Annual Report
Business Report 2013

for the Fiscal Year Ended March 31, 2014

Tokyo Financial Exchange Inc.

To Our Shareholders
First, we would like to express our sincere gratitude
to our shareholders for your continued support of ouroperations and business.
In ﬁscal 2013, the operating environment for Tokyo
Financial Exchange (TFX) was as follows:
・In the short-term monetary markets, the ultra-low
interest rate environment continued with unprecedented monetary easing under programs introduced by the Bank of Japan in April 2013 to achieve theprice stability target of 2%.
Trading volumes of Three-month Euroyen futures
increased in some cases, attributable to the eﬀect ofmeasures to encourage back month trading. However,annual trading volumes of Three-month Euroyen futures
declined to 4,620,000 lots, a drop of 7.4% from the pre-Contents

vious ﬁscal year, as trading remained weak throughout

To Our Shareholders

1

About Tokyo Financial Exchange

3

Summary of Operating Results

4Interview with the President

5

Topics in Fiscal Year 2013
2．Key Achievements: Margin Contracts
3．Operation of New Trading Systems
4．Enhancement of Investment Information

7
8
9
10

and Active Promotion

New Medium-Term Management Plan

11

Business Plans and Policies for Fiscal Year 201413

Financial Statements (Summary) and Market Data

14

1

Tokyo Financial Exchange Inc.

range-bound at extremely low levels.
・ In foreign exchange markets, the yen depreciatedsigniﬁcantly due to the unprecedented monetary easing
introduced by the Bank of Japan and the tapering of thequantitative easing policy by the Federal Reserve Board

1．Key Achievements: Interest Rate Futures Contracts

Corporate Proﬁlethe ﬁscal year as short-term interest rates remained

Back cover(FRB) in the United States, among other factors.
Trading volumes of Click 365, Exchange FX Margin
Contracts, remained high in the ﬁrst quarter, as in the
fourth quarter of the previous ﬁscal year. From thesecond quarter, however, trading volumes decreased
and remained low, reﬂecting the foreign exchange
marketʼs lack of direction after the pause in movements
toward the weaker yen, despite an incentive program
introduced in October to make trading free-of-chargeand encourage trading.

As a result, annual trading volumes declined signiﬁcantly,
by 23.4% from the previous ﬁscal year, to 44,556 thousand
lots.
・ Although the stock market performed well against a backdrop of expectations for an economic recovery driven by
Abenomics, an improvement in the corporate earnings environment based on the weakening yen and the buoyant
stock market conditions in the United States, the market
became sluggish in the early part of 2014.

amounted to 1,114 million yen.
In addition, with the switch to a new margin contracts
system, the remaining book value of 543 million yen forsoftware developed additionally to old systems was posted
as an extraordinary loss.
As a consequence of the above, the loss before income
taxes stood at 1,658 million yen, and the loss after income
taxes came to 1,855 million yen, the ﬁrst bottom-line loss innine ﬁscal years, since ﬁscal 2004.

Annual trading volumes of Click Kabu 365, Exchange
Equity Index Margin Contracts doubled from the previous

The outlook for the current ﬁscal 2014 is as follows:ﬁscal year, to 5,268 thousand lots, up 108.7% year on year,

As the unprecedented monetary easing introduced by thereﬂecting rising stock prices and an increase in the number

Bank of Japan is ongoing, interest rate futures contracts areof accounts.

facing an even more diﬃcult operating environment. Under
these circumstances, we will take steps to increase liquidity,

As a result, the trading volume of all products during ﬁscal

particularly in the medium-term zone (the seventh contract2013 was 54,445 thousand lots, down 17.2% from the pre-month and thereafter), to meet trading needs in anticipation

vious ﬁscal year. Operating revenues fell by 428 million yenof a potential future rise in interest rates.

or 7.9% year on year, to 5,027 million yen.

Looking at Click 365 (Exchange FX Margin Contracts),

Meanwhile, operating expenses increased 237 million yen

although the trading environment is uncertain, given theor 3.9% from the previous ﬁscal year, to 6,275 million yen,reducing volatility of exchange rates reﬂecting economic

despite substantial eﬀorts to reduce expenses in all quarters. This mainly reﬂected an ad-hoc increase in facilityrelated expenses including system operation costs posted
at the time of upgrades and the migration of both the interest rate futures trading system and margin contracts trading
system as well as an increase in marketing expenses toimplement incentive programs for our products.

trends worldwide, we will work to expand the investor basefrom individuals in Japan to corporations overseas andenhance convenience for investors.
Although we have already reduced costs substantiallysince ﬁscal 2012, we expect costs in ﬁscal 2014 to decline
by around an additional 1,700 million yen from the previous
ﬁscal year.

