(Reference Translation)

TSE Index Guidebook(TOPIX Ex-Financials)

December 25, 2020
Tokyo Stock Exchange, Inc.

Published: December 25, 2020

DISCLAIMER: This translation may be used for reference purposes only. This English version is not an
official translation of the original Japanese document. In cases where any differences occur between the
English version and the original Japanese version, the Japanese version shall prevail. This translation is
subject to change without notice. Tokyo Stock Exchange, Inc., Japan Exchange Group, Inc., Osaka
Securities Exchange Co., Ltd., Tokyo Stock Exchange Regulation and/or their affiliates shall individually or
jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy,
misunderstanding, or changes with regard to this translation.

©

2020 Tokyo Stock Exchange, Inc.

1

Contents
Record of Changes................................................................................................................. 3
Introduction........................................................................................................................... 4
I. Outline of Stock Price Indices .......................................................................................... 4
II. Index Calculation............................................................................................................. 5
1. Outline ........................................................................................................................... 5
2. Formula.......................................................................................................................... 5
3. Stock Price Used for Calculation.................................................................................. 5
4. Number of Shares Used for Index Calculation ........................................................... 5
III. Adjustments to Base Market Value............................................................................... 6
1. Events that Require Adjustment ................................................................................. 6
1) Inclusion or Removal of Constituents...................................................................... 6
2) Changes in Number of Shares Used for Index Calculation ................................... 93) Data Source...............................................................................................................11
2. Adjustment Method......................................................................................................11
1) Indices that do not reflect dividends (i.e. price indices) ........................................112) Total Return Index .................................................................................................. 13
IV. Other .............................................................................................................................. 14
1. Publication/Dissemination of Index Data............................................................... 14
1) Index Values............................................................................................................. 142) Index Data ............................................................................................................... 14
2. Licensing ................................................................................................................... 14
3. Contact ...................................................................................................................... 15©

2020 Tokyo Stock Exchange, Inc.

2

Record of Changes
DATE

Changes

2013/8/13*TSE will Begin Calculating and Publishing "TOPIX Ex-Financials" on September
2, 20132014/6/2*Change in the Inclusion or Removal of Constituents (Corporate Consolidation,etc.)

2015/11/11*Change in I.Outline of Index.
*Addition of rule for Inclusion or Removal of Constituents in III.1.(1).

2018/7/23*Clarification of the treatment of “Rights Offering” and “Gratis Allotment of Shares”

2020/3/31* Revised the date for adjusting base market value following the shortening ofstock settlement cycle to T+2

2020/6/30

Revision to bring forward the date for minor adjustments related to ex-dividend

2020/12/25

Clarification of the treatment of section transfers, etc.

©

2020 Tokyo Stock Exchange, Inc.

3

Introduction
・ Tokyo Stock Exchange, Inc. (TSE) calculates and publishes the TOPIX Ex-Financials inaccordance with the methods described in this document. If an event not specified inthis document occurs, or if TSE determines that it is difficult to use the methods
described in this document, TSE may use an alternative method of index calculation as
it deems appropriate.
・ Copyright of this document is owned by TSE and any copies, reprints and reproductionsof this document in whole or in part are prohibited without the prior approval of TSE. This
document is prepared solely for the understanding of indices calculated and publishedby TSE, and is not to be construed as a solicitation for trading any securities or related
financial instruments. Information expressed in this document is subject to change
without notice and in those cases TSE undertakes no obligation to update any recipientsof this document. TSE shall accept no liability or responsibility for any loss or damage
arising from errors, delays, or termination of the calculation or publication of TOPIX
Ex-Financials, changes to its calculation or publication method, the use of TOPIX
Ex-Financials or all or any part of this document or other similar events.
・ TSE calculates both price and total return versions of TOPIX Ex-Financials.
I. Outline of Stock Price Indices・ TOPIX Ex-Financials are composed of the common stocks of all issues except for the"Banks", "Securities and Commodities Futures", "Insurance", and "Other Financing
Business" sectors, although the timing of additions and exclusions differ from that of thelisting system (please refer to part III below).
・ Additionally, stocks of "Bank Holding Companies" prescribed in Article 2, Paragraph(13) of the Banking Act and "Insurance Holding Companies" prescribed in Article 2,
Paragraph (16) of the Insurance Act will be excluded from the index.
・ Securities such as subscription warrants, preferred stock, and equity contribution
securities are not included in calculation.
The base date is July 5, 1993, and the base value is 1,000.

