Compliance statement for non-significant benchmark exemptions (Based on Template in COMMISSION IMPLEMENTING REGULATION (EU) 2018/1106)A.

General Information

1. Date of Creation:

2019/11/25, Last updated 2019/11/25, formal revision 2020/03/31

2. Name of the Administrator:

Nikkei Inc.

B. Nikkei Inc. chooses not to apply the following provisions of Regulation (EU) 2016/1011 in respect of the non-significant benchmarks identified below.
1: Regulated-data benchmarks
2: Nikkei 225 Dividend Point Index
3: Nikkei Asia300 Investable Index
4: Nikkei 225 USD Hedged Index as well as Nikkei 225 EUR Hedged Index, Nikkei Stock Average Volatility Index, Nikkei 225 Risk Control Index.
1. Regulated-data benchmarks

2. Nikkei 225 Dividend Point

3. Nikkei Asia300

4. Nikkei 225 USD HedgedIndex

Investable Index

Index;
Nikkei 225 EUR HedgedIndex;
Nikkei Stock Average
Volatility Index;
Nikkei 225 Risk ControlIndex

Provisions

Y/N“Y” for application for“Y” for application for“Y” for application for“Y” for application for

exemption

exemption

exemption

exemption

Reasons

Y/N

ReasonY/N

ReasonY/N

ReasonArticle 4 Governance and conflict of interest requirements
Article 4(2)The provision of a benchmark shall be operationally separated from anyNNNN

part of an administrator's business that may create an actual or potential
conflict of interest.
Article 4(7) Administrators shall ensure that their employees and any other natural persons whose services are placed at their disposal or under their control and who are directly involved in the provision of a benchmark:Article 4(7)(c)(c) do not have any interests or business connections that compromiseNNNNNNNN

the activities of the administrator concerned;
Article 4(7)(d)(d) are prohibited from contributing to a benchmark determination byway of engaging in bids, offers and trades on a personal basis or on
behalf of market participants, except where such way of contribution isexplicitly required as part of the benchmark methodology and is subject
to specific rules therein;

1Article 4(7)(e)(e) are subject to effective procedures to control the exchange ofNN

N

N

NN

NN

NN

N

N

information with other employees involved in activities that may create arisk of conflicts of interest or with third parties, where that information
may affect the benchmark.

Article 4(8)Article 4(8)8. An administrator shall establish specific internal control procedures toensure the integrity and reliability of the employee or person determining
the benchmark, including at least internal sign-off by management before
the dissemination of the benchmark.

Article 5 Oversight function requirements
Article 5(2)2.Administrators shall develop and maintain robust procedures regarding
their oversight function, which shall be made available to the relevant
competent authorities.

Article 5(3) The oversight function shall operate with integrity and shall have the following responsibilities, which shall be adjusted by the administrator based on the complexity, use and vulnerability of the benchmark:Article 5(3)(a)(a) reviewing the benchmark's definition and methodology at least

NN

N

N

NN

N

N

N

N

N

N

N

N

N

N

N

N

N

N

annually
Article 5(3)(b)(b) overseeing any changes to the benchmark methodology and being
able to request the administrator to consult on such changes

Article 5(3)(c)(c) overseeing the administrator's control framework, the management
and operation of the benchmark, and, where the benchmark is based on
input data from contributors, the code of conduct referred to in Article 15

Article 5(3)(d)(d) reviewing and approving procedures for cessation of the benchmark,including any consultation about a cessation

Article 5(3)(e)(e) overseeing any third party involved in the provision of the benchmark,including calculation or dissemination agents2

Article 5(3)(f)(f) assessing internal and external audits or reviews, and monitoring theNNN

N

implementation of identified remedial actions
Article 5(3)(g)(g) where the benchmark is based on input data from contributors,N

monitoring the input data and contributors and the actions of theInput data is not fromN

