Japan Exchange : Earnings Release, Q3 FY2020

(Reference Translation)

January 28, 2021

Japan Exchange Group, Inc. and Consolidated Subsidiaries

Consolidated financial results for the nine months ended December 31, 2020

(Based on IFRS), unaudited

Company name:	Japan Exchange Group, Inc.	Stock Exchange Listings: Tokyo
Code number:	8697	URL: https://www.jpx.co.jp/english/
Representative:	Kiyota Akira, Director & Representative Executive Officer, Group CEO
Contact:	Miyaji Kazuyuki, Director, Corporate Communications
Scheduled date of filing of quarterly report:	February 12, 2021
Scheduled date of start of dividend payment:	－
Preparation of 3Q earnings presentation material:	Yes
Holding of 3Q earnings announcement:	None

1. Consolidated financial results for nine months ended December 31, 2020 (from April 1, 2020 to December 31, 2020)

(Figures less than a million yen are omitted)

(1) Consolidated operating results (cumulative)

(Percentages represent changes year on year)

															Net income
	Operating	Operating		Income before	Net income	attributable to		Comprehensive
	revenue	income		income tax	owners of the		income
															parent company
	Mil. yen		%	Mil. yen	%		Mil. yen		%		Mil. yen		%	Mil. yen	%		Mil. yen	%
Nine months ended
97,273	11.3	54,365		12.8	54,479	12.1		37,894	11.6	37,361		12.1	39,152	4.7
December 31, 2020
Nine months ended
87,433	(5.0)	48,176		(11.3)	48,586	(12.1)		33,953	(12.6)	33,317		(13.3)	37,398	(4.4)
December 31, 2019
	Basic earnings	Diluted earnings
		per share					per share
				yen						yen
Nine months ended			69.80
December 31, 2020								－
Nine months ended			62.22
December 31, 2019								－
(2) Consolidated financial position
												Total equity attributable to	Ratio of total equity
												attributable to owners of
	Total assets		Total equity	owners of the parent
		the parent company to
													company
																total assets
				Mil. yen						Mil. yen					Mil. yen					%
As of December 31,	59,393,100					313,755					306,473					0.5
2020
As of March 31, 2020	67,286,302					305,375					298,228					0.4

• Sizable amounts of "Clearing business financial assets and liabilities" and "Deposits from clearing participants" pertaining to clearing business conducted by consolidated subsidiary Japan Securities Clearing Corporation are included in assets and liabilities of JPX Group (meaning JPX and its subsidiaries). For JPX Group's financial position excluding "Clearing business financial assets and liabilities", "Deposits from clearing participants", etc., see "1. QUALITATIVE INFORMATION ON OPERATING RESULTS AND FINANCIAL POSITION - (2) Explanation on Financial Position" on Page 4 of the Appendix.

2. Dividends

Annual dividends per share

First quarter-end

Second quarter-end

Third quarter-end

Fiscal year-end

Total

yen

yen

yen

yen

yen

Year ended

24.00

30.00

54.00

March 31, 2020

－

－

Year ending

26.00

－

－

March 31, 2021

Year ending March 31,

26.00

52.00

2021 (Forecast)

(Note) Change in dividends forecast from the most recent announcement: None

3. Consolidated earnings forecast for the fiscal year ending March 31, 2021 (from April 1, 2020 to March 31, 2021) (Percentages represent changes year on year)

											Net income
	Operating	Operating	Income before	Net income	attributable to	Basic earnings
	revenue		income		income tax	owners of the	per share
											parent company
	Mil. yen		%	Mil. yen		%	Mil. yen	%	Mil. yen	%	Mil. yen	%	yen
Year ending
126,000		1.9	65,500		(4.4)	65,600	(5.1)	46,000	(4.8)	45,500	(4.4)	85.00
March 31, 2021

(Note) Change in earnings forecast from the most recent announcement: None

* Notes

1. Changes in significant subsidiaries during the period (Changes in specified subsidiaries that caused changes in the scope of consolidation): None
2. Changes in accounting policies / changes in accounting estimates

1. Changes in accounting policies due to revisions in accounting standards under IFRS: None
2. Changes in accounting policies other than the above: None
3. Changes in accounting estimates: None

1. Number of issued shares (common shares)

1. Number of issued shares at the end of the period (including treasury shares):

	As of December 31, 2020:	536,351,448
	As of March 31, 2020:	536,351,448
2)	Number of treasury shares at the end of the period:
	As of December 31, 2020:	1,069,255
	As of March 31, 2020:	904,476
3)	Average number of shares:
	Nine months ended December 31, 2020:	535,301,916
	Nine months ended December 31, 2019:	535,467,238

*This release is outside the scope of the quarterly review by certified public accountants or an audit firm.

