Tokyo Stock Exchange
Quantified Trading
Founded in 1878, the Tokyo Stock Exchange (TSE) originally functioned as a venue where ex-samurai could exchange bonds issued by the government. As it
Quantified Strategies
Founded in 1878, the Tokyo Stock Exchange (TSE) originally functioned as a venue where ex-samurai could exchange bonds issued by the government. As it evolved, the focus of the TSE transitioned to stock trading, and by the 1920s, this became its dominant activity.

Throughout its history, spanning several decades, it has experienced significant fluctuations—from suspending operations during World War II to emerging as the largest securities exchange globally by the late 1980s.

In contemporary times, Tokyo Stock Exchange operates as a publicly traded entity under Tokyo Stock Exchange, Inc., maintaining an essential position within Japan’s financial framework. It’s a very interesting exchange due to the number of listings there, which is very high.

As Japan’s principal stock exchange and one of the top five in the world by market capitalization, the Tokyo Stock Exchange is a financial leviathan that underpins the nation’s economy and draws global traders.

This article will explore the fundamental operations of the TSE, its trading hours, key listed companies, and its storied history to give you a comprehensive understanding of this powerful economic engine that rose from the ashes after WWII to get a dominant position for capitalists.

Key Takeaways

The Tokyo Stock Exchange (TSE) is Japan’s largest stock exchange, showcasing an extensive list of 3,784 (as of today) companies including top corporations like Toyota, and is divided into five sections for various company sizes and investor types.

Several indices, such as TOPIX and Nikkei 225, provide benchmarks for the Japanese equity market, and the TSE employs a ‘T+2’ settlement cycle and an ‘arrowhead’ platform for high-speed trading to remain competitive.

Technological advancements at TSE include transitioning from floor trading to electronic systems and the ToSTNeT off-auction trading system, with a focus on enhancing transaction speed, efficiency, and global accessibility for investors.

Several international brokers give access to TSE, for example, Interactive Brokers.

What is the Tokyo Stock Exchange?

Situated in Tokyo, the Tokyo Stock Exchange (TSE) is Japan’s premier stock exchange and boasts an impressive roster of 3,784 companies listed as of September 2021. The number of listed companies has always been high, so you can expect many to choose from.

It falls under the auspices of the Japan Exchange Group and is home to revered Japanese entities such as Toyota, Honda, and Mitsubishi. The structure of this exchange comprises five distinct sections that are tailored to accommodate businesses at various sizes and growth phases. Two segments cater specifically to burgeoning startups while another is solely for well-versed professional investors.

Among its notable offerings are two indices (TOPIX and Nikkei 225) which act as key barometers for tracking the trends within Japanese equity markets by reflecting changes in performance among their listed entities.

In terms of transactional framework, TSE adheres to a “T+2” settlement cycle where trades need settling no later than two business days post-execution date. With ambitions towards bolstering its stature on an international stage amongst trading platforms, TSE has rolled out ‘arrowhead’, a system engineered for facilitating ultra-fast trading activities.

How did the Tokyo Stock Exchange start?

The Tokyo Stock Exchange (TSE) was established on May 15, 1878, under the guidance of then Finance Minister Kuma Shigenobu and business magnate Shibusawa Eiichi. Originally, the exchange’s primary dealings were in government bonds along with gold and silver currency transactions that predominantly served ex-samurai who had been provided with government bonds.

As it developed, the TSE expanded into five distinct divisions to accommodate various segments within the market. Despite this growth, there have been periods of struggle. Notably from 1991 to 2001, when Japan’s asset price bubble collapsed, led to a significant reduction in the market capitalization for stocks on the exchange. Even three decades after the bubble burst, the N225 is struggling to reach all-time highs, not considering reinvested dividends, though.

When was the Tokyo Stock Exchange founded?

Tokyo Stock Exchange was founded on the 15th of May, 1878. The Tokyo Stock Exchange (TSE) marked a pivotal point for Japan’s economic development and growth as it embarked on becoming a key financial institution.