As a result, an operating loss of 1,247 million yen was
posted (compared with an operating loss of 581 million yen
in ﬁscal 2012).

We sincerely ask our shareholders for your ongoing support and cooperation.
June 2014

The ordinary loss after adding non-operating revenues
from gains on investments of deposits and money in trusts

President and CEO

Shozo Ohta

Tokyo Financial Exchange Inc.

2

About Tokyo Financial ExchangeTokyo Financial Exchange (TFX) contributes to the sound development of the ﬁnancial markets and theeconomy of Japan by developing ﬁnancial instruments markets as public infrastructure related to ﬁnancial instruments transactions that provide a superior degree of fairness, reliability, and convenience in accordance with the
Financial Instruments and Exchange Act.
TFX, as a comprehensive exchange for ﬁnancial derivatives, has now listed products thatcover all three major sectors for ﬁnancial derivatives: interest rates, foreign exchange , andstocks, as listed below.

Margin Contracts Business

Interest Rate Futures Contracts Business

3

Interest
Rate Sector

Foreign
Exchange Sector

Interest Rate
Futures Contracts(Exchange FX Margin Contracts)

Click 365

Stocks Sector

Click Kabu 365(Exchange Equity Index Margin Contracts)(Listed products)(Listed products)(Listed products)

・Three-month Euroyen futures
・Options on Three-month Euroyen futures
・Over-Night Call Rate futures
・Six-month Euroyen LIBOR futures

23 trading currency pairs in total
・12 yen currency pairs
・11 cross currency pairs

・Nikkei 225 Margin contracts
・DAX® Margin contracts
・FTSE 100 Margin contracts
・FTSE China 25 Margin contracts

Tokyo Financial Exchange Inc.

Summary of Operating Results
Financial Accounts ‒ Highlights
FY2010Operating Revenues

FY2011Market Highlights

Annual Trading Volume(Change from previous ﬁscal years)

FY2012FY2013

Changefrom FY2012■ Three-month Euroyen futures

21.0%（▲7.9%）

11,466
5,816
4,989
4,620
（▲5.7%） （▲49.3%） （▲14.2%） （▲7.4%）

̶10,966

9,238

5,456

6,602
（5,027）

Operating Proﬁt or
Loss (▲) (million yen)

3,927

1,761

▲581

▲1,247

Ordinary Proﬁt or
Loss (▲） (million yen)

4,232

2,086

▲378

▲1,114̶Net Income or
Loss (▲) (million yen)

2,242

807

55

▲1,855

̶

2,599.02

935.5263.98▲2,150.61

̶(million yen)

Net Income or
Loss (▲) per ShareFY2010(million yen)

Net Assets(million yen)

Net Assets per Share(yen)

238,807240,840

249,650

284,647

14.0%

23,24423,447

23,071

20,958▲9.2%

26,942.55

27,178.08

26,742.06

24,292.09▲9.2%

FY2012■ Click 365
FY2010(in thousands)

FY2013(in thousands)

FY2011FY2012FY2013

123,432
121,116
58,20044,556（+53.6%） （▲1.9%） （▲51.9%） （▲23.4%）■ Click Kabu 365
FY2010(yen)

Total Assets

FY2011447（−%）(in thousands)

FY2011FY2012FY2013

1,042
2,524
5,268
（+132.8%） （+142.2%）（+108.7%）■ Total Trading Volume of Listed Products (in thousands)
FY2010FY2011FY2012FY2013

135,346
128,019
65,71854,445（+46.2%） （▲5.4%） （▲48.7%） （▲17.2%）

Note: The value in parentheses under operating revenues for ﬁscal 2013 is eﬀective operating revenues, after
subtracting cost for incentive programs to make investorʼs charge for Click 365 free.

Outline of Financial Results
Operating revenues (after subtracting cost for incentive programs) declined 7.9% from theprevious ﬁscal year, to 5,027 million yen, reﬂecting the continued sluggishness of Threemonth Euroyen futures trading and a signiﬁcant drop in trading volumes for Click 365.
●
Operating expenses increased 3.9% from the previous ﬁscal year, to 6,275 million yen. This
mainly reﬂected an ad-hoc increase in facility-related expenses including system operation
costs posted at the time of upgrades and the migration of both the interest rate futures
trading system and margin contracts trading system as well as an increase in marketing
expenses to implement incentive programs for our products.
●
As a result, operating loss stood at 1,247 million yen, and ordinary loss came to 1,114
million yen.
Net loss amounted to 1,855 million yen as a result of posting impairment losses related toold systems as extraordinary losses on the occasion of the renewal to a new margin
contracts system.
●
Net loss per share was 2,150.61 yen, and net assets per share were 24,292.09 yen, down
9.2% from the previous ﬁscal year.
●
Taking into account the ﬁnancial results for the ﬁscal year, in which the bottom line loss wasrecorded for the ﬁrst time in nine ﬁscal years since ﬁscal 2004, we decided to lower our
dividend payments per share by150 yen compared with the dividends for the previous ﬁscal
year, to 150 yen.
●