* Explanation on appropriate use of forecast and other special items

This material contains earnings forecast and other forward-looking statements which are based on available information and certain assumptions that are considered reasonable at the time of preparation. Various factors may cause actual results, etc. to be materially different from those expressed in these forward-looking statements.

DISCLAIMER: This translation may be used for reference purposes only. This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. This translation is subject to change without notice. Japan Exchange Group, Inc., and/or its affiliates shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with regard to this translation.

(Appendix)

Contents of Appendix

1. QUALITATIVE INFORMATION ON OPERATING RESULTS AND FINANCIAL POSITION …2
2. 1. Explanation on Operating Results …2
   2. Explanation on Financial Position …4
   3. Explanation on Forecast Information such as Consolidated Earnings Forecast, etc. …5
3. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES …6
4. 1. Condensed Consolidated Statement of Financial Position …6
   2. Condensed Consolidated Statement of Income …8
   3. Condensed Consolidated Statement of Comprehensive Income …9
   4. Condensed Consolidated Statement of Changes in Equity …10
   5. Notes on Condensed Consolidated Financial Statements …12

(Note on Going-Concern Assumption) …12 (Operating Revenue) …12

(Operating Expenses) …12

Information on Risks Related to Coronavirus, etc.

- 1 -

1. QUALITATIVE INFORMATION ON OPERATING RESULTS AND FINANCIAL POSITION

1. Explanation on Operating Results

During the consolidated cumulative third quarter (from April 1, 2020 to December 31, 2020), JPX Group recorded operating revenue of ¥97,273 million (increased 11.3% from the same period of the previous fiscal year (i.e., year on year)), and operating expenses were ¥45,052 million (increased 7.2% year on year). As a result, JPX Group recorded operating income of ¥54,365 million (increased 12.8% year on year) and income before income tax of ¥54,479 million (increased 12.1% year on year).

In addition, net income attributable to owners of the parent company after tax was ¥37,361 million (increased 12.1% year on year).

(Operating revenue)

1) Trading services revenue

Trading services revenue is comprised of "Transaction fees" based on the value of securities traded or volume of financial and commodity derivatives traded, "Basic fees" based on the types of the trading participant's trading qualification, "Access fees" based on the number of orders, and "Trading system facilities usage fees" based on the types of trading system facilities used, and other similar fees.

During the consolidated cumulative third quarter, trading services revenue increased 17.1% year on year to

¥39,068 million due mainly to an increase in transaction fees resulting from a year-on-year increase in trading of cash equities.

Breakdown of trading services revenue

					(Mil. yen)
	Nine months ended		Nine months ended
	December 31, 2019		December 31, 2020
					Change (%)
	33,365		39,068		17.1
Trading services revenue
Transaction fees	26,388		31,831		20.6
Cash equities	18,236		22,665		24.3
Financial derivatives	7,742		7,612		(1.7)
TOPIX futures transactions	1,558		1,436		(7.8)
Nikkei 225 futures transactions *1	3,077		3,321		7.9
Nikkei 225 options transactions *2	1,608		1,807		12.3
10-year JGB futures transactions	1,370		916		(33.1)
Others	127		130		2.5
Commodity derivatives	410		1,553		278.8
Basic fees	759		765		0.8
Access fees	3,417		3,748		9.7
Trading system facilities usage fees	2,728		2,654		(2.7)
Others	70	68	(1.6)

*1: Figures include Nikkei 225 mini futures transactions.

*2: Figures exclude Nikkei 225 Weekly Options transactions.

2) Clearing services revenue

Clearing services revenue is comprised of clearing fees related to the assumption of obligations of financial instrument transactions carried out by Japan Securities Clearing Corporation and other similar fees.

During the consolidated cumulative third quarter, clearing services revenue increased 11.1% year on year to ¥20,872 million.

- 2 -

3) Listing services revenue

Listing services revenue is comprised of "Initial/Additional listing fees" that are received based on the issue amount when a company initially lists or when a listed company issues additional shares, and "Annual listing fees" received from listed companies based on their market capitalization, and other similar fees.

During the consolidated cumulative third quarter, listing services revenue increased 8.2% year on year to ¥10,981 million due mainly to an increase in initial/additional listing fees.