©

2020 Tokyo Stock Exchange, Inc.

4

II. Index Calculation
1. Outline
・TOPIX Ex-Financials are calculated using free-float adjusted market capitalization
weighting. Each index is denominated in points and is calculated to the second decimal
place (values beyond the second decimal are rounded).

2. FormulaIndex =

CMV× Base PointBMV

CMV = Current market value (free-float adjusted)
BMV = Base market value (free-float adjusted)
Current Market Value=෍(Number of Shares for Each Constituent × Stock Price for Each Constituent)

3. Stock Price Used for Calculation

・ The stock prices used for calculating and adjusting base market value for TOPIX
Ex-Financials are prices from auction trading on TSE and are determined by thefollowing order of priority:(1) Special Quote or Sequential Trade Quote, (2) Contract Price, (3) Base Price forIndex Calculation when neither (1) or (2) are available (determined in the following
order: (1) Theoretical Ex-rights Price, (2) Most Recent Special Quote or Sequential
Trade Quote on or before the previous trading day, (3) Most Recent Contract Price
before the previous trading day.)4. Number of Shares Used for Index Calculation
・ The number of shares used for index calculation is determined by multiplying the total
number of listed shares by the free-float weight (FFW) ratio.
Number of Shares Used for Index Calculation for Each Stock= Total Number of Listed Shares × FFW Ratio

・ In general, the "total number of listed shares" in the above formula is equal to thenumber of listed shares, but in some cases these numbers are different due tocorporate actions such as stock splits. For example, in a stock split, the number of listed
shares changes on the listing change date, which comes after the effective date. On
the other hand, the total number of listed shares used in index calculation (before FFW©

2020 Tokyo Stock Exchange, Inc.

5

adjustment) changes on the ex-rights date, leading to a brief period in which the two
numbers are different.
・ Also, the total number of listed shares used in index calculation (before FFW
adjustment) is generally equal to the number of issued shares, but in the case of Nippon
Telegraph and Telephone Corporation and Japan Tobacco, Inc., the government ofJapan holds some issued shares that have not been listed, leading these two numbers
to be different.
・ Please refer to the appendix for information on calculating FFW ratio.
III. Adjustments to Base Market Value・ Whenever the market value of the index changes due to an increase or decrease inconstituent issues, capital raising, or similar events other than market fluctuations, thebase market values for TOPIX Ex-Financials are adjusted as follows to maintaincontinuity.
1. Events that Require Adjustment
1) Inclusion or Removal of Constituents
TOPIX Ex-Financials①

Event Requiring Adjustment

Adjustment Date

Stock Price Used for
Adjustment

New listings on 1st section

Last business day of

Stock price at the(direct listing, listing via othertheend of trading on

exchange)listingmonthfollowingthebusinessbeforeadjustment

New Listingsdate
New listing of a newly formed
company

resultingfrom

New listing date*2

Base priceacorporate consolidation, etc.*1
that

results

in

a

TOPIX

Inclusion

Ex-Financials constituent beingdelisted and the new company
being

included

in

TOPIX

Ex-Financials.
©

2020 Tokyo Stock Exchange, Inc.

day

6

Event Requiring Adjustment

Adjustment Date

Stock Price Used for
Adjustment

Change in listed section/market to 1st

Last business day of

Stock price at thesection from 2nd section, Mothers orthefollowing

end of trading on

JASDAQ markets

designation

to

the

month

new

section/market*3

businessbeforeday

adjustment

date
Change in industrial sector (exclusion
from"Banks",Commodities"Securities

Date of change

Stock price on theandbusiness day before

Futures", "Insurance",

adjustment date

"Other Financing Business")
OthersDate(for stock of a company, excluded

TSE*6

determinedby

Stock price at theend of trading on

based on I., that will cease to be athebusiness"Bank Holding Company" or

before"Insurance Holding Company")

date

day

adjustment

New listing of a newly formed

Listing date of the newly

Stock price at thecompany

formedend of trading on

resultingfromacompany

corporate consolidation, etc. (*1)(normally two business

the

that

days following delisting

beforedate)

date*4

Delisting date

Stock price at theresults

in

a

TOPIX

Ex-Financials constituent being

businessday

delisting

Delistingsdelisted and the new company
being

included

in

TOPIX

than

those

Ex-Financials.
Delistings

otherstated

above

(e.g.

