The operator of the Tokyo Stock Exchange announced on Friday that it will set up three new trading sections on April 4, 2022, as the exchange seeks to improve its availability in the market.
Japan Exchange Group Inc. has said it will reorganize the current four trading sections into Prime, Standard and Growth sections.
Companies will choose which section they want to appear in between September and December of next year. JPX plans to announce business listings on each of the new sections in January 2022.
The restructuring comes as Japan seeks to strengthen its global position as a financial center at a time when Beijing’s tightening of controls over Hong Kong has raised concerns over Asia’s main financial center.
The exchange, which was recently hit with a full-day trading problem caused by a system failure, aims to attract foreign investors who have a strong presence in the market.
The Prime section or the leading market, equivalent to the current first section, will focus more on liquidity with the aim of attracting a variety of institutional investors.
Companies to be listed in this section will need to hold at least 10 billion yen of floating shares, which should in principle represent 35% or more of their outstanding shares.
These companies will have to generate at least 2.5 billion yen in profits for two years before their listing, with strict governance and other criteria to be defined.
Currently, companies wishing to be included in the first section must have a market capitalization of at least 25 billion yen.
JPX has said it will begin reviewing the components of the Topix, which currently targets stocks of companies in the first section, in October 2022 and plans to complete the review in January 2025. JPX said it aims to phase out companies with market capitalization less than ¥ 10 billion from the index as of October 2022.
The Standard section will be created by the merger of the Second Section and the Jasdaq, a market mainly for medium-sized companies. The Mothers Market for Emerging Businesses will be renamed the Growth section.
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