Market Summary
The trading volume of Three-month Euroyen
futures fell 7.4% from the previous ﬁscal year, to
4,620 thousand lots, reﬂecting sluggishness in
trading due to a stalemate in short-term interest
rates at an extremely low level.
●
The trading volume of Click 365 fell signiﬁcantly,
declining 23.4% year on year, to 44,556 thousand lots, as it became slow after the second
quarter, although it stayed high in the ﬁrst quarter.
●
The trading volume of Click Kabu 365 doubled,
increasing 108.7% year on year, to 5,268 thousand lots, due to rising stock prices and anincrease in the number of accounts.
●
As a result, the total trading volume of listed
products declined 17.2% year on year, to54,445 thousand lots.
●

Tokyo Financial Exchange Inc.

4

Interview with the President

Q1 TFX developed a new medium-term management plan in April 2014. Can you provide an
overview of the plan?

A1 We believe that the mission of TFX is to con-tribute to the development of the Japanese economy

through the healthy growth of ﬁnancial markets as acomprehensive exchange for ﬁnancial derivatives
that covers the major sectors including interest rates,
foreign exchange, and equity indexes.
Our basic strategies for that purpose are:(1) Respond to trading needs for interest rates in themedium-term zone in preparation for future yeninterest rate increases as well as demand forlisted products following the global trend of tightening regulations on over-the-counter derivatives;and(2) Expand the investor base in the FX margin market
from individuals in Japan to corporations overseas
and establish a currency futures market for institutional investors.
With these medium-term initiatives, we will seek toexpand trading volumes and increase earnings.
Although we do not clearly specify it in the plan,
we have been reducing costs signiﬁcantly, by approximately 3,000 million yen since ﬁscal 2012. We willcontinue eﬀorts to cut costs in the years to come.

5

Tokyo Financial Exchange Inc.

Q2 Which of the business strategies speciﬁedin the new medium-term management plan willplay a central role?

A2 The ﬁrst strategy is to list products for interest

rate swaps. Since the global ﬁnancial crisis, regulations on over-the-counter derivatives have been tightened worldwide to reduce systemic risk. These
include an obligation to trade on electronic trading
platforms, and obligation to clear through central
counter parties, and an obligation to report trade to
trading repositories. These regulations have increased
administrative and other costs for over-the-counter
derivatives. As a result, investors have been shiftingfrom over-the-counter interest rate swaps to listed
futures trading.
To meet these needs, TFX intends to list alternative

Q3 As a step to enhance convenience forinvestors in Click Kabu 365, TFX has set a goalof unifying the accounts for Click Kabu 365 andClick 365.

A3 Our aim is for investors to be able to execute
trades in Click 365 and Click Kabu 365 on the sameaccount with communalized margins. For example,
they will be able to take a position in Click Kabu 365
with unrealized gains from Click 365, improving bothconvenience and the eﬃciency of funds.
At the moment, since there is a directive diﬀerence
between Click Kabu 365, which is for securitiesrelated derivatives, and Click 365, which is for
currency-related derivatives, a change in the ordinances will be necessary. But we hope to realize thisas soon as possible.

interest rate swap products.
The second strategy is to establish a currency
futures market for institutional investors.
For currency derivatives, although a vast over-thecounter market (inter-bank market) exists, currency
derivatives successfully listed on an exchange do notexist in Japan and Europe; they are available only on
the Chicago Mercantile Exchange (CME) in the UnitedStates. However, a move toward listing currency
derivatives has begun to emerge worldwide, given
tightening regulations on over-the-counter derivatives.
TFX has experience with listing currency derivatives,
and would like to take on the challenge of listingthem once again.

Q4 Lastly, what is your outlook for the future?

A4 The extremely diﬃcult operating environment
is continuing, given that the ultra-low interest rateenvironment is expected to remain for the foreseeable future under the unprecedented monetaryeasing introduced by the Bank of Japan, and giventhat the future outlook for foreign exchange is uncertain. However, we will help bring vigor to the ﬁnancial
markets in Tokyo as public infrastructure and ultimately to the development of the Japanese
economy, by providing investors with attractive andhighly reliable products while minimizing costs.
As we pursue these initiatives, we ask our shareholders for their ongoing support.
Tokyo Financial Exchange Inc.

