(Reference Translation)
November 5, 2021
Tokyo Stock Exchange, Inc.
Nikkei Inc.
Results of Index Consultation on Revisions of Guidebooks for JPX-Nikkei Index 400and JPX-Nikkei Mid and Small Cap Index
Tokyo Stock Exchange, Inc. and Nikkei Inc. (hereinafter collectively referred to as the "IndexProviders") recently conducted an Index Consultation on revisions of Guidebooks for theJPX-Nikkei Index 400 and JPX-Nikkei Mid and Small Cap Index (hereinafter collectivelyreferred to as the "JPX-Nikkei Indices").
An outline of the opinions gathered through the Index Consultation and the Index Providers'responses are as follows:
1. Outline of opinions gathered and Index Providers' responses
These revisions aim to further strengthen the concept of the JPX-Nikkei Indices, which isindices that are composed of "companies with high appeal for investors."
We received multiple opinions through the Index Consultation, and all of them agreed withthe purpose of the revisions.
On the other hand, regarding the proposals on changes to the process for deciding theranking of final scores, we received multiple opinions that the current criteria of "3-year
average ROE and most recent ROE is negative shall be ranked lowest" should be kept andthe new criteria should be added to it. Based on the above circumstances, as the IndexProviders, we revised the previous proposal and reopened the Index Consultation, as a resultof which we received multiple opinions which agreed with the revised proposal.
In addition, we received multiple opinions regarding the addition of new data points forcalculating qualitative scores, including one which suggested the introduction of criteria toenable evaluation of whether disclosure is useful for dialogue with investors or otherpurposes, as the data points currently used for the qualitative score are limited to those
disclosed by many companies. As the Index Providers, we think objective judgments basedon common rules for all issues and the stable acquisition of data are necessary for index
periodic review criteria. We will continue to consider any suggestions which meet thisrequirement.
Based on the above considerations, the Index Providers have decided to revise theGuidebooks for the JPX-Nikkei Indices in accordance with the contents of the proposal
presented in this Index Consultation (including the reopened consultation).
The Index Providers will continue to improve the JPX-Nikkei Indices while taking into
consideration the opinions gathered through this consultation.

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(Reference Translation)
2. Final Revisions (revisions as of the reopened consultation are in red)
(1) "JPX-Nikkei Index 400" revision details(a) Process for deciding the ranking of final scores
The process for deciding the ranking of final scores will be revised as follows:
Item to be revised

Current

After revisions

III. JPX Nikkei Index

Ranking of final scores shall be madeRanking of final scores shall be made400

from highest to lowest. However,from highest to lowest. However,issues whose 3-year average ROE

issues whose 3-year average ROE

and most recent ROE is negative or

and most recent ROE are both in thewhose 3-year cumulative operating

bottom 10% of the issues in ③ above

profit is negative shall be ranked

orlowest. In cases of issues with thecumulative operating profit is negative

same final score, ranking preference

shall be ranked lowest. In cases ofshall be given to the issue with theissues with the same final score,higher ④(c) market capitalization onpriority shall be given to the issue withthe base date ranking score.

the higher ④ (c) market capitalization

Constituent

Selection 1. (2) ⑥

negative,

or

whose

3-yearon the base date ranking score.
(b) Revisions of the selection procedure for additional issues in the periodic review
The selection procedure for additional issues in a periodic review will be revised
as follows:
Item to be revised

Current

After revisions

III. JPX Nikkei Index

If the number of selected issues falls

If the number of selected issues falls

400 Constituent

below 400 in the preceding paragraphbelow 400 in the preceding paragraph

Selection 1. (2) ⑦(b)ii., then the non-selected top rankingii., then the non-selected top rankingⅲ.

400 issues according to the rankings

400 issues in ⑥ shall be selected

in ⑥ above shall be selected until theaccording to the rankings of 3-year

number of constituents reaches 400.

average ROE until the number ofconstituents reaches 400.