Originally established to cater to ex-samurais’ financial needs, the inception of TSE signaled a significant transformation within Japan’s monetary environment, eventually leading it to rise as an influential player in global finance.

Who owns the Tokyo Stock Exchange?

The Tokyo Stock Exchange (TSE) is owned by Tokyo Stock Exchange, Inc., a dedicated entity under the leadership of President & CEO Iwanaga Moriyuki.

Established on April 1, 1949, with a registered capital of 11.5 billion yen and two million three hundred thousand shares issued to date, this key financial institution supports various market operations. These include facilitating trading platforms for securities transactions, publishing trading prices and data, and maintaining integrity within securities dealings. Managing the exchange for financial instruments as well as engaging in ancillary activities such as forming partnerships with other exchanges like the York Stock Exchange.

How does the Tokyo Stock Exchange work?

The Tokyo Stock Exchange (TSE) works and operates through a structured system divided into five distinct sections.

The “Main Market,” which serves companies of large and medium size in terms of market capitalization.

The “Mothers” section, or Market of the High-Growth and Emerging Stocks, is tailored to emerging startup firms.

Jasdaq, with separate divisions for standard enterprises and those experiencing growth.

Tokyo Pro Market is a platform dedicated exclusively to professional investors.

Within these individual segments, unique listing prerequisites must be satisfied by businesses aspiring to join the exchange. This is particularly true for inclusion in the first section.

TSE leverages an off-auction transaction mechanism known as ToSTNeT (Tokyo Stock Exchange Trading NeTwork System) for its trading processes. This robust infrastructure accommodates an expanding volume of trades while distributing outcomes as actionable market information.

It facilitates various trade types such as single stock transactions, basket trading involving multiple securities simultaneously, end-of-day price-based trading activities along with off-auction buyback operations concerning own shares plus distribution outside traditional auction settings.

What is the purpose of the Tokyo Stock Exchange (TSE)?

The purpose of Tokyo Stock Exchange (TSE) performs a dual function of providing an environment that allows companies, including some of Japan’s leading firms, to access the public equity markets for funding, and to facilitate trading in the secondary market. Such capital is instrumental in financing several business operations that drive economic development, such as research and development or expansion initiatives.

The TSE acts as a hub where various financial products can be traded by providing essential data like real-time and historical index values along with market statistics.

This arrangement enhances the investment landscape for both private investors and large institutions alike by fostering liquidity and aiding in establishing accurate prices within the market.

Who created the Tokyo Stock Exchange?

The Tokyo Stock Exchange (TSE) was created in 1878 as the Tokyo Kabushiki Torihikijo, or Tokyo Stock Exchange in English. Its creation was primarily driven by a consortium of Japanese business leaders, financiers, and government officials aiming to provide a centralized marketplace for trading securities and promoting investment in Japan’s burgeoning industrial economy during the Meiji era. The TSE has since evolved into one of the world’s largest and most influential stock exchanges, playing a pivotal role in Japan’s economic development and serving as a key platform for domestic and international investors to participate in the country’s financial markets.

What are the trading hours on the Tokyo Stock Exchange?

Trading hours on the Tokyo Stock Exchange are typically from 9:00 AM to 3:00 PM local time, Monday to Friday. The TSE operates on a weekly timetable from Monday through Friday, starting trading at 9:00 am and ending the session at 3:00 pm Japan Standard Time (GMT+09:00). Trading pauses for a lunch recess between 11:30 am and 12:30 pm. The exchange is distinct in that it does not provide opportunities for trading before the market opens or after it closes.

Activity on the TSE ceases over weekends—Saturdays and Sundays—and remains closed on national holidays as well as other declared market holidays.

What are the biggest crashes on the Tokyo Stock Exchange?

The biggest crashes on the Tokyo Stock Exchange include:

The 1987 Black Monday Crash

The 1990 Nikkei Crash

The 2008 Global Financial Crisis Crash

Every financial market has its periods of growth and decline, and the TSE is no exception. A notable low point was in 1992 when the bursting of Japan’s asset bubble led to a dramatic drop in the Nikkei index, slashing it nearly by half and precipitating a mild recession within Japan. Nikkei 225 is still struggling to reach new highs even today.