Breakdown of listing services revenue

				(Mil. yen)
	Nine months ended	Nine months ended
	December 31, 2019	December 31, 2020
				Change (%)
Listing services revenue		10,981		8.2
10,153
Initial/Additional listing fees	2,492	2,818		13.1
Annual listing fees	7,660	8,163	6.6

4) Information services revenue

Information services revenue is comprised of market information fees, which consist of revenue related to the provision of market information to information vendors, etc., as well as revenue related to the index business, and revenue related to the provision of corporate action information and other information.

During the consolidated cumulative third quarter, information services revenue increased 10.5% year on year to ¥17,714 million due mainly to an increase in market information fees.

1. Other operating revenue
   Other operating revenue includes the following main items:
2. • Usage fees for arrownet, which connects trading, market information, and other systems to trading participants and other users;
   • Usage fees related to co-location services that allow trading participants, information vendors, and other users to install devices in the system center for the purpose of improving trade execution efficiency by shortening order transmission time, etc.; and
   • Revenue from system development and operations conducted by consolidated subsidiary TOSHO SYSTEM SERVICE CO., LTD.

During the consolidated cumulative third quarter, other operating revenue decreased 5.0% year on year to ¥8,636 million.

Breakdown of other operating revenue

					(Mil. yen)
	Nine months ended		Nine months ended
	December 31, 2019		December 31, 2020
					Change (%)
	9,093		8,636		(5.0)
Other operating revenue
arrownet usage fees	2,495		2,514		0.8
Co-location services usage fees	2,955		3,350		13.4
Other	3,643	2,771	(23.9)

- 3 -

(Operating expenses)

During the consolidated cumulative third quarter, personnel expenses increased 11.7% year on year to ¥13,661 million.

System maintenance and operation expenses include expenses related to maintenance and management/operations of various systems including the cash equities and derivatives trading systems. System maintenance and operation expenses increased 12.5% year on year to ¥9,959 million.

Depreciation and amortization increased 7.0% year on year to ¥12,767 million.

Other operating expenses decreased 3.8% year on year to ¥8,664 million.

1. Explanation on Financial Position (Assets, liabilities, and equity)
   For assets and liabilities of JPX Group, "Clearing business financial assets and liabilities" assumed by Japan Securities Clearing Corporation as a clearing organization and "Deposits from clearing participants" deposited by clearing participants as collateral are included under both assets and liabilities. "Clearing business financial assets and liabilities" and "Deposits from clearing participants" have a large impact on the amount of assets and liabilities of JPX Group due to their sizable amounts and daily fluctuations subject to changes in clearing participants' positions. In addition, "Legal guarantee funds", "Trading participant security money", and "Default compensation reserve funds" based on the rules for securing the safety of financial instruments transactions and other transactions are included both under assets and either liabilities or equity.
   Total assets as of December 31, 2020 decreased by ¥7,893,201 million from the end of the previous fiscal year to ¥59,393,100 million due mainly to a decrease in clearing business financial assets. Excluding clearing business financial assets, deposits from clearing participants, legal guarantee funds, and default compensation reserve funds, assets increased by ¥759 million from the end of the previous fiscal year to ¥379,580 million.
   Total liabilities as of December 31, 2020 decreased by ¥7,901,581 million from the end of the previous fiscal year to ¥59,079,345 million due mainly to the same decrease in clearing business financial liabilities. Excluding clearing business financial liabilities, deposits from clearing participants, legal guarantee funds, and trading participant security money, liabilities decreased by ¥7,581 million from the end of the previous fiscal year to ¥85,562 million. Total equity as of December 31, 2020 increased by ¥8,379 million from the end of the previous fiscal year to ¥313,755 million, due to a capital increase from net income attributable to owners of the parent company despite a capital reduction as a result of dividend payment. In addition, after excluding default compensation reserve funds, total equity as of the same date was ¥285,807 million.

							Total equity			Ratio of total
									equity attributable
							attributable to
	Total assets		Total equity				to owners of the
			owners of the
									parent company
							parent company
									to total assets
	Mil. yen		Mil. yen		Mil. yen		%
As of December 31, 2020	59,393,100			313,755			306,473		0.5
	*379,580		*285,807		*278,524	*73.4
	67,286,302			305,375			298,228			0.4
As of March 31, 2020
*378,820		*277,427		*270,280	*71.3

(Note)

Figures marked "*" under "Total assets" exclude "Clearing business financial assets", "Deposits from clearing participants", "Legal guarantee funds", and "Default compensation reserve funds", and those marked "*" under "Total equity" and "Total equity attributable to owners of the parent company" exclude "Default compensation reserve funds".

