www.tse.or.jp

July 2007

Tokyo Stock Exchange, Inc.

Tokyo Stock Exchange - Your Gateway to the Japanese Capital Market -

Ⓒ2007 　 Tokyo Stock Exchange, Inc. All Rights Reserved.

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TSE at a Glance

Chairman of the Board: Taizo NISHIMURO

President & CEO : Atsushi SAITO

Foundation: 15 May, 1878

Demutualisation: 1 November, 2001

Number of Listed Companies: 2,422 (Domestic: 2,396, Foreign: 26)

Market Capitalization: JPY 571 trillion (as of May 30, 2007)

Daily Average Trading Value: JPY 3,155 billion (May, 2007) Securities Traded at TSE: Equities, ETFs, REITs, Bonds,

Derivatives Structure of Equity Market: Main Board (First & Second Sections)

Venture Board (Mothers)

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15,421

4,6143,865 3,794 3,708

0

2000

4000

6000

8000

10000

12000

14000

16000

NYSE TSE NASDAQ LSE Euronext

(US$ billion)4,614

1,715

1,096918 834

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

TSE HKEx ASX Shanghai KRX

(US$ billion)

Source: World Federation of Exchanges (Dec.2006)

*Market Capitalization as of Dec. 2006 for Domestic Companies only. KRX includes Kosdaq market.

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World’s Top 5 Stock Markets by Market Capitalization * Asian Top 5 Stock Markets by Market Capitalization *

Tokyo Stock Exchange in the World

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（ Source ） The Bank of Japan

Ⓒ2007 　 Tokyo Stock Exchange, Inc. All Rights Reserved.

Target for Japanese government’s policy “From Savings To Investment”

Highest level in the world ！

　 Cash/Deposit

Domestic Stock

Foreign Securities

Others Total

FY1979 1,948 212 7 1,115 3,283

FY1985 3,294 532 14 2,471 6,312

FY1990 4,818 961 37 4,446 10,262

FY1995 6,296 819 21 5,553 12,689

FY2000 7,514 735 60 5,581 13,890

FY2001 7,654 654 87 5,590 13,736

FY2002 7,755 517 71 5,341 13,560

FY2003 7,796 812 65 5,420 14,093

FY2004 7,755 843 69 5,628 14,295

FY2005 7,703 1,180 80 6,242 15,205

（ Unit ： JPY100 billion ）

Huge Financial Assets Held by Japanese Individuals

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（％）

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0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

FY1979 FY1984 FY1989 FY1994 FY1999 FY2004

Cash/DepositStocksInvestment in Overseas SecuritiesTotal

Japanese Individuals’ Financial Assets (1979=100)Japanese Individuals’ Financial Assets (1979=100)Sharp increase in

investment in overseas securities by Japanese

investors ！

Active Investment in Overseas Securities by Japanese Individuals

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0

100

200

300

400

500

600

700

800

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006

[Trading in Indian Stock by Japanese Investors ][Trading in Indian Stock by Japanese Investors ] [Balance of Japanese Investment Trusts[Balance of Japanese Investment Trusts Investing in Indian Stock ] Investing in Indian Stock ]

[JPY bils.][JPY bils.]

(Source) JSDA (2000-2004), BOJ (2005-2006)(Source) Toshi-Shintaku Jijo

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Boom of Investment in Indian Stock Market

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【 Basic View 】

Asian Companies with High Growth Potential

Retail Investors ＋ Institutional Investors

Change

Current Basic Concept

Blue-chips in US and Europe

Secondary Listing

Basic Concept in the Past

Retail Investors

Secondary Listing ＋ Single Listing

Ⓒ2007 　 Tokyo Stock Exchange, Inc. All Rights Reserved.

※ ：” Relationship with Japan” is not a listing requirement but just a part of promotion policy of TSE.

Long-term listing on TSE

More Asian companies with high growth potential are expected to strengthen ties with the Japanese market and Japanese enterprises.

Marketing Policy for Listings of Non-Japanese Companies

To solidify TSE’s position as the core market for efficient flow of funds in Asia, “originality” and “uniqueness” of TSE market should be greatly improved.

Relationship with Japan ※

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A foreign company can merge or acquire a Japanese company through its subsidiary in Japan in an effective “stock swap”. （ implemented in May 2007. ）

a. What Is a Triangular Merger?

Japanese Company to be merged （ J Corp. ）

Japanese Corp.’s Shareholders

Overseas

Japan

FS Corp.（ Subsidiary of F Corp. ）

J Corp. Stock

F Corp. Stock

Succeeding Company

Merged Company

Merger of J Corp. by “stock swap”

F Corp.（ Parent of FS Corp ）

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New Framework for Alliance with Japanese Companies

～ ～ Triangular Merger Triangular Merger ～～

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b. Conditions for Successfully Conducting a Forward Triangular Merger

（※） It is also necessary for an acquiring company (F Corp.) to meet home country’s legal requirements.

The following points should be ensured for shareholders of the merged Japanese company.

◎ Secondary market in Japan ◎ Sufficient disclosure of corporate information ◎ Smooth exercise of shareholders’ rights including voting rights

Under Japanese laws and regulations, a foreign company is required to obtain approval from the merged Japanese company’s shareholders if it conducts a triangular merger. （※）

If the foreign company is listed on TSE, it can satisfy the above points.

Easy to obtain approval at General Shareholders Meeting for a triangular merger

New Framework for Alliance with Japanese Companies

～ ～ Forward Triangular MergerForward Triangular Merger ～～

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* Currently, original shares and DRs issued outside Japan (e.g. ADRs, GDRs) can be listed on TSE through depository linkage.

Introduction of JDR* （ Japanese Depositary Receipt ） Listing System (to take effect in Autumn 2007)

Giving consideration to corporate governance practices in the home country

Support from Japanese Government （ FSA & METI ）

　 JDRs （ DRs issued in Japan ） will be added to TSE’s product line-up as a new vehicle for capital raising in Tokyo Market.

Efforts by TSE for Revitalising its Foreign Stock Market

Even the following foreign companies can be listed on TSE:

A company which is prohibited from overseas listing by way of original shares under the legal framework of the company's home country,

A company for which restrictions are imposed of shareholding by foreigners, or A company issuing classified stock which may not be unconventional in Japanese market.

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Large number of manufactures with competitive edges Close economic ties with Asian countries High attractiveness of Tokyo as metropolis

To enhance status of Tokyo market as an international financial centre To improve management returns of financial assets held by Japanese individuals

＋

Vigorous Discussion inside Japanese Government（ Cabinet Office, Financial Services Agency, etc have set up one advisory body after

another since the 2nd half of 2006.)

Superiority of Japan Policy of Japanese Government

High possibility that measures will be taken to contribute to revitalisation of TSE’s Foreign Stock Market

Efforts by Japanese Government’s Response

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Roles Expected of TSE for DMIC

Tokyo Stock Exchange (TSE)

Japan’s Huge Financial Assets

Indian Companies

DMIC Project

Further Development of Indian Economy

InvestmentFund Raising by Listing Investment

Through listing of Indian companies TSE will play a role of a bridge between Indian companies having vigorous fund raising needs and Japanese investors having abundant financial assets.

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Thank you

Ⓒ2007 　 Tokyo Stock Exchange, Inc. All Rights Reserved.

While every effort has been taken to ensure that the information contained on this material is correct, TSE is not responsible for any damages or losses suffered as a result of the use of this information. For further information, please contact TSE personnel.  None of the information contained in this material constitutes a recommendation, solicitation or offer by TSE or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.