Below is a chart (log scale) showing the Nikkei 225 from 1960 until today.

As you can see, after the bubble burst in 1991, the Nikkei went down for over two decades before it finally turned and went up after 2010. However, the above chart is the cash value of the index, so any reinvested dividends are not included. Hence, the performance is better than indicated! Anyway, the chart proves how long it can take if a big bubble bursts.

In recent times, there have been significant downturns such as during the global financial crisis of 2008, which saw the Nikkei plummet close to 10%, and again in March 2020 when fears surrounding the COVID-19 pandemic prompted a substantial sell-off.

We backtested the N225, and since 1960, the Nikkei has dropped at least ten percent over ten days 159 times. It has dropped at least 20% over ten days eight times.

What is the history of on the Tokyo Stock Exchange?

The history of the Tokyo Stock Exchange dates back to 1878, when it was established as the Tokyo Kabushiki Torihikijo. It has since grown to become one of the largest stock exchanges in the world, playing a crucial role in the Japanese economy and global finance.

Established in 1878, the Tokyo Stock Exchange (TSE) has a storied past that initially saw it as a marketplace for former samurais to trade government bonds. As time went on, the exchange expanded and developed five distinct sections designed for companies of different sizes and at various stages in their growth.

Over several decades, TSE’s prominence grew steadily. By the 1920s, stock trading came into vogue there, and after World War II, its importance eclipsed that of the Saka Stock Exchange. By late in the 20th century, TSE was conducting over 90 percent of all securities transactions across Japan.

Yet this progress wasn’t without its share of trials. From 1991 until approximately ten years later – following bursts within Japan’s equity and real estate sectors – TSE witnessed significant declines in market capitalization.

These hurdles were surmounted due to the persistent nature of TSE which constantly adjusted itself to address shifting market demands with perseverance even during tough times.

Innovations like transitioning from floor-based systems toward electronic platforms have marked technological leaps forward while structural amendments sought out improved efficiency within operations — collectively bearing witness to both endurance and continual transformation securing an indelible mark on financial markets worldwide.

Can tourists visit the Tokyo Stock Exchange (TSE)?

Yes, tourists visit the Tokyo Stock Exchange. The Tokyo Stock Exchange (TSE) opens its doors to visitors. The TSE’s visitor facility, known as TSE Arrows, operates between 9:00 am and 4:30 pm for self-guided tours without the need for prior booking, though it is closed on Saturdays, Sundays, and public holidays. For groups comprising 10 individuals or more who desire a guided tour experience at the exchange, they must make a reservation in advance.

To this service offering, the stock exchange venue in Tokyo includes an observation area that provides guests with a view of the trading floor dynamics and ongoing market activities. There is also a museum within premises where tourists can immerse themselves in learning about both historical elements and current operational aspects related to one of Japan’s paramount financial institutions – The Tokyo Stock Exchange.

Does the Tokyo Stock Exchange have holidays?

Tokyo Stock Exchange has many holidays annually, like other enterprises and countries. The exchange remains closed on weekends, national festivities, as well as supplementary occasions including the 2nd and 3rd of January following New Year’s Day, plus December 31st.

Celebratory days such as Vernal Equinox Day, Showa Day, Constitution Memorial Day, Greenery Day and Children’s Day are among those observed by the TSE.

If a national holiday lands on Sunday at any point in time during the year (for instance), it is customary for the TSE to defer its commemoration to Monday immediately following that Sunday.

What was the first company traded on the Tokyo Stock Exchange?

The first company to be traded on the Tokyo Stock Exchange was the “Tokyo Kabushiki Torihikijo,” which began operations in May 1878. It was the inaugural listed entity on the exchange, marking the beginning of organized securities trading in Japan. This historical milestone laid the foundation for the development and evolution of Japan’s financial markets over the following decades.

What is Japan’s main stock index?