- 4 -

1. Explanation on Forecast Information such as Consolidated Earnings Forecast, etc.

1. Consolidated Earnings Forecast
   There are no revisions to the consolidated earnings forecast from the forecast figures announced in the

"Consolidated financial results for the six months ended September 30, 2020 (Based on IFRS), unaudited" on October 28, 2020 (hereinafter "Previously disclosed material").

The consolidated earnings forecast for the year ending March 31, 2021 is based on the assumptions that the average daily trading values and volumes are ¥3.1 trillion for cash equities*1, 31,000 contracts for 10-year JGB futures transactions, 104,000 contracts for TOPIX futures transactions, 214,000 contracts for Nikkei 225 futures transactions*2, and ¥26.0 billion for Nikkei 225 options transactions*3.

*1 The trading value of stocks listed on the TSE 1st and 2nd Sections, Mothers, JASDAQ, and TOKYO PRO Market, and that of ETFs, ETNs, REITs, etc. (includes auction and off-auction trading)

*2 Includes Nikkei 225 mini contract volumes converted into large-sized contracts *3 Excludes Weekly Options transactions

2) Dividend Forecast

There are no revisions to the dividend forecast from the forecast figures announced in previously disclosed material.

JPX adopts a dividend policy with a target payout ratio of approximately 60% tied to business performance while giving due consideration to the importance of internal reserves for the following purposes:

• Maintaining sound financial health as a financial instruments exchange group,
• Preparing for risks as a clearing organization, and
• Enabling JPX Group to pursue investment opportunities to raise the competitiveness of its markets as they arise.

- 5 -

2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

1. Condensed Consolidated Statement of Financial Position

	As of March 31, 2020		As of December 31, 2020
	Mil. yen		Mil. yen
Assets
Current assets
Cash and cash equivalents	71,883	81,958
Trade and other receivables	16,686	16,983
Clearing business financial assets	60,329,672	53,116,129
Specified assets for deposits from clearing	6,549,099	5,868,769
participants
Specified assets for legal guarantee funds	762	673
Income tax receivables	5,922	7,569
Other financial assets	117,400	116,800
Other current assets	1,837	2,765
Total current assets
67,093,263	59,211,649
Non-current assets
Property and equipment	14,798	11,525
Goodwill	67,374	67,374
Intangible assets	35,045	34,904
Retirement benefit assets	5,642	5,568
Investments accounted for using the equity	14,703	16,316
method
Specified assets for default compensation reserve	27,948	27,948
funds
Other financial assets	18,156	8,468
Other non-current assets	6,049	5,949
Deferred tax assets	3,321	3,395
Total non-current assets
193,039	181,451
Total assets	67,286,302	59,393,100

- 6 -

	As of March 31, 2020		As of December 31, 2020
	Mil. yen		Mil. yen
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables	6,643	4,047
Bonds and loans payable	32,500	32,500
Clearing business financial liabilities	60,329,672	53,116,129
Deposits from clearing participants	6,549,099	5,868,769
Legal guarantee funds	762	673
Trading participant security money	8,248	8,210
Income tax payables	10,289	7,826
Other current liabilities	10,062	8,727
Total current liabilities
66,947,278	59,046,884
Non-current liabilities
Bonds and loans payable	19,953	19,958
Retirement benefit liabilities	8,866	9,003
Other non-current liabilities	2,162	2,364
Deferred tax liabilities	2,665	1,134
Total non-current liabilities
33,648	32,461
Total liabilities
66,980,926	59,079,345
Equity
Share capital	11,500	11,500
Capital surplus	39,716	39,716
Treasury shares	(1,548)	(1,889)
Other components of equity	5,602	2,136
Retained earnings	242,958	255,008
Total equity attributable to owners of the parent
298,228	306,473
company
Non-controlling interests	7,146	7,282
Total equity
305,375	313,755
Total liabilities and equity	67,286,302	59,393,100

- 7 -

(2) Condensed Consolidated Statement of Income
	Nine months ended		Nine months ended
	December 31, 2019		December 31, 2020
	Mil. yen		Mil. yen
Revenue
Operating revenue	87,433	97,273
Other revenue	902	305
Total revenue
88,335	97,579
Expenses
Operating expenses	42,018	45,052
Other expenses	10	2
Total expenses
42,028	45,054
Share of income of investments accounted for using	1,869	1,840
the equity method
Operating income
48,176	54,365
Financial income	486	190
Financial expenses	75	76
Income before income tax
48,586	54,479
Income tax expense	14,633	16,585
Net income	33,953	37,894
Net income attributable to
Owners of the parent company	33,317	37,361
Non-controlling interests	636	532
Net income	33,953	37,894
Earnings per share
Basic (Yen)	62.22	69.80
Diluted (Yen)	－		－

