A translation

General Policies for Nikkei Indexes Administration
May 11, 2020
Nikkei Inc.
1Purpose
The purpose of this document is to set the general policies to administer theindexes, in and to which Nikkei Inc. (“Nikkei”) owns the intellectual property
rights including copyright, and calculated and published by Nikkei (“NikkeiIndexes”).

2

Governance framework
Index Business Office in Nikkei is responsible for the administration of theNikkei Indexes.
Index Business Office establishes a meeting “Index
Administration Meeting (“IAM”)” which determines the Nikkei Indexes andconducts related operations. IAM is chaired by General Manager of theIndex Business Office and consists of the members of the Index Business
Office. IAM is held on a weekly basis under normal circumstances. Directorin charge of the Index Business oversees the administration through IAM,
while the “Index Committee” which consists of such director and the directors
independent from the Index Business as appointed by CEO oversees andprovides effective scrutiny for the significant issues.

3

Oversight of Third Parties
3.1

3.2
3.3

Nikkei may commission third parties to engage in the index calculation
and related operations. Such third parties are chosen by reliability,
record of performance, and/or the possibility of conflicts of interest.
Nikkei enters into a written agreement with the third parties, in which
the roles and obligations are defined and substantiated.
Nikkei establishes necessary and sufficient communication process withthe third parties to monitor their performance.

1

A translation

4

Publication of Methodology
Nikkei publishes methodologies of the Nikkei Indexes as “Index Guidebook”
on its Official Index Website which is open to public access. Index
Guidebook describes the calculation of the indexes, methods to choose
constituents, and other information pertaining to the indexes in reasonabledetail.

5

Review of the Methodology
5.1

Nikkei reviews the conditions in the underlying interests that Nikkei
Indexes measure to determine whether the interests have undergone
structural changes at the occasion of annual constituent reshuffle
process at the IAM. Such reviews include the assessment of potential
limitations of the indexes such as operations under illiquid markets orresponses to the revision of the market system.

65.2

In addition to 5.1 above, IAM conducts assessment and examination of
the methodologies as necessary.

5.3

If results of the reviews in 5.1 and 5.2 above suggests material changes
to the methodologies are necessary, Clause 9 applies.

Determination of the Nikkei Indexes under Market Stress
When the market stress or disruption causes the prices from the exchanges
which are necessary to calculate the Nikkei Indexes unavailable, Nikkei
Indexes are determined by the last fair prices received from or announced by
the exchanges in accordance with the procedures described in themethodologies. However, when no such price is available, the indexes may
become “Not Available”. Treatment of the Nikkei Indexes under the market
stress or disruption shall be published promptly.

7

Revision of the Nikkei Indexes
When the following situations arise, and the revision of the Nikkei Indexes2

A translation

become necessary, Nikkei may recalculate and revise the closing value of theindexes. Under such circumstances, Nikkei promptly publishes the revised
indexes together with their reasons.
(1) Revision of the closing prices of the index constituents by exchanges(2) Corporate actions not applied(3) Erroneous application of corporate actions(4) Corporate actions cancelled or changed(5) Other errors in determination of the indexes
The revision applies only to the closing value of the indexes and intradayindexes will not be revised in principle. Nikkei Indexes revisions are decided
by IAM and published promptly.
8Communication with Stakeholders
Nikkei prepares a Contact Form on its Official Index Website through whichstakeholders submit queries and comments. Nikkei makes best efforts topromptly and appropriately respond to such queries and comments.
Complaints submitted by the stakeholders are processed in accordance with
“Policies for Nikkei Indexes Complaints Procedures”.

9

Material Changes to the Methodology
9.1

Material changes are defined as the changes in the underlying interest
that the Nikkei Indexes intend to measure. Material changes also
include the changes in the constituent selection rules or index
calculation method which makes managers of the financial products
linked to the Nikkei Indexes alter the composition of the products.

9.2

Material changes are determined by the Index Committee andannounced and applied with sufficient announcement period.

10 Cessation and Transition
Policies and procedures of cessation and transition of the Nikkei Indexes are3

A translationprescribed in the document “Policies for Nikkei Indexes Cessation andTransition”.
11 Consultation
Nikkei consults stakeholders on the changes to the Nikkei Indexes before
such changes take place. Consultation is conducted on the following
subjects provided that Nikkei deems consultation is necessary in its decision
making.
(1) Material changes to the methodology as stipulated in Clause 9(2) Permanent cessation of an index, as stipulated in Clause 10, where theindex is licensed for financial products(3) Regarding operations of the Nikkei Indexes other than (1) and (2)12 Control of Conflicts of Interest
Nikkei Indexes are determined based on the prices formed in and deliveredfrom the exchanges and calculated automatically in the computer systems.
Due to their nature, these indexes are highly transparent and not prone to
the risk of the conflicts of interest. In addition, following measures ensure
the integrity and independence of the Nikkei Indexes.
12.1 Nikkei establishes the Code of Conduct based on the corporate creedof “Fair and Impartial” to build up reliability as a news media. This Codeof Conducts apply to all the employees, including members of the Index
Business Office.
12.2 Nikkei is not involved in creation, marketing or settlement of financial
products and there is no potential conflicts of interest at corporate
business level.
12.3 Nikkei’s remuneration policies are not linked to the index determination
process and employees are not rewarded or incentivized by the level ofthe indexes.

4A translation

12.4 Index Business Office is responsible for all the aspects of the index
administration and reporting lines are segregated from otherdepartments of the company.
12.5 Trading and investing in the individual stocks and/or financial products
linked to the Nikkei Indexes by the members of the Index Business Office
are restricted by Nikkei’s Insider Trading Codes.
12.6 Nikkei establishes Information Control Policies and controls the accessto the information of each business unit, including the index business.

13 Whistleblowing Mechanism
Nikkei, at its corporate level, establishes whistleblowing mechanism whereemployees can report the conducts against or potentially against its Code ofConducts to the internal and external reporting centers and such reports canbe anonymous.
14 Internal Training
For the internal rules such as Insider Trading Codes, Information Control
Policies, and others, all employees are required to take in-house training
courses annually. The Index Business Office holds workshops internally or
by inviting lecturers in various areas to improve the knowledge and skills
related to the indexes and its interests to measure.
15 Changes
Contents of this policy may be changed from time to time without a priornotice. Changes are made in accordance with the procedures laid down in theNikkei’s internal rules. Changes are published on Nikkei Official Index
Website promptly.

[End of document]5

A translation[Revisions]
DateContents

May 11, 2020

Title of Clause 9 changed from Consultation
Communication to distinguish it from Clause 11

May 11, 2020

Clause 11, Consultation is added, following clauses are renumbered

May 11, 2020

Internal workshop is added to Clause 14to6