once TSE has received Funds for Delivery, the selling Participantbuying Participant.
・The designated financial institution shall

shall be deemed to have received the funds from the buying Participant andbe MUFG Bank, Nihonbashi-Chuoshall no longer be able to claim payment from the buying Participant.

Branch.

(6) Hold and transfer of・ From the point that TSE receives Funds for Delivery as described in (5) (onlycarbon credits fromwhen the full amount has been transferred), carbon credits linked to theTSEsettlement units covered by said Funds for Delivery which are held by TSE on
behalf of a selling Participant as indicated in (3) shall then be deemed to be held
on behalf of the Participant who bought said settlement units. With this, theselling Participant shall be deemed to have transferred the carbon credits linked
to said settlement units to the buying Participant.

(7) Payment of Funds

・ Starting at 11:00 a.m. on the settlement date, for settlement of executed tradesfor Receipt from TSE

for which TSE has confirmed payment of Funds for Delivery as indicated in (5),to selling Participant

TSE shall pay the Funds for Receipt to the selling Participant on the same day
into a bank account designated in advance by the selling Participant.

(8) Transfer of carbon

・ After confirming payment of Funds for Delivery as indicated in (5), starting at

credits from TSE to

11:00 a.m. on the settlement date, TSE shall transfer the Credits for Receipt

buying Participanttransferred in (4) to the buying Participant on the same day by transferring
them to a J-Credit account designated by the buying Participant in advance.

(9) Provision ofqualified invoices

・ Preparation, delivery, and receipt of qualified invoices in connection with- (*) In response to the introduction of thesettlement of trades executed on the Market will be performed by TSE with the

new invoicing system in October 2023,

application of special provisions for intermediary delivery.

TSE will provide qualified invoices and・ On behalf of selling Participants, TSE shall provide buying Participants with arelated documents based on thequalified invoice in electromagnetic form, including TSE's company name andspecial provisions for intermediaryregistration number, for each settlement unit promptly after the settlement

delivery.

date.
14

Item

Description

Remarks

・ TSE shall provide selling Participants with an electromagnetic record of the・ "Qualified invoice" refers to that assettlement statement from the above qualified invoice, omitting the buying

defined in Article 57-4, Item 1 of theParticipant information, promptly after the settlement date.

Consumption Tax Law.
・ "Special provisions for intermediarydelivery" refers to the system underwhich a person acting as anintermediary or agent delivers aqualified invoice on behalf of a seller(Article 70-12 of the Enforcement
Order of the Consumption Tax Law(Cabinet Order No. 360 of 1988))2.
・ "Registration number" refers to thatas defined in Article 57-2, Item 4 of
the Consumption Tax Law.
・ TSE will provide qualified invoices andrelated documents to trading
participants in a manner designatedby TSE.

・ If a Participant does not settle a trade execution or discovers that it cannot

・ In settlement of carbon credits, whensettlement defaults

conduct a settlement as in (1) through (4) below, the execution will be

an executed trade is cancelled, any

and probable defaults

cancelled, no further procedures pertaining to settlement will be conducted,

credits or funds transferred to TSE toand settlements that have taken place will be reversed.

execute said trade shall be returned

5. Treatment ofto the relevant Participants. Anyother costs or damage incurred by
the Participant in connection with

2

This refers to the Consumption Tax Law Enforcement Order after revisions implemented by the Cabinet Order No. 135, 2018.
15

Item

Description

Remarkssuch a cancellation shall be borne by
the Participant.

(1) Difficulty in・ When TSE receives a report as stipulated in 4. (1) b. that transfer of carbon

transferring carbon

credits will not be possible because of an error in a credit certification number

credits prior to thedesignated in 3. (5) c. or difficulty with transferring the volume of credits that

settlement datewere executed, it will cancel the trade execution pertaining to the relevant
Credits for Delivery.
・ If TSE determines not to perform subsequent procedures, it shall notify the・ Funds for Delivery and Funds forbuying Participant who is the counterparty to the settlement by 4:00 p.m.

Receipt that have been corrected due

three trading days after that of the execution (two trading days before theto subsequent procedures not being

settlement date).

performed can also be viewed via the
Carbon Credit Market System.

(2) Default on transfer
of carbon credits

・ If, by 11:00 a.m. on the trading day preceding the settlement date, the Credits

・ If a selling Participant transfers

for Delivery have not been transferred in full to TSE by the selling Participant,carbon credits for only part of a

execution of said trade will be canceled and no further procedures will besettlement unit, TSE will return theperformed.

transferred carbon credits to the・ If, by 11:00 a.m. on the trading day preceding the settlement date, the Credits
for Delivery have been only partially transferred to TSE by the selling
Participant, settlements pertaining to the credit certification number of thecredits that were only partially transferred will be carried out in ascendingorder from the one with the fewest carbon credits (or by lottery if thenumbers are equal), the execution of settlement units not covered by theamount of credits received by TSE will be cancelled, and no further
procedures will be performed.