(c) Matters used for determining qualitative scores"Appointment of independent outside directors", which is an item used for
determining qualitative scores, will be revised as follows:
Item to be revised

Current

After revisions

III. JPX Nikkei Index

Item:

Item:

400

Appointment of independent outside

Appointment of independent outside

directors

directors and female corporate officers

Selection

Constituent

1. (2) ⑤2

(Reference Translation)
Item to be revised

Current

After revisions

Criteria:

Criteria:

Out of the total number of directors, at-Outof

the

total

numberof

least one-third or a minimum of three

directors, a majority are appointed

directors

as independent outside directors.

areappointed

asindependent outside directors. If one--

Out of the corporate officers, at

third of the total number of directors isleast one female corporate officer

less than two, at least two independent

is appointed based on information

outside directors are appointed

in "members of the board andexecutive officers" of the securities
reportReference Material:
Corporate Governance Report

Reference Material:
Corporate Governance Report

andSecurities Report(d) Data pertaining to matters for calculating qualitative scores
Data pertaining to matters for calculating qualitative scores will be revised asfollows:
Item to be revised
III. JPX Nikkei Index
400

Current

After revisions- Newly createdConstituent③"Securities Report"-For appointment status of female

Selection

corporate officers, information in

4. (2) ③"membersof

theboard

andexecutive officers" of the securities
report will be used.
(e) Eligible constituents
Eligible constituents will be revised as follows, in response to revisions of market
segments.
Item to be revised
I. Outline of the Index

Current
JPX-Nikkei

400

is

After revisions
composedofJPX-Nikkei

400iscomposedofcommon stocks whose main market iscommon stocks whose main market isthe TSE 1st Section, 2nd Section,

the TSE Prime Market, StandardMothers, or JASDAQ market (InMarket or Growth Market (In addition,addition, the Index Provider may

theinclude

whoseequivalent issues whose inclusion itinclusion it deemed is particularly

deemed is particularly necessary.).

equivalentissues

3Index

Providermay

include(Reference Translation)
Item to be revised

Current

After revisions

necessary.). Constituents shall be

Constituents shall be selected by theselected by the Index Provider based

Index Provider based on market

on market capitalization, trading value,capitalization, trading value, ROE, andROE, and other factors. Please referother factors. Please refer to III. JPX-toNikkei Index 400 Constituent Selection

III.

JPX-Nikkei

Index

400

Constituent Selection for more details.

for more details.

III. JPX-Nikkei Index

i. Common stocks

i. Common stocks

400

Common stocks whose main market is

Common stocks whose main market isSelection

the TSE 1st Section, 2nd Section,

the TSE Prime Market, Standard

1. (2) ①i

Mothers, or JASDAQ market on theMarket or Growth Market on the base

base date (for dual-listed foreign

date (for dual-listed foreign stocks, asstocks, as a general rule, only when

a general rule, only when their trading

their trading value at TSE in the mostvalue at TSE in the most recent year

recent year from the base date isfrom the base date is greater than that

greater than that on their other listedon their other listed exchanges) areexchanges) are regarded as eligible

regarded as eligible constituents.

Constituent

constituents.
*Please note that the constituents of JPX-Nikkei Index 400 will not be reviewed due torevisions of the market segments.
(2) Revision details for "JPX-Nikkei Mid and Small Cap Index"(a) Process for deciding the ranking of final scores
The process for deciding the ranking of final scores will be revised in the same
way as for JPX-Nikkei Index 400.
Item to be revised

Current

After revisions

III. JPX-Nikkei Mid

Ranking of final scores shall be madeRanking of final scores shall be madeand Small Cap Index

from highest to lowest. However,from highest to lowest. However,Constituent Selectionissues whose 3-year average ROE

issues whose 3-year average ROE

1.(2) ⑦and most recent ROE is negative or

and most recent ROE are both in thewhose 3-year cumulative operating

bottom 10% of the issues in ④ above

profit is negative shall be ranked

orlowest. In cases of issues with the

cumulative operating profit is negative

same final score, ranking preference

shall be ranked lowest. In cases ofshall be given to the issue with theissues with the same final score,higher " ⑤ (a) 3-year average ROE

ranking preference shall be given toranking".

the issue with the higher "⑤(a) 3-year

negative,or

whose

average ROE ranking".
43-year(Reference Translation)(b) Revisions of the selection procedure for additional issues in the periodic review
The selection procedure for additional issues in the periodic review will be revisedin the same way as for JPX-Nikkei Index 400.
Item to be revised

Current

After revisions

III. JPX-Nikkei Mid

If the number of selected issues falls

If the number of selected issues falls

and Small Cap Index

below 200 in the preceding paragraphbelow 200 in the preceding paragraphConstituent Selection

ii., then the non-selected top rankingii., then the non-selected top ranking

1.(2)⑧(b)ⅲ.

