Japan Exchange Group, Inc. · TSE:8697

Japan Exchange — Q3 FY2012 Earnings Presentation

31 slides from Japan Exchange's earnings presentation, Jan 30, 2013

  1. Slide 1: IR Presentation Material

    IR Presentation Material Japan Exchange Group, Inc. January 30, 2013

  2. Slide 2: Contents

    Contents I. Outline of Japan Exchange Group (JPX) II. Basic Policies of the Medium‐term Management Plan (FY 2013 – FY 2015) III. FY 2012, 3rd Quarterly Earnings Report IV.Reference Material * Our financial year starts on April 1 and ends on March 31. This English translation is solely for reference

  3. Slide 3: Disclaimer

    Disclaimer These materials are prepared solely for the purpose of providing information regarding Japan Exchange Group Inc., and as such, they are not intended as any offer or sale of securities or other similar action whether inside or outside Japan. Our securities have not been and will not be reg

  4. Slide 4: I. Outline of Japan Exchange Group (JPX)

    Ⅰ. Outline of Japan Exchange Group (JPX) 4

  5. Slide 5: Establishment of Japan Exchange Group (JPX)

    Establishment of Japan Exchange Group (JPX) „ TSE and OSE, with their respective strengths in cash equities and derivatives, conducted a business combination in January 2013. „ The business combination will improve market user convenience and strengthen international competitiveness through expanded

  6. Slide 6: Diversified Horizontal/Vertical Business Model

    Diversified Horizontal/Vertical Business Model „ Trading available in diverse listed products, from cash equity to derivatives „ Develop high added‐value business via vertical integration of listing/trading, clearing/settlement, and information services. Self‐regulatory Functions JPX Revenue Structu

  7. Slide 7: "Your Exchange of Choice"

    Future Vision “Your Exchange of Choice” ‐ Support Economic Growth in Japan and Asia as the Most Preferred Exchange in the Asian Region ‐ „ Revitalize the Japanese economy through the provision of risk money „ Support pro‐active investment and overseas development for listed Japan companies by facili

  8. Slide 8: As the Most Preferred Exchange in the Asian Region

    As the Most Preferred Exchange in the Asian Region „ Connect Asia with the US, Europe, and Japan and lead Asian growth Expand global network through Leading Driver for cooperation with overseas exchanges: Asian Growth Provide developed market system 1. 1 Create fund‐raising opportunities to 1. 1 Cre

  9. Slide 9: JPX in Asia

    JPX in Asia <Listed Company Market Capitalization> <Cash Equity Trading Value> <Futures (Index/Bond)/ Option Trading Volume> (bil USD) (bil USD) (mil contracts) 4,000 4,000 1,637 3,680 3,606 300 3,500 3,500 250 3,000 2,831 3,000 206 2,547 2,599 2,369 200 2,500 2,500 2,000 2,000 150 1,518 110 1,500 1

  10. Slide 10: Creed (The 4 C's)

    Creed (The 4 C’s) Customer First Prioritize customer needs In order to understand the needs of various stakeholders and to maximize the sum of customer satisfaction, we always think through from the customer's viewpoint and continue to look for the optimum solution. Credibility Creativity Build publ

  11. Slide 11: II. Basic Policies of the Medium-Term Management Plan (FY 2013 – FY 2015)

    II. Basic Policies of the Medium‐Term Management Plan (FY 2013 – FY 2015) 11

  12. Slide 12: Primary Strategies

    Primary Strategies Early Realization of Business Combination Synergies „ Early and smooth consolidation of markets, clearing functions and systems „ Early realization of synergies for both JPX group and market users (Cost reduction, etc.) Expand Derivatives Market Create a New Japanese Stock Market

  13. Slide 13: Consolidation of Markets/Clearing Functions

    Consolidation of Markets/Clearing Functions „ Consolidate markets/clearing functions within JPX group within FY 2013 FY 2012 FY 2013 4Q 1Q 2Q 3Q 4Q Combination Business July 2013 March 2014 „ Consolidate cash equity market under Tokyo Stock „ Consolidate derivatives market Exchange under Osaka Secur

  14. Slide 14: System-related Cost Synergy via Consolidation

    System‐related Cost Synergy via Consolidation „ Aim to realize approx. JPY 7 billion in annual system‐related cost synergy in FY 2015 (compared to FY 2011). FY 2012 FY 2013 FY 2014 FY 2015 Sep. 2012 – Jul. 2013 Accelerated amortization of prior OSE’s cash equity system July 2013 Cash equity system c

  15. Slide 15: Effect on Revenue due to Consolidation

    Effect on Revenue due to Consolidation Causes of Increase Causes of Decrease Business Expansion via Improved Convenience Lower Usage Costs for Users „ Increase in Trading/Trading Fee Revenue The following decreases are expected, coinciding with the consolidation of the cash equity market (July 2013)

  16. Slide 16: III. FY 2012, 3rd Quarter Earnings Report

    III. FY 2013, 3rd Quarter Earnings Report 16

  17. Slide 17: Highlights

    Highlights „ 3rd Quarter revenues and profits increased due to solid trades of derivatives from the beginning of the fiscal year and an increase in listed‐related revenues due to increased fund‐raising by listed companies and increased IPOs. „ In regard to annual performance forecast, reflecting pos