16

selling Participant after cancelling
execution of the trade.

Item

Description

Remarks(3) Default on payment

・ If all or part of Funds for Delivery are not paid by a buying Participant by the・ If a buying Participant who has not

payment cutoff time on the settlement date, TSE will cancel execution of all

paid all or part of Funds for Delivery

trades pertaining to said Funds for Delivery and will not perform subsequentby the due date is the seller of otherprocedures.

carbon credits, executions of trades

・ Carbon credits pertaining to said cancellation that have been transferred topertaining to settlement units of said

TSE on the trading day prior to the settlement date as indicated in 4. (4) shallParticipant which are sales of carbon

be returned to the selling Participant.

credits will not be cancelled, andprocedures will be performed as
usual.
・ If a buying Participant has partiallypaid Funds for Delivery, TSE will
return money equivalent to theamount paid to the buying Participant
after cancelling execution of the
trade.

(4) Sanctions, etc.



In cases of sanctions against a Participant where TSE deems it difficult tosettle trades that were executed before the sanctions took effect, TSE shallcancel execution of trades to which said Participant is a party.



Carbon credits pertaining to said cancellation which were already transferred
to TSE before the settlement date as in 4. (4) will be returned to the selling
Participant.

6. Other

TSE will separately establish provisions for the sale of credits held by thegovernment.

III. Implementation Date (Scheduled)
Trading on the Market will begin in October 2023. Registration for participants will begin around July 2023.

17

Appendix: Table of Trading Categories
First layer

Second layer

Third layer

SchemeMain Category

Subcategory

J-Credit

Energy saving(Not specified)OutlineA category consisting of J-Credits that have a seven-digit certification number
beginning with 1 and that are certified using only the energy saving methodologies
specified in the J-Credit Scheme, where only the amount of saved energy (kl) is apositive number in the monitoring report*.

Renewable(Not specified)A category consisting of J-Credits that have a seven-digit certification number

energybeginning with 1 and that are certified using only the renewable energy methodologies(electricity)

specified in the J-Credit Scheme, where only the amount of renewable energy(electricity) (MWh) is a positive number in the monitoring report.

Renewable(Not specified)energy (heat)

A category consisting of J-Credits that have a seven-digit certification number
beginning with 1 and that are certified using only the renewable energy methodologies
specified in the J-Credit Scheme, where only the amount of renewable energy (heat)(GJ) is a positive number.

Renewable(Not specified)energy(mixedelectricity

andA category consisting of J-Credits that have a seven-digit certification number
beginning with 1 and that are certified using only the renewable energy methodologies
specified in the J-Credit Scheme, where both the amount of renewable energy

heat)(electricity) (MWh) and that of renewable energy (heat) (GJ) are positive numbers.

Forest sink

(Not specified)A category consisting of J-Credits that have a seven-digit certification number
beginning with 1 and are certified using only the forest sink methodologies specified in
the J-Credit Scheme.

Other(Not specified)A category consisting of J-Credits that have a seven-digit certification number
beginning with 1 and do not fit into any of the above categories.

Transferred

Domestic credits(Not specified)from Domestic

A category consisting of J-Credits that have a seven-digit certification number
beginning with 2.

Credit Scheme
Transferred

J-VER

from

sink)

J-VER

(forest(Not specified)A category consisting of J-Credits that have a seven-digit certification number
beginning with 3 and are certified using only the forest sink methodologies specified in18

Schemethe J-VER Scheme.
J-VER (other)(Not specified)A category consisting of J-Credits that have a seven-digit certification number
beginning with 3 and do not fit into any of the above categories.

Regional

J-

Regional

Credits, J-VERs

Credits(not

J-VER (not yet

yet

J-

(Not specified)A category consisting of J-Credits that have a seven-digit certification number
beginning with 4.

(Not specified)A category consisting of J-Credits that have a seven-digit certification number

transferred),transferred)

beginning with zero (0) and are certified using only the forest sink methodologies

regional J-VERs

forest sinkspecified in the J-VER Scheme.

(not

J-VERs (not yet

yet(Not specified)A category consisting of J-Credits that have a seven-digit certification number

transferred),transferred)domesticothercredits (not yet

Regional J-VERs (Not specified)A category consisting of J-Credits that have a seven-digit certification number

transferred)(notbeginning with 9.

beginning with zero (0) and do not fit into any of the above categories.

yettransferred)
Domestic credits
(not

yet

(Not specified)A category consisting of J-Credits that have a seven-digit certification number
beginning with 8.

transferred)*A "monitoring report" is created for each credit in the J-Credit Scheme.

19