mergers/acquisitions

betweenTOPIX

end of trading on
the

Ex-Financials

constituentswithbusinessbeforesurvivingday

adjustment

datecompany remaining as a TOPIX
Ex-Financials constituent, etc.)
Designation

as

Delisted

Securities

to

be

Four

business

after designation*5

days

Stock price at theend of trading on

Removalthebusinessbeforeadjustment

date©

2020 Tokyo Stock Exchange, Inc.

day

7

Event Requiring Adjustment

Adjustment Date

Stock Price Used for
Adjustment

Section/market

changefrom

1stDate of change*8

Stock price at thesection to 2nd section, Mothers or

end of trading on

JASDAQthebusinessbeforeday

adjustment

date
Change in industrial sector (inclusion in

Date of change

Stock price on the"Banks", "Securities and Commodities

business day before

Futures",adjustment date

"Insurance","OtherFinancing Business")
OthersDate(for the stock of a company that willTSE*7

determinedby

Stock price at theend of trading on

become a "Bank Holding Company" orthebusiness"Insurance Holding Company")

beforeadjustment

date
*:

If the ratio of the free-float adjusted market capitalization of a newly listed company on the TSE 1st
Section to the adjusted market value of TOPIX reaches or exceeds 1% on any day during the fivebusiness days counting from the initial listing date, the company is included into the indices inseveral phases (The second and subsequent installments will take place on the last business day
two months following the previous installment.)*:

For issues newly listing on the 1st Section (other than companies formed through consolidation, etc.) or
switching from the Mothers market to the 1st Section, if the date of inclusion in the TOPIX index falls
within a "when-issued transaction" period, the issue will be included in TOPIX Ex-Financials on thelast business day of the month following the end of the when-issued transaction period.

Note: Stock splits with an allotment date (base date) on or after January 4, 2006 do not have a when-issued
transaction period. When-issued transactions may continue to take place for third-party allotments
according to the circumstances.
*:

Adjustments to the base market value are made after the end of trading on the business day before theadjustment date (i.e., before the market opens on the adjustment date). The same shall apply
hereinafter.

*1:

Stock transfer, stock swap, corporate merger, or company split.

*2:

Next business day when the new listing date falls on a holiday.

*3:

Issue is counted amongst constituents from the designation date, but for technical purposes FFW will
be set to 0.00 and the number of shares used for index calculation will be 0 from the designation
date until the adjustment date in order to essentially push back the date that the issue is reflected in©

2020 Tokyo Stock Exchange, Inc.

day

8

the calculation of TOPIX Ex-Financials.
*4:

The stock price at the end of trading on the business day before the delisting date is used to calculate
the index for the period from the delisting date to the removal date.

*5:

Next business day when the designation date falls on a holiday.

*6: Generally, the last business day of the next month of ceasing to be a "Bank Holding Company" or"Insurance Holding Company"*7: Generally, the last business day of the next month of becoming a "Bank Holding Company" or"Insurance Holding Company". However, for cases involving a stock transfer, the stock will be
excluded on the listing date of the new company as described in the 1st item under "Removal" due todelisting in the table above.
*8:

Next business day when the date of change falls on a holiday.

2) Changes in Number of Shares Used for Index Calculation
Event Requiring Adjustment

Adjustment Date

Stock Price Used in
Adjustment

Changes in free-float weight (FFW)

Date of Change

Stock price at the endoftradingonthebusiness day before
adjustment datePublic offering

Additional listing date (day after Stock price at the end
payment date)*1

oftradingonthebusiness day before
adjustment date
Third-party allotment

Issuestoafter Stock price at the end
additional listing date (two of trading on thebusiness days after payment business day before

Fiveshareholders

business

days

date)
with Ex-rights datepayment

adjustment date
Payment

price

per

share

Exercise of subscription warrants

Last business day of the month Stock price at the end
following exerciseoftradingonthebusiness day before©

2020 Tokyo Stock Exchange, Inc.

9

Event Requiring Adjustment

Adjustment Date

Stock Price Used in
Adjustment
adjustment dateConversion of preferred stock, etc.