  18. Slide 18: Japanese Stock Market Trends

    Japanese Stock Market Trends Abe Administration’s “Three‐pronged Strategy” for Nikkei 225 (JPY 10) economic recovery: → Bold monetary policy JPY/USD Rate TOPIX (point) 日経平均 Nikkei 225 → Flexible fiscal policy 1,200 TOPIX TOPIX → Growth strategy that promotes private investment 95 円・ドルレート JPY/USD Rat

  19. Slide 19: Operating Revenue Conditions

    Operating Revenue Conditions „ Due to increase in derivatives trading, revenues from trading participant fees and securities settlement‐related revenues increased. „ Due to increases in listed company fund‐raising and IPOs, listing‐related revenues increased. (JPY 1 mil.) Information‐ related Other

  20. Slide 20: Operating Cost Conditions

    Operating Cost Conditions „ Large decrease in depreciation in 3Q FY2012 compared to the previous period due to accelerated system amortization of former TSEG before the business combination being included in FY2011. „ “Other” costs increased due to start of goodwill amortization (20 year annual amor

  21. Slide 21: Composition of Operating Revenues and Costs

    Composition of Operating Revenues and Costs (JPY 1 mil.) Operating Revenues Operating Costs Other 7,294 Trading Other Personnel Stable Revenue Participant Fees 9,992 10,594 23,164 Information‐ related Revenue Real Estate 11,192 Costs Depreciation 4,757 Cost 8,567 Securities Settlement‐related System

  22. Slide 22: Basic Policy for Dividends/ Handling of Treasury Shares

    Basic Policy for Dividends/ Handling of Treasury Shares „ Basic Policy for Dividends Giving due consideration to the importance of internal reserves for the purpose of development of the system to strengthening competitiveness and improving self‐regulatory function as an exchange, and for the purpos

  23. Slide 23: IV. Reference Materials

    IV. Reference Materials 23

  24. Slide 24: Trends in JPX Stock Price

    Trends in JPX Stock Price 2013/1/1 (JPY) Effective date of combination, launch of (JPY1 mil.) Japan Exchange Group 売買代金 Trading Value TOB Period for OSE Stock 5,000 12,000 (2012/7/11～2012/8/22) (Revised) Stock Price (修正後)株価 2011/11/22 Agreement on TSE/OSE Business Combination 4,500 10,000 4,000 8,00

  25. Slide 25: Outline of JPX Stock

    Outline of JPX Stock Code 8697 Tokyo Stock Exchange 1st Section, Osaka Securities Exchange JASDAQ Listed Exchange (Standard) Business Year April 1st – March 31st Annual General June Shareholders Meeting Record Date March 31st No. of Shares per 100 shares Share Unit No. of Authorized Shares: 290,000,

  26. Slide 26: Trends in IPOs

    Trends in IPOs (companies) 26

  27. Slide 27: Trends in Trading Volume Share of Japanese Stocks

    Trends in Trading Volume Share of Japanese Stocks Jan. 2010 July 2010 Oct. 2012 arrowhead launch Chi‐X enters Japanese market TOB Restrictions Eased 100% OTC 3.23% (Oct. – Dec. 2012) 90% SBI Japan-Next 3.40% (Oct. –Dec. 2012) 80% Chi-X 2.08% (Oct. – Dec. 2012) 70% JPX 91.29% Oct. – Dec. 2012) 60% 50

  28. Slide 28: Trends in the Japanese Stock Market

    400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 TOPIX (point) Nikkei 225 (JPY 10) 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 37991 37999 38006 38013 38020 38027 38035 38042 38049 38056 38063 38070 38077 38084 38091 2004 38098 38105 38118 20

  29. Slide 29: Trends in Derivatives Trading Volume

    Trends in Derivatives Trading Volume (1 mil. contracts) 250 200 日経225オプション Nikkei 225 Options 150 日経225 Nikkei 225 minimini 日経225先物 Nikkei 225 Futures その他東証デリバティブ Other TSE Derivatives TOPIX先物 TOPIX Futures 100 JGB Options JGBオプション JGB Futures JGB先物 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012

  30. Slide 30: Derivatives Night/Evening Session

    Derivatives Night/Evening Session (1 mil. contracts) Nov. 2011 （％） TSE session extended to 16 Jun. 2011 11:30PM 45% OSE session renamed “Night Session”, extended to 3AM 40% 40% 14 35% Sept. 2007 35% 12 Introduction of evening 34% session for OSE Nikkei 225 32% 31% 31% Futures/Options (until 7PM) 30%

  31. Slide 31: Expansion of OTC Clearing Business

    Expansion of OTC Clearing Business Notional Amount <Trends in Volume of Yen‐denominated Contracts under Outstanding (JPY 1 tril.) IRS under Obligation> Obligation (contracts) 120 12,000 100 10,000 100 80 8,000 60 70 6,000 40 4,000 40 20 2,000 14 0 0 October‐2012 November‐2012 December‐2012 January‐2

Japan Exchange Group — Q3 FY2012 Earnings Presentation on 6ix