Same as the left

N

Same as the left

N

Same as the left

N

Same as the left

N

Same as the left

N

Same as the left

N

Same as the left

N

Same as the left

N

Same as the left

contributors.

administrator in challenging or validating contributions of input dataArticle 5(3)(h)(h) where the benchmark is based on input data from contributors, taking

Neffective measures in respect of any breaches of the code of conduct

Input data is not fromcontributors

referred to in Article 15
Article 5(3)(i)(i) reporting to the relevant competent authorities any misconduct byN

contributors, where the benchmark is based on input data from

Input data is not fromcontributors.

contributors, or administrators, of which the oversight function becomesaware, and any anomalous or suspicious input data.
Article 5(4)4.The oversight function shall be carried out by a separate committee orNNNNN

N

N

N

by means of another appropriate governance arrangement.

Article 6 Control framework requirements
Article 6(1)1.Administrators shall have in place a control framework that ensures that
their benchmarks are provided and published or made available inaccordance with this Regulation.

Article 6(3) The control framework shall include:
Article 6(3)(a)(a) management of operational risk;

NN

N

N

Article 6(3)(b)(b) adequate and effective business continuity and disaster recovery plans;

NN

N

N

Article 6(3)(c)(c) contingency procedures that are in place in the event of a disruption toNNN

N

the process of the provision of the benchmark.
Article 6(5)5.The control framework shall be documented, reviewed and updated as

Y

The control framework at

appropriate and made available to the relevant competent authority and,Nikkei is documented,

upon request, to users.

reviewed and updated asYSame as the left

Y

Same as the left

Y

Same as the left

appropriate and madeavailable to the relevant
competent authority.
Exemption is applied for3only concerningavailability to users uponrequest. The reason is toavoid parallel
procedures: The control
framework is publishedin the IOSCO
Compliance Report anda separate submission
procedure upon requestof users needs to beavoided.
Article 7 Accountability framework requirements
Article 7(2)2.An administrator shall designate an internal function with the necessary

Y

Instead of internal

capability to review and report on the administrator's compliance with thefunction to review,

benchmark methodology and this Regulation.

Nikkei conducts a review

YSame as the left

YSame as the left

YSame as the left

NDividends can beY

Nikkei Asia300

YNikkei 225 USD

by third-party auditor toassure compliance with
the IOSCO Principles.

Article 11 Input data
Article 11(1)(b)

1.The provision of a benchmark shall be governed by the following

YBenchmarks of Nikkei

requirements in respect of its input data:

are based on the prices

verified by publicly

Investable Index isHedged Index and(b) the input data referred to in point (a) shall be verifiable;from regulated

available sources suchbased on theNikkei 225 EUR

exchanges. They areas corporate

prices fromHedged Index aregenerally accepted asannouncements

regulatedbased on FX rates

accurate but notexchanges. They

provided byverifiable;

are generally

WM/Reuters London

accepted as(4pm Closing Rates).

accurate but not

The rates areverifiable;

administered by
Refinitiv Benchmark
Services (UK) Limited
which is authorizedunder Article 34 ofRegulation (EU)4

2016/1011. The rates
are commerciallyavailable, and Nikkei
obtains them directlyfrom Refinitiv under aservice levelagreement.
Nikkei Stock Average
Volatility Index isbased on options
prices and theinterest rate LIBOR.
Strike prices of
options are chosenusing the futures
prices. The
futures/options prices
are from the Osaka
Exchange which is EU
equivalent (BMR
Article 3(1)(24)(i)).
LIBOR euro-yen rate
(1 and 2 months)
plays a small role inthe calculation of theindex. LIBOR isprovided by ICE
BenchmarkAdministration("IBA"), an
independent
subsidiary ofIntercontinental
Exchange ("ICE")
Group. IBA is
authorized under5Article 34 ofRegulation (EU)2016/1011. LIBOR iscommerciallyavailable and QUICK
receives LIBOR
directly from IBA
under a service levelagreement andprovides it to theOsaka Exchange.
Nikkei 225 Risk
Control Index isbased on the closing
value of the Nikkei
225 and the largest
closing value of theNikkei Stock Average
volatility Index (VI) inthe past 20 businessdays. The Nikkei 225
is a regulated data
benchmark. VI is asdescribed above.
Article 11 (2) Administrators shall ensure that their controls in respect of input data include:
Article 11(2)(b)Article 11(2)(c)(b) a process for evaluating a contributor's input data and for stopping