6

Topics in Fiscal Year 2013

1 Key Achievements: Interest Rate Futures Contracts
1 Revision of the fee structure in Interest Rate Futures Contracts
The revenue structure of the Interest Rate Futures Contracts business had in the past been heavily dependent on
per-contract exchange fees based on trading volumes. In April 2013, TFX revised its fee structure based on theconcept of the beneﬁt principle, by increasing the monthly exchange fee and establishing a new fee structure
according to the frequency of use of systems to transition to a more stable income structure.
Along with the revision of its fees, TFX introduced the Inactive Membership, whereby the rights and obligationsof trading members or clearing members will be temporarily suspended.

2 Activation of trading in the medium-term interest rate zone in Three-month Euroyen futures

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Tokyo Financial Exchange Inc.

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In the Three-month Euroyen futures market, tradTrading volume of Euroyen futures (daily average for the month)ing volumes remain extremely low, as the ultra-low
Introduction of measures tointerest rate environment continues due to the proactivate back month contracts(medium-term zone)
30,000longed quantitative easing policy of the Bank ofJapan.
1st - 6th contractmonth
In this environment, reﬂecting the investment atti7th contract monthtude toward medium- and long-term yen interestand thereafter
20,000rates after the unprecedented monetary easing
undertaken by the Bank of Japan in April 2013,
TFX increased liquidity in the market by introducing
10,000the market maker program in September 2013 (atpresent, two members are designated as market
makers) and quoting bids and oﬀers for backmonth contracts in the seventh through twelfth
0back month contracts in order to meet trading andhedging needs for medium- and long-term interest
rates from ﬁnancial institutions.
We have also take steps to activate the overall interest rate futures market with incentive measures for the
medium-term interest rate zone for all participants in Euroyen futures contracts.
After introducing these measures to bolster trading in back month contracts, the share of the total trading
volume of Euroyen futures represented by the medium-term interest rate zone (from the seventh contract month)increased, suggesting some impact.

2 Key Achievements: Margin Contracts
1 Groundbreaking promotion measure implemented to activate Click 365 trading
In October, TFX introduced an unprecedented incentive program aimed at reducing the investorʼs charge for
Click 365, which is a groundbreaking eﬀort for trading on an exchange.
As a result, many trading members have reduced fees or implemented a cashback service, including the fee-freeservice of Click 365, and investors have been able to participate in Click 365 trading without worrying about fees.

Design of the trading promotion measure❶ The trading promotion fee (up to 108 yen per lot) is provided a trading member.
❷ The trading member reduces the fee to zero (or reduces it signiﬁcantly).
❸ The fee for market makers is raised to 108 yen per lot.
❹ Market makers widen the spread, taking the raised fee into account.

❸❶

108 yen/ lot(Fee)
Marketmakers(6 MMs)Tokyo
Financial
Exchange Inc.
(TFX)

108 yen/ lot(Trading
promotion fee)❷Free
(0yen/ lot)
Click 365
trading
members

Individual
investors❹ Equivalent to spread of 0.02 yen
2 Investor base for Click 365 expanded
The major players in the market are individual investors in Japan, but we have sought to provide overseas corporate investors with trading environment as well.

3 Listing of three Asian currency pairs suspended
Although TFX has listed three Asian currency pairs since August 2011, namely Chinese Yuan/Japanese Yen,
Korean Won/Japanese Yen, and Indian Rupee/Japanese Yen, it has decided to suspend the listing of these currency pairs for the time being, with November 28 as the last trading date, as it has become diﬃcult for market
makers to reliably oﬀer a price because of the characteristics of these currencies as non-deliverable forward (NDF)
currencies.

Tokyo Financial Exchange Inc.

8

4 Market for Click Kabu 365 expanded

Click Kabu 365: Balance of margins and number of accounts

250

Number ofaccounts

40,00035,000

Balance of margins(100 million yen)200

25,000

Number of accounts
150

20,00015,000100

10,000
50

5,000
0

0

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In October, when a new margin contracts system began operating,investors became able to execute a trade using a smartphone with all
trading members. In addition, in November, the maximum order size
limit of Nikkei 225 Margin trading was expanded from 200 to 500,
further improving investor convenience.

l.

5 Convenience of Click Kabu 365 enhanced

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Since the launch of Click Kabu 365 in November 2010, the number of accounts andthe amount of deposited margins have been
increasing steadily, attributable to its excellent features and our seminars for investors
and various campaigns.
In ﬁscal 2013, in particular, the trading
volume doubled from the previous ﬁscal
year, reﬂecting rising stock prices driven
ma i n l y by grow in g e x pe cta tion s for a n
Abenomics-led recovery.