- 8 -

(3) Condensed Consolidated Statement of Comprehensive Income

Nine months ended

December 31, 2019

Mil. yen

Net income	33,953
Other comprehensive income
Items that will not be reclassified to profit or loss
Net gain (loss) on revaluation of financial assets
measured at fair value through other	3,444
comprehensive income
Share of other comprehensive income of
investments accounted for using the equity	(0)
method
Other comprehensive income, net of tax	3,444
Comprehensive income	37,398
Comprehensive income attributable to
Owners of the parent company	36,761
Non-controlling interests	636
Comprehensive income	37,398

Nine months ended December 31, 2020

Mil. yen

37,894

1,258

(0)

1,258

39,152

38,620

532

39,152

- 9 -

(4) Condensed Consolidated Statement of Changes in Equity

Equity attributable to owners of the parent company

	Share capital		Capital surplus
	Mil. yen		Mil. yen
Balance as of April 1, 2019	11,500	39,716
Net income	－		－
Other comprehensive income, net of tax	－		－
Total comprehensive income
－		－
Acquisitions of treasury shares	－		－
Dividends paid	－		－
Transfer from other components of equity
	－		－
to retained earnings
Other	－		－
Total transactions with the owners
－		－
Balance as of December 31, 2019	11,500	39,716
	Equity attributable to owners of
	the parent company
	Retained		Total
	earnings
	Mil. yen		Mil. yen
Balance as of April 1, 2019	227,317	285,009
Net income	33,317	33,317
Other comprehensive income, net of tax	－	3,444
Total comprehensive income
33,317	36,761
Acquisitions of treasury shares	－	(350)
Dividends paid	(35,935)	(35,935)
Transfer from other components of equity	4,150
		－
to retained earnings
Other	－	3
Total transactions with the owners	(31,785)	(36,281)
Balance as of December 31, 2019	228,849	285,488

Treasury shares

Mil. yen (1,213)

－

－

－

(350)

－

－

3

(346)

(1,560)

Non-controlling

interests

Mil. yen 6,441

636

－

636

－

－

－

－

－

7,078

Other

components of

equity

Mil. yen 7,688

－

3,444

3,444

－

－

(4,150)

－

(4,150)

6,982

Total equity

Mil. yen 291,450

33,953

3,444

37,398

(350)

(35,935)

－

3

(36,281)

292,566

- 10 -

Equity attributable to owners of the parent company

	Share capital		Capital surplus
	Mil. yen		Mil. yen
Balance as of April 1, 2020	11,500	39,716
Net income	－		－
Other comprehensive income, net of tax	－		－
Total comprehensive income
－		－
Acquisitions of treasury shares	－		－
Dividends paid	－		－
Changes of interests in subsidiaries
	－		－
without losing control
Transfer from other components of equity
	－		－
to retained earnings
Other	－		－
Total transactions with the owners
－		－
Balance as of December 31, 2020	11,500	39,716
	Equity attributable to owners of
	the parent company
	Retained		Total
	earnings
	Mil. yen		Mil. yen
Balance as of April 1, 2020	242,958	298,228
Net income	37,361	37,361
Other comprehensive income, net of tax	－	1,258
Total comprehensive income
37,361	38,620
Acquisitions of treasury shares	－	(366)
Dividends paid	(30,035)	(30,035)
Changes of interests in subsidiaries
	－		－
without losing control
Transfer from other components of equity	4,724
		－
to retained earnings
Other	－	26
Total transactions with the owners	(25,311)	(30,375)
Balance as of December 31, 2020	255,008	306,473

Treasury shares

Mil. yen (1,548)

－

－

－

(366)

－

－

－

26

(340)

(1,889)

Non-controlling

interests

Mil. yen 7,146

532

－

532

－

－

(397)

－

－

(397)

7,282

Other

components of

equity

Mil. yen 5,602

－

1,258

1,258

－

－

－

(4,724)

－

(4,724)

2,136

Total equity

Mil. yen 305,375

37,894

1,258

39,152

(366)

(30,035)

(397)

－

26

(30,772)