YArticle 11(2) exempted

the contributor from providing further input data, or applying otheras regulated data

penalties for non-compliance against the contributor, where appropriate;

benchmark(c) a process for validating input data, including against other indicators
or data, to ensure its integrity and accuracy.

NInput data is not fromN

Same as the left

N

Same as the left

Y

Nikkei Asia300

Y

Nikkei 225 USD

contributors.
Y

Nikkei’s dividends arecollected from theInvestable Index isHedged Index andpublicly available

based on theNikkei 225 EUR

sources and provided

prices fromHedged Index arecommercially to its

regulatedbased on FX rates

clients afterexchanges. They

provided byverifications.

are generally

WM/Reuters London

accepted as(4pm Closing Rates).
6

accurate but

The rates arecannot beadministered byvalidated.

Refinitiv Benchmark
Services (UK) Limited
which is authorizedunder Article 34 ofRegulation (EU)2016/1011. The rates
are commerciallyavailable, and Nikkei
obtains them directlyfrom Refinitiv under aservice levelagreement.
For the Nikkei Stock
Average Volatility
Index please refer toline Article 11(1)(b),above, right column.
For the Nikkei 225
Risk Control Index
please refer to line
Article 11(1)(b),above, right column.

Article 11 (3) Where the input data of a benchmark is contributed from a front office function, meaning any department, division, group, or personnel of contributors or any of its affiliates that performs any pricing,trading, sales, marketing, advertising, solicitation, structuring, or brokerage activities, the administrator shall:
Article 11(3)(a)Article 11(3)(b)(a) obtain data from other sources that corroborate that input data(b) ensure that contributors have in place adequate internal oversight andverification procedures.

YArticle 11(3) exempted

NDividends are notas regulated dataobtained from a front

benchmarkoffice function.
N

Input data is not fromcontributors

N

Input data is notNfrom contributors
N

Input data is notfrom contributors

Input data is not fromcontributors

N

Input data is not fromcontributors

Article 13(1)(c) the procedures for consulting on any proposed material change in the administrator’s methodology and the rationale for such changes, including a definition of what constitutes a material change andthe circumstances in which the administrator is to notify users of any such changes.
Article 13(2) The procedures required under point (c) of paragraph 1 shall provide for:7

Article 13(2)(a)(a) Advance notice, with a clear time frame, that gives the opportunity toY

There will be aY

Same as the left

Y

Same as the left

Y

Same as the left

Same as the above.

Y

Same as the above

Y

Same as the above

Y

Same as the above.

Article 14(2) exemptedN

Input data is not fromN

Input data is notY

Input data is not fromanalyse and comment upon the impact of such proposed material

procedure with achanges; andreasonableannouncement period
and no separate
consultation procedure
is required due to thescope of the benchmarks
and the rareness ofamendments.

Article 13(2)(b)(b) the comments referred to in point (a) of this paragraph, and theYadministrator's response to those comments, to be made accessible after
any consultation, except where confidentiality has been requested by theoriginator of the comments
Article 14 Reporting of infringements
Article 14(2)2. An administrator shall monitor input data and contributors in order toY

be able to notify the competent authority and provide all relevant

as regulated data

contributors.

from contributors.

contributors. For

information where the administrator suspects that, in relation to abenchmark

Dividend information

Input data is stock

Nikkei 225 USD

benchmark, any conduct has taken place that may involve manipulation

is Nikkei’s in-house

prices from locallyHedged Index andor attempted manipulation of the benchmark, under Regulation (EU) No

data and Nikkei’s

regulated

Nikkei 225 EUR

596/2014, including collusion to do so.

code of conductexchanges. Since

Hedged Index, FX

applies including

exchanges report

rates are provided byreporting

infringements,

WM/Reuters London

infringements.