Balance ofmargins (100million yen)

Annual trading volume of Click Kabu 365(thousand)

6,000

5,268

5,000
4,000
3,000
2,000
1,000
0

3 Operation of New Trading Systems

2010

2011

2012

2013 (FY)A new margin contracts trading system and a new interest rate futures contracts trading system began operatingsmoothly in October 2013 and February 2014, respectively.

1 Cost reduction
The total cost, including initial investments and operational costs for ﬁve years,
decreased by half from costs using the former system, to around 10.0 billion yen,representing a substantial cost reduction.

Total cost over ﬁve years halved
Approx. 20.0 billion yen

Approx. 10.0 billion yen

2 Improved reliability
The reliability of systems has improved with the instant switching to a backup
system at the time of system failure and the installation of a disaster recoverysite for the margin contracts trading system.

Old systems

New systems

3 Enhanced convenience
TFX improved convenience for trading members by unifying data centers for both systems and adopting ashared network that is widely used among the trading members of TFX.

9

Tokyo Financial Exchange Inc.

4 Enhancement of Investment Information and Active Promotion
1 Expanded investment information
To improve convenience for investors in Click 365 and Click Kabu 365, TFX expanded investment information byissuing a weekly foreign exchange market report, publishing the volume of short and long positions, and oﬀering anemail alert service on TFXʼs oﬃcial mobile application “Exchange 365.”● Weekly foreign exchange market report[Screen image of the oﬃcial application
Exchange 365 ]In April, TFX began issuing a weekly report on trends of
exchange rates, etc. This report provides information that canbe used as a reference for trading, such as the behavior ofmajor currencies and the general economic conditions of
relevant countries.

A button that links to the
oﬃcial website of Click
365 and Click Kabu 365
and the oﬃcial Twitter
account of TFX is added.

● Volume of short and long positions
TFX began publishing the volume of short and long positions for the currency pairs in Click 365 in April and for Nikkei
225 Margin trading/contracts in Click Kabu 365 in October,which can be used as statistics to analyze the trading trends.

If you wish to use the email
alert service, please select● Email alert service on the oﬃcial mobile application Exchange 365

email alert at the bottomof the screen.

In July 2013, TFX launched a service whereby a alert ismade on its oﬃcial application Exchange 365 when theactual trading rate (trading price) reaches a price designatedin advance for each contract in Click 365 and Click Kabu 365.

Click Kabu 365 Special
Investment Seminar▶

2 Active promotion
To further increase recognition of Click 365 and Click
Kabu 365 and facilitate more product knowledge, TFX
engaged in active promotion by holding seminars andevents for investors throughout the year.
TFX also sought to raise its proﬁle and understandthe trading needs of institutional investors and ﬁnancial
institutions in Japan and overseas by communicatingwith them through presentations at overseas exhibitions and participation in international conferences.

▲Click Fair

EXPO by the Futures Industry
Association (FIA)▶

Tokyo Financial Exchange Inc.

10

New Medium-Term Management Plan (Fiscal 2014 ‒ Fiscal 2016)
Introduction
The Japanese economy is gradually regaining strength, thanks to the monetary and ﬁscal policies of Abenomics,
and is showing signs of breaking away from deﬂation.
Sustainable economic growth is anticipated going forward, as deregulation and other initiatives based on thegrowth strategies of the government are pursued.
The mission of TFX, as public infrastructure, is to contribute to the development of the Japanese economy

through the healthy growth of the ﬁnancial markets as a comprehensive exchange for ﬁnancial

derivatives. We are required to contribute to economic growth in the ﬁnancial realm by oﬀering attractive andhighly reliable products and activating the vast ﬁnancial assets of individuals, while securing investor protection.
To that end, TFX has once again developed a three-year medium-term management plan begin-ning in ﬁscal 2014.
Basic Strategies

111

Respond to the trading needs for medium-term interest rates in preparation for future yen interest rate increases as well as demand for listed products following the global trend of tightening
regulations on over-the-counter derivatives.

2

Expand the investor base in the FX margin market from individuals in Japan to corporations
overseas and establish a currency futures market for institutional investors.

3

Enhance the convenience of Equity Index Margin Contracts and respond to diverse investment
needs.

4

Ensure the fairness and reliability of the markets.

Tokyo Financial Exchange Inc.

Business Strategies

1 Interest Rate Futures Contracts Business●

Activate the market by increasing liquidity, particularly in the medium-term zone, in response to trading needs in preparation for future yen interest rateincreases.

●

Increase overseas market participants.

●

Launch new products with substitutability for over-the-counter trading in response to rising needs forlisted products following the global trend of tightening regulations on over-the-counter derivatives.

Needs for exchange-traded products
in preparation for future yeninterest rate increases

Needs for listed products following
the trend of tightening regulations
on over-the-counter derivatives(1) Increase liquidity and activating the market▶ Enhance market making coverage in the medium-term zone (2014).