Japan’s main stock index is the Nikkei 225 Stock Average (N225), which aggregates the performance of Japan’s foremost 225 blue-chip companies on the Tokyo Stock Exchange. Initiated in September 1950 and calculated retrospectively to May 1949, it stands as Asia’s most longstanding stock index.

As a capitalization-weighted index, it mirrors the dynamism of companies listed on exchanges and acts as an indispensable barometer for Japan’s equity markets.

How does the Tokyo Stock Exchange compare to other major stock exchanges globally in terms of market capitalization?

In terms of market capitalization, the Tokyo Stock Exchange compares favorably with other major stock exchanges globally, such as the New York Stock Exchange (NYSE) and the NASDAQ.

The Tokyo Stock Exchange (TSE) is prominent among the giants of global stock exchanges in terms of market capitalization. By today, it had reclaimed its status as Asia’s premier stock exchange based on market cap, outperforming the Shanghai Stock Exchange.

Regarding global rankings for 2023, the TSE comes in fifth among leading stock exchanges by market capitalization with an estimated value around $6.54 trillion USD.

Can foreign investors easily participate in trading on the Tokyo Stock Exchange?

Foreign investors can engage in trading on the TSE, easily via foreign brokers. This exchange permits the trading of foreign stocks using the Japanese yen, which avoids the need for currency conversion and related banking fees. With a modest initial investment starting from as little as JPY 100,000, investors can invest in these foreign equities listed on the TSE.

Numerous international brokerage firms extend services enabling overseas investors to trade stocks from Japan, especially those on the TSE. There is another option for such investors seeking involvement with Japanese market indices without directly purchasing Japanese shares: investing in ETFs that mirror these indices can provide exposure similar to direct stock investments on the TSE.

Interactive Brokers offers trading in Japanese stocks, and commissions are going down. You can also buy ADRs on the US exchanges, but many of the smaller companies only on the OTC market.

What role does the Tokyo Stock Exchange play in Japan’s economy?

The Tokyo Stock Exchange’s role is to serve as a crucial hub for capital formation and investment in Japan’s economy.

The Tokyo Stock Exchange (TSE) bolsters Japan’s economy. It offers a vital stage for major Japanese companies to garner capital from public equity markets, thus supporting corporate endeavors that drive economic expansion. By acting as an exchange where numerous financial instruments can be traded, the TSE stimulates investment into these companies, which fuels spending and investment within the nation’s economy.

As an emblematic gauge of Japan’s economic vigor and breadth, the TSE’s market capitalization mirrors its listed entities’ aggregate value.

How has the Tokyo Stock Exchange evolved technologically over the years?

The Tokyo Stock Exchange has evolved technologically over the years by adopting advanced trading systems, implementing electronic trading platforms, and enhancing connectivity for faster and more efficient transactions.

A commitment to technological innovation is at the core of TSE’s progress. Japan is a very innovative country. The market moved away from traditional floor trading and adopted electronic systems, which enhanced both the speed and effectiveness of transactions. To increase its global market competitiveness, it launched ‘arrowhead,’ a platform tailored for high-speed trading.

In 2017, there was a substantial enhancement to the off-auction trading system known as ToSTNeT. This upgrade augmented both processing capacities and ease of use for participants in the exchange.

Are there any unique features or trading practices specific to the Tokyo Stock Exchange (TSE)?

The TSE distinguishes itself in the market with a distinctive trading methodology called “Itayose,” which is a call auction system employed to establish opening and closing prices. In this process:

Exchange personnel announce an initial tentative price.

Participants on the trading floor put forward their orders.

The provisional price is systematically revised according to these orders until every trade has been executed.

Within Itayose, market transactions are organized by the sequence in which they were received, ensuring execution adheres to both pricing and chronological precedence.

What are some notable companies listed on the Tokyo Stock Exchange?

Some notable companies listed on the Tokyo Stock Exchange are Toyota, Sony, and SoftBank Group are present there, along with vital contributors to sectors such as Mitsubishi UFJ Financial, Keyence, Fast Retailing, and Tokyo Electron.

