June 29th, 2017 EXTENT Conference, London Peter Babucke, Clearing Systems, JPX © Japan Exchange Group, Inc. All rights Reserved. Japan Exchange Group: ‘Grand Design’ for a new Clearing System

TSE OSE IT Planning Dept. • Creates system ground design for JPX corporate group • Sets rules and procedures for system quality assurance Report Report Set the rules and monitor compliance • Develop and maintain TSE systems JPX Cooperation Outline the strategic direction Outline the strategic direction • Develop and maintain OSE systems • Operate and maintain OSE systems • Responsible for service delivery Operational support Technical support Set the rules and monitor compliance • Operate and maintain TSE systems • Responsible for service delivery IT Development Dept. IT Services Dept. IT Services Dept. IT Development Dept. Operational support Technical support JPX IT Organizational Chart © Japan Exchange Group, Inc. All rights Reserved. 2

JPX IT Systems Setup © Japan Exchange Group, Inc. All rights Reserved. 3 Primary Center Secondary Center AP １ AP 2 arrownet Optical ring network Trading systems Clearing systems Other systems Trading systems Clearing systems Other systems Tokyo Stock Exchange (Kabutocho) Dedicated lines, VPN, etc. Back-up offices Osaka Exchange (Kitahama) Users (Securities cos., etc.) AP 3

Overview of JPX Systems 1 arrowhead (cash trading) ToSTNeT (Off-auction cash trading) 1. Trading System • In-house system developed with Japanese system vendor • Off-auction: ToSTNeT trading for stocks, domestic convertible bonds, etc. J-GATE (Futures/options trading) • NASDAQ Genium Package • Futures: Japanese indices, overseas indices, volatility indices, bonds, etc. • Options: Equity options, index options, JGB futures options OSE TSE • In-house system developed with Japanese system vendor • Stocks (domestic, foreign, preferred, etc.), ETF, REIT, convertible bonds, etc. 2. Market Information System Market Info. System ISC • About 100 indices, statistics (Index Statistics Calculation Engine) TSE • Issues data, price, quote, trading volume, turnover, etc © Japan Exchange Group, Inc. All rights Reserved. 4

Overview of JPX Systems 2 3. Information Systems • TDnet facilitates electronic transmission of timely disclosure information of listed companies through the network to media outlets and investors. TDnet 4. Clearing Systems Clearing Systems TSE 5. Network JSCC Clearing System (Cash/Derivatives): In-House (Japanese system vendor) • Cutting-edge network infrastructure connecting JPX's trading, information, etc. systems (such as arrowhead) with trading participants and users. arrownet © Japan Exchange Group, Inc. All rights Reserved. 5 JGB Clearing System: In-House (Japanese system vendor) OTC Clearing System: Calypso

Core System Replacement: Master Plan © Japan Exchange Group, Inc. All rights Reserved. 6 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020～ * Details will be subject to future discussions. arrowhead (Cash) Launch 9.2015 * ISC (Index & Statistics Calculation) Next J-GATE (Futures/Options) Launch * Launch 2015.9 7.2016 (Scheduled) Service launch for TOCOM * Service 9.2016 JSCC Clearing System Upgrade 10.2015 Respond to new BOJ net Latter half, FY2017(Scheduled) Renew Derivatives Clearing Function Enhance Risk and Collateral Management Functions TBD OTC Clearing System JGB Clearing System Upgrade 9.2015 Cross Margin Upgrade FY2016 New Products (Scheduled) Latter Half, FY2017 (Scheduled) 10.2015 Upgrade 5.2018 Shorter Settlement Cycle (Scheduled) TBD Launch Trading Systems Clearing Systems Launched 11.2011 ToSTNeT (Off-Auction) Next ToSTNeT (Off-Auction) * 1.2017 (Scheduled) Launch J-GATE (Futures/Options) Upgrade FY2017 New Products (Scheduled) “Grand Design”

Future Vision of the JPX Clearing System © Japan Exchange Group, Inc. All rights Reserved. 7 7 Clearing Infrastructure OTC Clearing System JGB Clearing System Listed Clearing System Member Member Member Deriv Cash Listed Derivatives System (Cinnober) OTC System (Calypso) Listed Cash System JGB System Risk Management System (Cinnober) Collateral Mgmt System (Calypso) Clearing Infrastructure Listed Derivatives System (Cinnober) OTC System (Calypso) Listed Cash System JGB System Risk Management System Collateral Management System ・Clearing ・Risk ・Collateral ・Reporting Phase ２/3 Phase １ ・Clearing ・Clearing ・Clearing ・Clearing ・Clearing ・Risk ・Clearing ・Reporting ・Clearing ・Reporting ・Clearing ・Risk ・Collateral ・Reporting ・Clearing ・Risk ・Collateral ・Reporting ・Clearing ・Risk ・Collateral ・Reporting

Clearing System after Replacement © Japan Exchange Group, Inc. All rights Reserved. 8 Clearing Function (Listed Cash / Listed Derivatives) Fund Settlement / Collateral Management Function (Listed Cash / Listed Derivatives) As Is Clearing Function (Listed Cash) Clearing Function (Listed Derivatives) Fund Settlement Function (Listed Derivatives) Collateral Management Function (Listed Cash / Listed Derivatives) After Change Terminal Single Sign On Log-in Terminal Direct Connection System Direct Connection System Web GUI JSCC Clearing System Participant Participant FIX Base(*) FpML Base(*) Custom Specifications (*) Global standard specifications will be adopted. Can log-in with 1ID Custom Specifications Web GUI Fund Settlement Function (Listed Cash) CMF (non-Web base) CMF (non-Web base)

Agile Testing and Migration (with Cinnober) © Japan Exchange Group, Inc. All rights Reserved. 9 Production environment 2016.05 2017.07 2018.02 Current system Historical data Master data Trade data [JSCC] Account Update Master Update [Cinnober] [JPX] Performance Test Cinnober Sprint Release (1-15) [JPX] SP1. . . SP15 ・・・・・・・ ・・・・・・ Testing environment Functional Test [JPX] Program Release Parameter Program Release ・ ・ Acceptance Test [JPX] Failover Test Migration Rehearsal Go Live

Milestones and Test Timeline © Japan Exchange Group, Inc. All rights Reserved. 10 2016 2017 2018 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3 4-6 7-9 Major JSCC Project 【Milestone】 【Framework / Operation】 【System】 ▲ 【JGB OTC】 JGB T+1 ▲ Publish Outlines ▲ 【Listed Derivatives】 Next J-GATE Launch ▲ Rule Enforcement 【Listed Derivatives】 Derivatives Clearing Renewal Project ▲ Briefing or Posting via Target - Clearing Framework Change, Various Notifications, Participant Test, Migration to Live Environment ▲ Briefing or Posting via Target -System Function Change, Connection Specifications, Schedule Update Individual Follow-up for Participants (to be continued beyond Launch) Discussion on Framework/Practice Accept Various Operational Notifications ▲Direct Connection Specifications (Draft) Accept Various System Notifications ▲ Direct Connection Specifications (Final) Participants Test (Weekday Test Environment) Participant Test / Migration Rehearsal (Holiday Test Environment) Development Period on Participants’ Side ▲ Launch Discussion on System Change

Thank you © Japan Exchange Group, Inc. All rights Reserved. 11 Peter Babucke Vice President – IT Development, Clearing Systems Tokyo Stock Exchange, Inc. Mail: [email protected] Phone: +81-50-33-777-666 2-1 Nihombashi Kabutocho 103-8220 Tokyo Japan