▶ Introduce the liquidity provider program for investors in Asia and otherregions (2014).

▶ Encourage entry of new market participants from overseas (2014).

(2) Launch new products▶ Interest-rate swap-related products (2015)▶ Mid-curve options on interest rate futures (2016)

2 Margin Contracts Business
Click 365

Click Kabu 365●●

Expand the investor base in the market for Click 365
from individuals in Japan to corporations overseas
and establish a currency futures market meeting theneeds of institutional investors.

Enhance the convenience of investors in Click Kabu 365
and respond to diverse investor needs.

Needs of corporate investors and institutional investors

Needs of individual investors(1) Increase the number of corporate investors in Click 365(1) Enhance convenience for investors▶ Increase the number of corporate investors in Japan and overseas by▶ Introduce the unification of accounts for Click Kabu 365 and Click 365 (2014).

using trading promotion measures (2014).

▶ Tighten the spread through increasing number of market makers (2014).

(2) Establish a currency futures market for institutional investors(2) Respond to diverse investment needs▶ Establish a currency futures market meeting the needs of institutional▶ Launch new products tailored to investor needs (2015).

investors (2015).

▶ Build the infrastructure required for the establishment of the new market.

3 Ensure the fairness and reliability of the markets(1) Stable operation of trading and clearing systems.
(2) Respond to the international regulatory frameworks for the clearing house.
(3) Enhance the self-regulatory function to protect investors and to ensure the fairness and transparency of the markets.
(4) Develop the internal control system with a view to making an initial public oﬀering.
Tokyo Financial Exchange Inc.

12

Business Plans and Policies for Fiscal Year 2014
Basic policies
１．Interest Rate Futures Contracts
Take steps to increase liquidity, mainly in the medium-term zone, to respond to trading needsin anticipation of a potential future rise in interest rates.

２．Margin Contracts (Click 365)
Strive to expand the investor base from individuals in Japan to corporations overseas and enhance investor convenience, etc., and establish a currency futures market for institutional
investors.

Main measures
1. Interest Rate Futures Contracts(1) Increase liquidity in back month contracts (medium-term zone)― Enhance market making coverage(2) Encourage the entry of overseas investors including proprietary traders― Introduce the liquidity provider program(3) Introduce new products with substitutability for over-the-counter trading― Consider interest rate swap-related products

2. Margin Contracts(1) Expand the investor base for Click 365― Expand from individuals in Japan to corporations overseas(2) Establish a currency futures market for institutional investors― Develop products that meet investor needs(3) Increase trading for Click Kabu 365― Introduce the uniﬁcation of accounts for Click Kabu 365 and Click 365― Tighten the spread with more market makers

13Tokyo Financial Exchange Inc.

Financial Statements (Summary) and Market Data
Balance Sheet (Summary)
Account Titles

FY2012(million yen)

FY2013

Account Titles

As of March 31, 2013 As of March 31, 2014

(Assets)

FY2012FY2013As of March 31, 2013 As of March 31, 2014

18,345

15,944Current Liabilities

1,269

438

16,855

13,526

Accounts
payable-trade

193

418

557

548

1,075

19

610

1,764

Non-current Liabilities

225,309263,251322

104

Deposits received
from members

Non-current Assets

231,304

268,703

Tangible Fixed
Assets

2,128

1,684

Total Liabilities

Buildings

440

419

(Net Assets)

Cash and bankdeposits
Accounts
receivable-trade

Securities
Others

Account Titles

Operating Revenues(Liabilities)

Current Assets

Proﬁt and Loss Statement (Summary) (million yen)

Others224,804

262,712504

539

226,578

263,689

OthersFixed amountexchange fees

FY2012

From April 1, 2012
to March 31, 2013

FY2013

From April 1, 2013
to March 31, 2014

6,602

5,456
50

144

Per-contract
exchange fees
Income related tosystem equipment
Other exchange
fees
Member registration
fees, etc.
Income frominformation services

4,970

5,872

185

258

―

47

11

17

240

262

Operating Expenses

6,037

7,850

Personnel expenses

1,267

1,336

Marketing expenses

100

1,781

Facility-related
expenses
Administrative
expenses

4,454

4,537

215

193

Operating Loss (▲)▲ 581▲ 1,247

Non-operating Revenues

222

133

Non-operating Expenses

20

205

Ordinary Loss (▲)▲ 378▲ 1,114

Furniture andequipment
Constructionin progress

675

1,264

Shareholders' Equity

23,071

20,957

1,012−

Common stock

5,844

5,844

Intangible Fixed
Assets

3,170

3,663

Capital surplus

6,045

6,045

Software

1,177

3,648

Retained earnings

11,181

9,066

Software in
progress

1,987

−

3,594

3,594

Extraordinary Income

510

−

7,587

5,472

Extraordinary Losses

−

▲ 543

−

0

Income or Loss (▲) Before
Income Taxes131▲ 1,658

23,071

20,958

Income taxes-current

16

3

249,650

284,647

Income taxes-deferred

60

193

Net Income or Loss (▲)