The biggest companies today are these:

Toyota

Mitsubishi UFJ Financial

Keyence

Sony

Tokyo Electron

NTT

Fast Retailing

Mitsubishi Corporation

Shin-Etsu Chemical

Softbank

Japan is famous for its cross-ownership, where many companies own shares of one another, something which is not very shareholder friendly. They have also many conglomerates.

How does the Tokyo Stock Exchange contribute to Japan’s reputation as a global financial hub?

The Tokyo Stock Exchange (TSE) significantly enhances Japan’s position as a global financial hub. The Tokyo Stock Exchange contributes to Japan’s reputation as a global financial hub in its vast size, extensive market capitalization, and significant impact on worldwide financial markets.

With the highest aggregate market capitalization of shares that are listed among Asian stock exchanges, the TSE reinforces Japan’s status as a pivotal financial epicenter in Asia.

Are there any recent regulatory changes or developments affecting the Tokyo Stock Exchange?

Over the past few years, the Tokyo Stock Exchange (TSE) has made several regulatory adjustments and improvements. These changes encompass:

Amendments to parts of the Securities Listing Regulations

Improvements in monitoring activities within the market

Modifications to trading regulations aimed at bolstering the effectiveness of cash equity markets

Such reforms demonstrate TSE’s dedication towards ensuring that its market operates with integrity, clarity, and efficiency.

What are some future plans for growth by the Tokyo Stock Exchange?

Here are some future plans for growth by the Tokyo Stock Exchange, including:

Employing advanced generative AI technology to scrutinize the financial health and performance of stocks listed on the exchange using different forecasting indicators.

Distributing these insights in a multitude of languages, with English prominently featured.

Targeting an expansion in its base of international investors by removing obstacles presented by language differences.

Becoming more shareholder-friendly by increasing the return on invested capital has been low for many decades.

Anticipated outcomes of this endeavor include heightened global recognition for Japanese firms as well as improvements in market efficiency.

Related Reading: Shanghai Stock Exchange

Are there any cultural or historical landmarks associated with the Tokyo Stock Exchange’s location?

Yes, the Tokyo Stock Exchange is located in the Nihonbashi district of Tokyo, which is historically significant as the commercial center of Edo (old Tokyo) during the Tokugawa shogunate. Nihonbashi itself is a landmark, known for its historic bridge that served as a starting point for major roads leading to other parts of Japan. However, the specific location of the Tokyo Stock Exchange building doesn’t have significant cultural or historical landmarks directly associated with it.

Situated in the historically and culturally significant district of Nihonbashi in Tokyo, the TSE stands amid remarkable landmarks. The vicinity is adorned with an age-old train station pivotal as a transport nexus, an enchanting shrine that attracts numerous visitors, and a venerable elementary school structure contributing to the area’s antiquated aesthetic.

Nihonbashi is distinguished by the emblematic Nihonbashi Bridge, which has been an enduring representation of this locale since its inception in 1603.

What are some interesting facts about the architecture or design of the Tokyo Stock Exchange building?

The Tokyo Stock Exchange building features a modern design characterized by its sleek glass facade and striking steel framework. Its architectural layout emphasizes transparency and connectivity, symbolizing openness and accessibility in financial markets.

The structure housing the Tokyo Stock Exchange (TSE) is truly remarkable. Having opened its doors in 1899, this building captured attention with its distinctive aesthetic appeal that distinguished it from other nearby structures. Within these walls, one can find the TSE Historical Museum.

A place presumably dedicated to showcasing exhibits about Japan’s financial chronicles and the development of the exchange over time. A Museum Shop within the premises indicates that part of this architectural masterpiece is designed to include commercial space for those visiting.

Equally noteworthy is what could be referred to as the Market Center section – potentially functioning as either a hub where trading activities unfold or perhaps representing a vital core for market operations on site.

What is the main Japan Stock Exchange (TSE)?

The main Japan Stock Exchange is Tokyo Stock Exchange (TSE), and serves as Japan’s primary exchange for stocks.