Nikkei can notify(4pm Closing Rates)

the competentand administered byauthority if such

Refinitiv Benchmark

infringement isServices (UK) Limited

reported.

which is authorizedunder Article 34 ofRegulation (EU)2016/1011. Refinitiv istherefore subject tomonitoring
requirements
concerning therelevant data. On arisk based approach,8formalized
monitoringprocedures by Nikkei
are thus not deemednecessary.
Furthermore, therelevat rates arecommerciallyavailable, and Nikkei
obtains them directlyfrom Refinitiv under aservice levelagreement.
For the Nikkei Stock
Average Volatility
Index please refer toline Article 11(1)(b),above, right column.
For the Nikkei 225
Risk Control Index
please refer to line
Article 11(1)(b),above, right column.
Article 15 (2) The code of conduct shall include at least the following elements:
Article 15(2)(a)(a) a clear description of the input data to be provided and theY

Article 15 exempted asY

Since the input data isrequirements necessary to ensure that input data is provided inregulated data

not from contributors,

accordance with Articles 11 and 14;

benchmarkArticle 15 does notY

Same as the left

Y

Same as the left

apply.
Article 15(2)(b)(b) identification of the persons that may contribute input data to theYSame as the above.

Y

Same as the left

Y

Same as the left

Y

Same as the above

Y

Same as the left

Y

Same as the left

administrator and procedures to verify the identity of a contributor andany submitters, as well as authorisation of any submitters that contributeinput data on behalf of a contributor;
Article 15(2)(c)(c) policies to ensure that a contributor provides all relevant input data;.
9Article 15(2)(d)(d) the systems and controls that a contributor is required to establish,

Y

Same as the above

Y

Same as the left

Y

Same as the left

Y

Input data is not fromY

Same as the left

Y

Same as the left

Y

Same as the left

Y

Same as the left

including:(i) procedures for contributing input data, including requirements for thecontributor to specify whether input data is transaction data and whetherinput data conforms to the administrator's requirements;(ii) policies on the use of discretion in contributing input data;(iii) any requirement for the validation of input data before it is provided
to the administrator;(iv) record-keeping policies;(v) reporting requirements concerning suspicious input data;(vi) requirements concerning the management of conflicts of interest.
Article 16 Governance and control requirements for supervised contributors
Article 16(2)2. A supervised contributor shall have in place effective systems andY

Article 16 exempted ascontrols to ensure the integrity and reliability of all contributions of input

regulated data

data to the administrator, including:benchmarkcontributors.

(a) controls regarding who may submit input data to an administrator
including, where proportionate, a process for sign-off by a natural person
holding a position senior to that of the submitter;(b) appropriate training for submitters, covering at least this Regulation
and Regulation (EU) No 596/2014;(c) measures for the management of conflicts of interest, includingorganizational separation of employees where appropriate andconsideration of how to remove incentives, created by remuneration
polices, to manipulate a benchmark;(d) record-keeping, for an appropriate period of time, of communications
in relation to provision of input data, of all information used to enable thecontributor to make each submission, and of all existing or potential
conflicts of interest including, but not limited to, the contributor’s
exposure to financial instruments which use a benchmark as a reference;(e) record-keeping of internal and external audits.

Article 16(3)3.Where input data relies on expert judgement, supervised contributors

YSame as the above

shall establish, in addition to the systems and controls referred to inparagraph 2, policies guiding any use of judgement or exercise ofdiscretion and shall retain records of the rationale for any such judgement10

or discretion. Where proportionate, supervised contributors shall take into
account the nature of the benchmark and its input data.

11