55▲ 1,855

4

14

1,201

642

Default compensation
reserve
Retained earnings
brought forward
Valuation and Translation
Adjustments

224,804

262,712

Total Net Assets

249,650

284,647

OthersInvestment andOther Assets

Assets Held for Guarantee
from Members

Total Assets

Total Liabilities andNet Assets* The above statements are based on accounting standards of Japan.

Market Data

(In lots; upper row: annual trading volume; lower row: average daily trading volume)

Products

FY2009FY2010FY2011FY2012FY2013Three-month Euroyen
futures

12,161,642(49,843)

11,466,264(46,801)

5,816,233(23,643)

4,989,726(20,366)

4,620,441(18,859)

19,000(78)

0(0)

35,547
(145)

1,500
(6)

0
(0)

80,368,758(309,111)

123,432,149(472,920)

121,116,072(466,391)

58,200,747(224,754)

44,556,077(171,731)(ー)ー

447,814(5,128)1,042,524(4,088)2,524,870(9,762)

5,268,870(20,285)

92,549,400(359,031)

135,346,227(524,849)

128,019,351(494,471)

65,718,851(254,896)

54,445,388(210,875)

Options on There-month
Euroyen futures
Click 365
Click Kabu 365
All Listed ProductsTokyo Financial Exchange Inc.

14

Corporate ProﬁleCompany NameFoundedAddress
CapitalMarunouchi Park Building 15th Floor, 2-6-1
Marunouchi, Chiyoda-ku, Tokyo, 100-6915

Board
監査役会
of Auditors

監査役
Statutory
Auditor
General Administration Department

5,844,650,000 yen

106 (as of March 31, 2014)
March 31

President & CEO
Managing Director
Managing Director
Member of the Board
Member of the Board
Member of the Board
Member of the Board
Member of the Board
Standing Statutory Auditor
Statutory Auditor
Statutory Auditor

Shozo Ohta
Wataru Ito
Takuo Hirota
Takashi Imai
Masahiro Okuno-Fujiwara
Yoshihiko Shimizu
Junko Hirakawa
Shin Yoshidome
Nagao Hashimoto
Osamu Sekine
Toshihiko Fujie

No. of TFX Members① Interest Rate Futures Trading Members…………………45

株
主
総
会

Budget and Accounting Department

取
締
役
会

President & CEO

Management(in April 2004, TFX changed from a membership organization to a stock company)

Organizational Chart

Board of Directors

Fiscal term

April 1989

Shareholders Meeting

No. of Employees

Tokyo Financial Exchange Inc.

取
締
役
社
長

Fixed Income Products Development and Marketing Department
Margin Contracts Market Development Department
Margin Contracts Marketing Department
Clearing and Settlement Department

Self-Regulatory
Committee
自主規制委員会

Interest Rates Market Surveillance Department

Expert Committee
・DisciplineCommittee

Margin Contracts Market Surveillance Department

Advisory Committee
・Interest-Rate Futures etc. Market Operation Committee
・FX/EquityIndex Market Operation Committee

System Department
Compliance Department
Internal Audit Oﬃce

(including 31 Interest Rate Futures Clearing Members and 12 inactive
trading members (inactive clearing members))

Self-Regulation Bureau② FX Margin Trading Members(FX Margin Clearing Members) ……………………………21(including 6 FX Market Makers)③ Equity Index Margin Contracts Trading Members

Share Information (as of March 31, 2014)(Equity Index Margin Contracts Clearing Members) …10(including 2 Equity Index Market Makers)

URL

Total No. of Shares Authorized
No. of Shares Issued and Outstanding
No. of Shareholders
http://www.tfx.co.jp/en/