Established as a Kabushiki gaisha or joint-stock company, this exchange tracks market performance through major indices, including the Nikkei 225 and TOPIX, which collectively represent the activity of companies listed on it.

How big is Tokyo Stock Exchange?

Tokyo Stock Exchange is big and has a market capitalization of 6.6 trillion USD (6.500 USD).

The Tokyo Stock Exchange (TSE) exhibits a towering presence with respect to market capitalization. By December 2023, the TSE’s market cap reached an enormous sum of 6,155.309 billion USD. Such a figure ranks it within the highest echelons worldwide as one of the top five largest stock exchanges by market capitalization.

As of April 2022, the TSE encompasses various segments in its marketplace structure: these are recognized as the Prime Market, Standard Market and Growth Market.

How many stock exchanges are there in Japan?

There are four major stock exchanges in Japan: the Tokyo Stock Exchange, the Tokyo Stock Exchange, and the Tokyo Stock Exchange.

Tokyo Stock Exchange

Osaka Exchange

Nagoya Stock Exchange

Fukuoka Stock Exchange

Additional platforms are connected to trading activities like JASDAQ and the Tokyo Pro Market.

Historically, numerous stock exchanges were operational in different cities across Japan. These merged into one unified Japanese Stock Exchange during World War II.

What are the 10 biggest companies on Tokyo Stock Exchange?

The ten biggest companies on the Tokyo Stock Exchange are these:

Toyota

Mitsubishi UFJ Financial

Keyence

Sony

Tokyo Electron

NTT (Nippon Telegraph & Telephone)

Fast Retailing

Shin-Etsu Chemical

Recruit

Softbank

Are there any foreign companies listed on the Tokyo Stock Exchange?

Yes, there are foreign companies listed on the Tokyo Stock Exchange. TSE has become a hub for numerous international firms.

Since 1973, it has facilitated the market activities of foreign stocks and enhanced its listing processes to draw in rapidly expanding Asian enterprises. The exchange hosts two types of overseas companies: those with global “Blue Chip” status and those exclusively listed on the TSE itself.

Summary

Since its establishment in 1878, the Tokyo Stock Exchange (TSE) has emerged as a formidable force within the global financial sector. It not only plays a significant role within Japan, but also considerably influences worldwide economic movements and fiscal strategies.

The TSE is recognized for fostering diverse market sections, pioneering trading methods, and perpetually embracing technological innovation—factors driving its ongoing evolution and bolstering Japan’s international finance center standing. Looking to the future, it continues to be an essential venue where companies can access capital while offering investors robust opportunities for trading across various financial instruments—all underlining Japan’s vibrant economic strength to global observers.

Frequently Asked Questions

What is Tokyo Stock Exchange called?

Tokyo Stock Exchange is commonly referred to as “TSE.”

The TSE or Tokyo Stock Exchange stands as Japan’s largest stock exchange.

Can Americans invest in the Tokyo Stock Exchange?

Americans are unable to invest directly in the Tokyo Stock Exchange. They can acquire exposure by purchasing shares of an ETF that follows the Nikkei 225 index or by investing in Japanese stocks via international brokerages with offerings of Japanese equities.

Is Tokyo Stock Exchange open now?

Tokyo Stock Exchange is open from Monday through Friday, starting trading at 9:00 am and ending the session at 3:00 pm Japan Standard Time (GMT+09:00). Trading pauses for a lunch recess between 11:30 am and 12:30 pm.

What major crashes has the TSE experienced?

Including notable crashes on the TSE like Black Monday in 1987, the financial crisis that swept across the globe in 2008, and March 2020’s sharp sell-off triggered by concerns surrounding the COVID-19 pandemic.

Such occurrences have left a substantial mark on trading activities within the market.

How does the TSE contribute to Japan’s reputation as a global financial hub?

The Tokyo Stock Exchange (TSE) enhances Japan’s global financial hub status by providing a platform for international investors to access Asia’s second-largest economy, fostering liquidity, and showcasing Japan’s advanced financial infrastructure.