200 issues according to the rankings

200 issues in ⑦ shall be selectedin ⑦ above shall be selected until theaccording to the rankings of 3-year

number of constituents reaches 200.

average ROE until the number ofconstituents reaches 200.

(c) Matters used for determining qualitative scores"Appointment of independent outside directors", which is an item used for
determining qualitative scores, will be revised in the same way as for JPX-Nikkei
Index 400.
Item to be revised

Current

After revisions

III. JPX-Nikkei Mid

Item:

Item:

and Small Cap Index

Appointment of independent outside

Appointment of independent outside

Constituent Selection

directors

directors and female corporate officers

1.(2) ⑥

Criteria:

Criteria:

Out of the total number of directors, at-Outofthetotal

numberofleast one-third or a minimum of three

directors, a majority are appointed

directors are appointed as

as independent outside directors.

independent outside directors. If one--Out of the corporate officers, atthird of the total number of directors isleast one female corporate officer

less than two, at least two

is appointed based on information

independent outside directors arein "members of the board andappointed.

executive officers" of the securities
report.

Reference Material:
Corporate Governance Report

Reference Material:
Corporate Governance Report andSecurities Report(d) Data used for calculating qualitative scores
Data pertaining to matters for calculating qualitative scores will be revised in the5(Reference Translation)same way as for JPX-Nikkei Index 400.
Item to be revised
III. JPX-Nikkei Mid

Current

After revisions- Newly created③ "Securities Report"

and Small Cap Index

For appointment status of female

Constituent Selection

corporate

4.(2) ③

"members of the board and executive

officers,

information

inofficers" of the securities report will beused.
(e) Eligible constituents
In response to revisions of the market segments, eligible constituents will berevised in the same way as for JPX-Nikkei Index 400, as shown below:
Item to be revised

Current

After revisions

I. Outline of the Index

JPX-Nikkei Mid Small is composed ofJPX-Nikkei Mid Small is composed ofcommon stocks whose main market

common stocks whose main market

is the TSE 1st Section, 2nd Section,is the TSE Prime Market, StandardMothers, or JASDAQ market (InMarket or Growth Market (In addition,addition, the Index Provider may

the Index Provider may include

include equivalent issues whoseequivalent issues whose inclusion itinclusion it deemed is particularly

deemed is particularly necessary.).

necessary.).

Constituents shall be selected by theConstituents shall be selected by theIndex Provider based on market

Index Provider based on market

capitalization, trading value, ROE andcapitalization, trading value, ROE andother factors. Please refer to III. JPX-

other factors. Please refer to III. JPX-Nikkei Mid Small Constituent

Nikkei Mid Small Constituent

Selection for more details.

Selection for more details.
III. JPX-Nikkei Mid

i. Common stocks

i. Common stocks

andCapCommon stocks whose main market

Common stocks whose main market isConstituent

is the TSE 1st Section, 2nd Section,

the TSE Prime Market, Standard

SelectionMothers, or JASDAQ market on theMarket or Growth Market on the base1.(2)①ibase date (for dual-listed foreign

date (for dual-listed foreign stocks, asstocks, as a general rule, only when

a general rule, only when their trading

their trading value at TSE in the mostvalue at TSE in the most recent year

recent year from the base date isfrom the base date is greater than that

greater than that on their other listedon their other listed exchanges) areexchanges) are regarded as eligible

regarded as eligible constituents.

Small

Index

constituents.
6

(Reference Translation)*Please note that the constituents of JPX-Nikkei Mid and Small Cap Index will not be
reviewed due to revisions of the market segments.
(3) Other required revisions
In line with the revision of the calculation methodology for free-float ratio used in TSE
indices, that for the JPX-Nikkei Indices, which use the same methodology, will also berevised.
(Reference: Revisions of TOPIX and Other Indices)
https://www.jpx.co.jp/english/markets/indices/governance/indexconsultation/20201225-01.html
3. Implementation Date
The revisions shown in "(e) Eligible constituents - I. Outline of the Index" of sections(1) and (2) and in "(3) Other required revisions" will be implemented on April 4, 2022,
while other revisions will be implemented in the periodic reviews from August 2022
onwards.

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