Last business day of the month Stock price at the end
following conversionof

tradingonthebusiness day before
adjustment date
Cancellation of treasury stock

Last business day of the month Stock price at the end
following cancellationof

tradingonthebusiness day before
adjustment date
Situations

in

which

constituent

a Delisting

date

of

of non-surviving entity

TSE-calculated

indices*2

oftradingonthebusiness day before

is the non-surviving entity
Merger/Acquisition

the Stock price at the end

adjustment date(mergers/acquisitions
between two issues thatare both constituents of anindex calculated by the
TSE)
Situations other than those Listing change date (effective Stock price at the end
described above

date)

of

tradingonthebusiness day before
adjustment date
Sale

of

sharesheld

Japanesegovernment

Telegraphandby

the Date determined by TSE*3(Nippon

Telephone

Stock price at the endof

andtradingonbusiness day before

Japan Tobacco only)

adjustment date

Rights offering

Payment

where

the

(limited to case Ex-rights dateallottedthesubscription

price

per

share

warrant securities are listed)*4
Company split (merged split)

Listing change date (effective Stock price at the end
date)

of

tradingonthebusiness day before
adjustment date
Other adjustments*5

Last business day of the month Stock price at the end©

2020 Tokyo Stock Exchange, Inc.

10

Event Requiring Adjustment

Adjustment Date

Stock Price Used in
Adjustment

in

which

appearsintheinformation of"Sho-ho"trading

on(TSE business day before

Notice) or the last business day adjustment dateof the following month*:

Since market value does not change when there is a stock price revision made due to a stock split, gratis
allotment of shares (limited to case where the allotted treasury stock), reverse split, etc., no adjustment ismade to the base value.

*1:

Next business day when the change (addition) date falls on a holiday (same applies below)*2:

Constituents of TOPIX Ex-Financials include domestic common shares.

*3:

Generally the delivery date*4:

The number of shares for Rights offering used for calculating indices will correspond to the number of shares tobe allocated to shareholders. The case where the allotted subscription warrant securities are not listed istreated as “Exercise of subscription warrants”.

*5:

For example, situations in which an issuer of convertible bonds or other securities conducts a stock split; thenumber of shares calculated based on ratios for stock splits, reverse splits, paid-in allotment to shareholders,etc. is different than the final number of shares determined after the effective date; or revisions made by listedcompanies after data has been reflected in index calculation.

3) Data Source
・ Information on the reason for base market value adjustments, details on the adjustment,
the adjustment date and other data is available through the "Sho-ho" (TSE Notice)
published daily by TSE based on reports, etc. made by listed companies. (Please refer tothe appendix for information on calculating FFW.)
・ If a listed company revises the contents of a previously published report that resulted in
an index adjustment, retroactive index adjustments will NOT be made based on therevised contents.
2. Adjustment Method
1) Indices that do not reflect dividends (i.e. price indices)①Adjustment Method
・ Base market value will be adjusted according to the formula below in order to maintainthe continuity of the index:©

2020 Tokyo Stock Exchange, Inc.

the

11

Previous Business Day Market Value(Previous Business Day Market Value ± Adjustment Amount)=Pre − Adjustment Base Market Value
New Base Market Value (After Adjustment)*Adjustment Amount

Increase (Decrease)＝in Number of Shares Used for Index

Calculation X Stock Price Used for Adjustment
Therefore,
New Base Market Value ＝

Old Base Market Value × (Previous Business Day Market Value ± Adjustment Amount)
Previous Business Day Market Value② Adjustment Example
・ If, for example, the old base market value is 20 trillion yen and the previous day’s
market value is 400 trillion yen, TOPIX on the previous day will be:

Previous Day TOPIX＝ ¥400 tn ÷ ¥20 tn ×100＝ 2,000.00

・ Now, suppose that Stock A increases the number of listed shares used for index
calculation by 100 million shares due to a public offering. If the closing price of the stockon the previous day was ¥2,000, the adjustment amount is 100 million shares x ¥2,000= ¥200 billion. The new base market value, therefore, is:

New Base Market Value＝ ¥20 tln ×(¥400 tn ＋ ¥200 bn）÷ ¥400 tn＝ ¥20.01 tn

・ As illustrated below, if there is no price change in any constituent, the value for TOPIX
Ex-Financials today is the same as the previous day: 2000 points. Thus, continuity inthe index is maintained though adjustments to base market value even if the market
value of constituents changes due to public offerings, etc.
(¥400 tn + ¥200 bn)÷¥20.01 tn = 2,000 points©

2020 Tokyo Stock Exchange, Inc.

12

2) Total Return Index
・ Dividends used in calculating the Total Return Index are gross (i.e. before tax)・ Since the dividend amount for the current period is not fixed as of the ex-dividend date,adjustments made to reflect dividends in the base market value are made in two stages:
1) adjustment using estimated dividends and 2) minor adjustments made to reflect
differences in estimated dividend and dividend amount announced in the earnings
report, etc.

A) Adjustments Using Estimated Dividends
・ The total dividend amount for all constituents is calculated on ex-dividend dates using
estimated dividends, and base market value is adjusted as above. In principle, theestimated dividend amount used is as follows:1.

Dividend amount for the current period as announced in timely disclosure documents,
if available

2.

Dividend amount for the previous period if the dividend for the current period is not
fixed (e.g. the dividend is not announced in disclosure documents as (1) above, or theamount is not determined, etc.)

・ The base market value adjustment method is basically as described in the previous
section, except an adjustment is made to reflect dividends as follows:
New Base Market Value ＝

Old Base Market Value × (Previous Business Day Market Value − Total Dividends ± Adjustment Amount)
Previous Business Day Market Value* Dividends Per Constituent = Number of Shares Used for Index Calculation on Business
Day Before Ex-Dividend Date × Estimated Dividend Per Share* Total Dividends = Sum of Dividends for All Constituents* Adjustment Amount＝

Increase (Decrease)in Number of Shares Used for Index

Calculation X Stock Price Used for Adjustment
B) Minor Adjustment Made to Reflect Difference Between Estimated Dividend andDividend Announced in the Earnings Report, etc.
・ Minor adjustments are made with respect to those constituents for which the estimated©

2020 Tokyo Stock Exchange, Inc.

13

dividend used on the ex-dividend date and the dividend announced in the earnings
report or the notice of dividends of surplus (hereinafter the “earnings report, etc.”) are
different. Specifically, the total dividend adjustment amount is calculated and the basemarket value adjustments are made on the last business day of the month in which thedividend is announced in the earnings report, etc. (hereinafter the “publication date”; if
the publication date is one business day before the last business day of the month or
the last business day of the month, adjustments will be as a general rule, made on thelast business day of the next month).
New Base Market Value ＝

Old Base Market Value × (Previous Business Day Market Value − Total Dividend Adjustment ± Adjustment Amount)
Previous Business Day Market Value* Adjusted Dividend Per Constituent = Number of Shares Used for Index Calculation on
Business Day Before Ex-Dividend Date × (Dividend Announced in Earnings Report, etc. Estimated Dividend Per Share)* Total Adjusted Dividends = Sum of Adjusted Dividends for All Constituents*

Adjustment Amount ＝Increase (Decrease) in Number of Shares Used for Index

Calculation X Stock Price Used for Adjustment
IV. Other
1. Publication/Dissemination of Index Data
1) Index Values
・ TOPIX Ex-Financials and other price index values are disseminated in real-time(every 15 seconds) through the Market Information System to securities companies,
news media, and other institutions all over the country.
・ The TOPIX Ex-Financials Total Return Index is calculated daily at market close.
2) Index Data
・ Index data relating to TOPIX Ex-Financials (base market value, number of shares foreach constituent, etc.) is provided for a fee through the Tokyo Market Information
service
2. Licensing
・ TSE reserves all calculation, publication and other rights pertaining to TOPIX
Ex-Financials. As such, commercial use of such indices in the composition and/or sale©

2020 Tokyo Stock Exchange, Inc.

14

of financial products such as funds or linked bonds (including using the index as thebasis for options, swaps, warrants, or other OTC derivatives) or provision of index datarequires a license from TSE.
3. Contact
Information Services
Tokyo Stock Exchange, Inc.
email: index@jpx.co.jp©

2020 Tokyo Stock Exchange, Inc.

15