3,400,000
862,75075* Information without a speciﬁc date is as of June 24, 2014.
The Nikkei Stock Average is a copyrighted index calculated by a method independently developed by Nikkei Inc. Nikkei Inc holds the copyright, the intellectual property rights, and all other rights associated with the Nikkei Stock Average itself
and the method of calculating Nikkei Stock Average. Business of Equity Index Margin contracts, the underlying assets of which are the Nikkei Stock Average ( Nikkei 225 Margin contracts ), and the enforcement of trading regulations for suchcontracts shall be managed under the responsibilities of Tokyo Financial Exchange Inc. ( TFX ) and its Trading Members, and Nikkei Inc shall not assume any obligations or responsibilities thereof. In operating Nikkei 225 Margin contracts, TFX
is responsible for calculating and publishing the ex-dividend prices of stocks used in the Nikkei Stock Average, which are required for Nikkei 225 Margin contracts. Nikkei Inc has the right to change component stocks in the Nikkei Stock
Average, the method of calculation, and other details of the Nikkei Stock Average, and to discontinue the publication of the Nikkei Stock Average. Nikkei Inc shall not be obligated to continuously publish the Nikkei Stock Average, and shall not
be liable for any errors, delay or discontinuation of publication.
DAX® is a registered trademark of Deutsche Börse AG. This ﬁnancial instrument is neither sponsored nor promoted, distributed or in any other manner supported by Deutsche Börse AG (the "Licensor"). The Licensor does not give any explicit or
implicit warranty or representation, neither regarding the results deriving from the use of the Index and/or the Index Trademark nor regarding the Index value at a certain point in time or on a certain date nor in any other respect. The Index is
calculated and published by the Licensor. Nevertheless, as far as admissible under statutory law the Licensor will not be liable vis-à-vis third parties for errors in the Index. Moreover, there is no obligation for the Licensor vis-à-vis third parties,
including investors, to point out potential in the Index Neither the publication of the Index by the Licensor nor the granting of a license regarding the Index as well as the Index Trademark for the utilization in connection with the ﬁnancial
instrument or other securities or ﬁnancial products, which derived from the Index, represents a recommendation by the Licensor for a capital investment or contains in any manner a warranty or opinion by the Licensor with respect to theattractiveness on an investment in this product.In its capacity as sole owner of all rights to the Index and the Index Trademark the Licensor has solely licensed to the issuer of the ﬁnancial instrument the utilization of the Index and the Index
Trademark as well as any reference to the Index and the Index Trademark in connection with the ﬁnancial instrument.
The FTSE100 Margin contract is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ( FTSE ) or the London Stock Exchange Group companies ( LSEG ) (together the Licensor Parties ) and none of the Licensor
Parties make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to (i) the results to be obtained from the use of the FTSE100 (the Index ) (upon which the FTSE100 Margin contract is based), (ii) theﬁgure at which the Index is said to stand at any particular time on any particular day or otherwise, or (iii) the suitability of the Index for the purpose to which it is being put in connection with the FTSE100 Margin contract. None of the Licensor
Parties have provided or will provide any ﬁnancial or investment advice or recommendation in relation to the Index to Tokyo Financial Exchange Inc. or to its clients. The Index is calculated by FTSE or its agent. None of the Licensor Parties shallbe (a) liable (whether in negligence or otherwise) to any person for any error in the Index or (b) under any obligation to advise any person of any error therein.
All rights in the Index vest in FTSE. FTSE® is a trade mark of LSEG and is used by FTSE under licence.
The FTSE China 25 Margin contract is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ( FTSE ) or the London Stock Exchange Group companies ( LSEG ) (together the Licensor Parties ) and none of theLicensor Parties make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to (i) the results to be obtained from the use of the FTSE China 25 (the Index ) (upon which the FTSE China 25 Margin
contract is based), (ii) the ﬁgure at which the Index is said to stand at any particular time on any particular day or otherwise, or (iii) the suitability of the Index for the purpose to which it is being put in connection with the FTSE China 25 Margin
contract. None of the Licensor Parties have provided or will provide any ﬁnancial or investment advice or recommendation in relation to the Index to Tokyo Financial Exchange Inc. or to its clients. The Index is calculated by FTSE or its agent.
None of the Licensor Parties shall be (a) liable (whether in negligence or otherwise) to any person for any error in the Index or (b) under any obligation to advise any person of any error therein.
All rights in the Index vest in FTSE. FTSE® is a trade mark of LSEG and is used by FTSE under licence.

Tokyo Financial Exchange Inc.

Marunouchi Park Building 15th Floor,
2-6-1 Marunouchi, Chiyoda-ku, Tokyo, 100-6915
TEL +81 3 4578 2400
FAX +81 3 3212 5780
http://www.tfx.co.jp/en/

Universal design fonts thatare easy to understandand easy to read are used.

The copyright of this document is held by Tokyo Financial Exchange Inc. (TFX). The original text of this document has been prepared in the Japanese language and only the Japanese version will
apply to and govern the rights and obligations for all purposes whatsoever hereunder. Accordingly, the Japanese version of this document shall apply in the event of any disagreement over themeaning or construction of any provisions in this document. Although we undertook with reasonable care to ensure the accuracy of the translation of this document, no liability for such translation
is assumed by TFX under any circumstances whatsoever.