Comprehensive Guide to Japan’s Four Major Stock Exchanges

Japanese stock exchanges play a crucial role on the vast global financial stage. As one of the largest stock markets in Asia, the Japanese stock market is not only central to the economy of Japan itself, but also a financial hub that cannot be ignored by foreign investors.

This article explores the history, classification, market structure, and importance of the global financial system of Japanese stock exchanges.

The Historical Background of Japanese Stock Exchanges

The history of stock exchanges in Japan can be traced back to 1878, when the Tokyo Kabushiki Torihikijo opened, marking the beginning of the modern financial market in Japan.

With the rapid economic development of Japan, the stock exchange in Japan experienced numerous significant changes and expansions, especially during the post-World War II period of economic boom.

In 1973, the Tokyo Stock Exchange introduced an electronic trading system, underscoring an important milestone in the history of its technological innovation.

There was another important event occurred in 2013, the merger of the Tokyo Stock Exchange and the Osaka Securities Exchange merger to form the Japan Exchange Group (JPX).

This merger not only simplified the financial market structure of Japan, but also improved its global competitiveness.

The new group structure enables the Japan Exchange to distribute resources better, increase operational efficiency, and improve its attraction to both domestic and foreign investors.

Besides, the stock exchanges in Japan have been the pioneer of innovation in the history of global finance for a long time.

From early stock and bond trading to the development of derivative markets and electronic trading platforms, they have been consistently expanding the territory of technology and services.

These innovations have not only improved the market liquidity within domestic markets in Japan, but also provided a transparent and efficient trading environment for investors all over the world.

Japanese stock exchanges have grown from local trading venues into financial centers with international influence over time.

The history of their development has marked how technological innovation and market integration drive financial markets towards higher efficiency and global integration.

The Four Major Stock Exchanges in Japan

The stock market is primarily led by the Tokyo Stock Exchange (TSE), and there are still other major exchanges, including the Nagoya Stock Exchange (NSE), Sapporo Securities Exchange (SSE), and Fukuoka Stock Exchange (FSE). Although TSE and NSE are the two major domestic exchanges in Japan, the significance and scale of NSE are far smaller in comparison with TSE, due to the trading being more concentrated in TSE. Besides, FSE and SSE are regional exchanges as the companies listed in them are mainly local companies.

Tokyo Stock Exchange (TSE)

The Tokyo Stock Exchange (TSE), established in 1878, is the most important stock exchange in Japan, most of the stocks of listed companies are traded in TSE.

Originally, TSE was divided into the First and Second Sections, but after the restructuring in April 2022, three new markets were formed, i.e. the Prime Market, the Standard Market, and the Growth Market for startup companies and emerging companies. Please refer to the detailed description of the 3 markets in the following text.

Besides, TSE merged with the Osaka Stock Exchange to form the Japan Exchange Group (JPX) in 2013 to improve market efficiency and global competitiveness.

Nagoya Stock Exchange (NSE)

Nagoya Stock Exchange (NSE), established in 1949, was once one of the top three exchanges in Japan, along with TSE and the former Osaka Securities Exchange.

However, because the market activity is highly concentrated in TSE, the current trading volume at NSE is extremely low, representing only 0.02% of total trading volume in Japan.

The original markets in NSE, the First Section, the Second Section and Centrex, were reclassified in April 2022 to the Premier Market, the Main Market, and the Next Market which is positioned for emerging companies.

Sapporo Securities Exchange (SSE)

The Sapporo Securities Exchange (SSE) was established in 1950, and most of the companies listed in SSE are based in Hokkaido. As of June 2023, there are 61 companies listed in SSE, and 18 of those companies are only listed in SSE.

The market for emerging companies in SSE is the Ambitious market, RIZAP Group, which is famous for its functional food products, is one of the companies listed in Ambitious market. The companies listed in the Main Market of SSE include Takeda Pharmaceutical and Mitsui & Co. Ltd.

Fukuoka Stock Exchange (FSE)

The Fukuoka Stock Exchange (FSE), established in 1949, is the only stock exchange in the Kyushu region, with 108 listed companies as of May 2023. Its market for emerging companies is Q-Board, established in 2000.

Market Structure of the Tokyo Stock Exchange (TSE)

The market structure of the Tokyo Stock Exchange is essential to its high operational efficiency, covering its multiple trading segments serving various companies and investment needs.

The most outstanding is that TSE has established three major market segments: Prime, Standard, and Growth, each with its unique positioning and objectives.

Prime market

The Prime market is the top-tier segment of TSE, designed for large companies meeting the highest criteria.

In general, these large companies hold strong market influence and stable financial performance, making the Prime market the best choice of trading venue for both domestic and foreign institutional investors and large-cap funds.

The companies listed in the Prime market tend to have good reputations among global investors due to their high transparency and governance standards.

Standard Market

The Standard market serves more medium-sized enterprises that demonstrate good market potential and growth prospects, although not as large in scale as the Prime market companies.

The Standard market not only provides a platform for these companies to demonstrate their performance and attract investment, but also offers investors opportunities to invest in medium-sized Japanese companies, which often have more potential to grow.

Growth Market

The Growth market is dedicated to small to medium-sized companies with rapid growth and strong innovation capabilities.

This market segment supports companies in early development stages with innovative technology or business models.

The Growth market not only provides these companies with access to capital markets, but also helps them build their reputation in the market, and attract venture capital and other forms of investment.

Important Indices and Listed Companies

The most well-known indices for the Japanese stock exchange include the Nikkei 225 and the Tokyo Stock Price Index (TOPIX).

These indices include many of the largest and most influential companies in Japan, serving as important references for both domestic and foreign investors.

Major Indices

Nikkei 225 The Nikkei 225 is one of the most known stock indices in Japan, consisting of 225 major companies listed on the Tokyo Stock Exchange.

It covers various industries, including technology, energy, financial services, and consumer goods, and is taken as the barometer of the Japanese economy.

Tokyo Stock Price Index (TOPIX) TOPIX includes all companies listed in the former First Section in TSE, thus providing a more comprehensive view of the overall market.

TOPIX is widely utilized by international investors to assess the performance of the Japanese stock market.

Major Listed Companies

Some of the companies listed in stock exchanges in Japan are as follows.

Name	Industry	Description
Toyota Motor Corporation	Automotive	One of the largest automakers in the world, a leader in electric and hybrid vehicles.
Sony Group Corporation	Electronics & Entertainment	World famous electronic product manufacturer, also occupies an important position in film and music industries.
Mitsubishi UFJ Financial Group	Financial Services	The largest financial service group in Japan with a global business reach.
SoftBank Group Corp	Investment & Technology	Invests in technical companies all over the world through its Vision Fund.
Hitachi Ltd.	Electronics & Engineering	Engaged in many sectors such as IT, energy, industrial equipment, etc.
Honda Motor Co., Ltd.	Automotive	The largest motorcycle manufacturer in the world, mainly produces cars and motorcycles.
Panasonic	Electronics	Mainly produces consumer electronics and household appliances, also engages with sectors of energy and industrial equipment.
Nintendo Co., Ltd.	Video Game	World famous developer of video games and home consoles.
NEC Corporation	IT & Electronic Devices	Provides IT solutions and technical support that engage with communication and network techniques.
Nippon Steel Corporation	Steel	The most major steel producer in Japan, its products are utilized in various industrial sectors all over the world.

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