313,755

- 11 -

1. Notes on Condensed Consolidated Financial Statements (Note on Going-concern Assumption)
   Not applicable

(Operating Revenue)
The breakdown of "Operating revenue" is as follows:
		Nine months ended		Nine months ended
		December 31, 2019		December 31, 2020
		Mil. yen		Mil. yen
Trading services revenue	33,365	39,068
Clearing services revenue	18,786	20,872
Listing services revenue	10,153	10,981
Information services revenue	16,034	17,714
Other	9,093	8,636
Total	87,433	97,273
(Operating Expenses)
The breakdown of "Operating expenses" is as follows:
		Nine months ended		Nine months ended
		December 31, 2019		December 31, 2020
		Mil. yen		Mil. yen
Personnel expenses	12,229	13,661
System maintenance and operation expenses	8,854	9,959
Depreciation and amortization	11,929	12,767
Other	9,005	8,664
Total	42,018	45,052

DISCLAIMER: This translation may be used for reference purposes only. This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. This translation is subject to change without notice. Japan Exchange Group, Inc., and/or its affiliates shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with regard to this translation.

- 12 -

Information on Risks Related to Coronavirus, etc.

(1) Measures to Ensure Business Continuity

With respect to the global pandemic of novel coronavirus (COVID-19), a further spread within Japan could lead to JPX Group facing risks to its business continuity resulting from, for example, impacts on the public transportation system that JPX Group employees use to commute, or COVID-19 infection cases among JPX Group employees.

To ensure that the impacts of COVID-19 do not affect the stable operation of its markets, JPX Group has implemented the following measures to ensure business continuity. This is in addition to various measures to prevent further spread of COVID-19 in line with guidance such as the Japanese government's Basic Policies for Prevention and Control of the Novel Coronavirus.

• Established a BCP (Business Continuity Plan) Emergency Headquarters headed by the Group CEO, in line with the JPX Group's BCP;
• Carefully examined each department's duties and situation, and is encouraging remote working for employees whose duties are judged to not require physical attendance at the office based on this;
• For employees whose duties involve physical attendance at the office, actively implemented staggered working hours using the flex time system;
• Developed and implemented a multi-channel operational structure for employees whose duties require physical attendance at the office, by dividing them into several teams which work at physically different locations, in principle rotating between the office and home but also using nearby back up facilities;
  and so on.
  While persisting with measures to prevent the further spread of COVID-19, JPX Group will continue striving for stable

market operations by flexibly implementing initiatives as needed to ensure business continuity in response to the changing situation.

(2) Impact on Earnings

Among JPX Group's operating revenue, "Trading services revenue" and "Clearing services revenue" (which accounted respectively for 40.2% and 21.5% of consolidated operating revenue for the nine months ended December 31, 2020) are heavily reliant on the value of securities traded and volume of derivatives traded. Meanwhile, "Listing services revenue" (which accounted for 11.3% over the same period) is reliant on the market capitalization of and the funds raised by listed companies as well as the number of new listings.

Although the Japanese economy continues to be in difficult circumstances due to COVID-19, a certain level of improvement in these circumstances can be seen. The Japanese economy is expected to continue to improve, helped by various government policy measures and improvement of overseas economies. However, we need to keep an eye on the risk that domestic and overseas economies could suffer from the impact of the spread of COVID-19 on social and economic activities as well as fluctuations in the financial and capital markets, among other factors.

JPX Group's revenue is greatly affected by trends in the secondary market for securities and derivatives products as well as the primary market for securities, and furthermore by trends in global financial markets and economic conditions in Japan and overseas. In particular, as most TSE listed companies are Japanese companies, JPX Group's earnings are strongly linked to economic conditions in Japan, meaning that they are at risk of significantly adverse impacts if economic stagnation, etc. causes a deterioration of the environment surrounding the primary and secondary markets, leading to a decrease in trading volume and value on the cash equity and derivatives markets and a decrease in market capitalization of or funds raised by listed companies. Furthermore, since trends in the primary and secondary markets can also be strongly affected by other varying factors including economic circumstances, it is extremely difficult to accurately predict these trends.

In order to fulfill its duty as public infrastructure despite the increasing impact of COVID-19, JPX Group will place top priority on continuing stable market operations and take every possible measure to that end.

As for the consolidated earnings forecast for the fiscal year ending March 31, 2021, there are no revisions to the forecast figures announced in the "Consolidated financial results for the six months ended September 30, 2020 (Based on IFRS), unaudited" on October 28, 2020. However, depending on future market conditions, there is the possibility that actual trading values and volumes may differ from the assumptions for the forecast, resulting in a large impact on consolidated earnings.