Comparing Japan Exchange Group and Australian Securities Exchange 2011-2015

A Comparative Study of Japan Exchange Group and
Australian Securities Exchange from 2011 to 2015
Sho YAMAUCHI: s2142054
January, 2017
A project submitted in partial fulfilment of the requirements for the paper 90.701:
Interdisciplinary Project

List of Abbreviations and Acronyms
List of Abbreviations
APA......American Psychological Association
ASD......Australian Dollar
ASX......Australian Securities Exchange
ETF......Exchange Traded Fund
ETN......Exchange Traded note
ETP......Exchange Traded Product
FY......Financial Year
IPO......Initial Public Offering
JPX......Japan Exchange Group
JPY......Japanese Yen
NKY......Nikkei-225 Stock Average
OTC......Over-the-counter
USD......United States Dollar
WFE......World Federation of Exchanges
WWII......World War II
List of Acronyms
JASDAQ......Japan Securities Dealers Association automated Quotation
Mothers......Market of the high-growth and emerging stocks
REIT......Real Estate Investment Trust

1. Chapter 1
1.1 Background and Introduction
1.1.1 Introduction
Today, organisations called ‘stock exchanges’ or ‘securities exchanges’ have some important
roles, especially for businesses. WebFinance Inc. (2017a, ¶1) defines a stock exchange as an
organised and regulated financial market where securities such as shares and bonds “are bought
and sold at prices governed by the forces of demand and supply.” The roles of stock exchanges
include measuring the economic condition of a company but also of a country and making it
easy for businesses and investors to convert investments into cash. Desjardins (2016, ¶1)
explains there are 60 major stock exchanges in the world with a total value of USD 69 trillion
dollars. This report will compare two stock exchanges in the Asian Pacific market: the Japan
Exchange Group (JPX), ranked 4th in the world, and the Australian Securities Exchange (ASX),
ranked 15th. In order to do this, the researcher will use data of Domestic Market Capitalization
from April, 2015 and will specifically evaluate the data from 2011 to 2015 (Market Index,
2017).
1.1.2 Background of JPX
In Japan, the first two stock exchanges were founded in Tokyo and Osaka in 1878 under Stock
Exchange Regulation. However, these two stock exchanges were forced to close during World
War II (WWII). After the end of WWII, in 1948, the Securities and Exchange Act was
implemented. Financial Services Agency (2017) describes that this law was amended and
renamed Financial Instruments and Exchange Act in June 2006. As a result, this established an
additional seven stock exchanges: Nagoya, Kyoto, Kobe, Hiroshima, Fukuoka, Niigata, and
Sapporo (Financial Services Agency, n.d.). In October 1967, the Kobe Stock Exchange
dissolved. The Tokyo Stock Exchange absorbed the Hiroshima and Niigata Stock Exchanges
in 2000 and the following year, the Osaka Stock Exchange absorbed the Kyoto Stock Exchange.
Eventually, JPX was formed in 2013 and includes Tokyo and Osaka stock exchanges, as well
as the remaining exchanges of Nagoya, Sapporo, and Fukuoka (Japan Exchange Group, 2016a,
p.5).
1.1.3 Background ofASX
The history of the Australian Stock Exchange is older than the Japan Exchange Group. Market

Index (2017) explains the first Australian stock exchange was founded in Melbourne, Australia
in 1861. The second stock exchange was established in Sydney ten years later. After that, four
regional stock exchanges were established in Hobart in 1872, Brisbane in 1884, Adelaide in
1887, and Perth in 1889. ASX Limited (2017a) states that the Australian Stock Exchange was
set up on 1 April 1987 by integrating these six stock exchanges. Finally, the Australian
Securities Exchange was formed in 2006 by merging with Sydney Futures Exchange.
1.1.4 Definition of terms
This research will compare two stock exchanges in terms of structure, liquidity, and
performance. Investopedia, LLC (2017a, ¶1) defines “liquidity as the degree to which an asset
or security can be quickly bought or sold in the market without affecting the asset's price.”
Also, financial performance indicates profit and market capitalisation. Investopedia, LLC
(2017b, ¶1) defines “market capitalization as the total dollar market value of a company's
outstanding shares.” Moreover, it is necessary for readers to know what a listed company is.
WebFinance Inc. (2017b, ¶1) defines a listed company as “a firm whose shares are listed
(quoted) on a stock exchange for public trading.”
1.2 Research statement and Questions
This research will compare JPX with ASX, from 2011 to 2015, in order to identify how
structure, functions, liquidity, and performance created the gap between them even though
these exchanges were established within only 20 years of each other.
Question 1: What is the background of JPX and ASX?
Question 2: What are differences between JPX and ASX in the way each one organises its
market?
Question 3: What are the strengths and weaknesses of both stock exchanges?
Question 4: How can both stock exchanges be improved in the future?
1.3 Research Framework
This interdisciplinary project consists of five chapters to answer four research questions and
present a conclusion.

Chapter 1 explores how JPX and ASX have been formed, by referring to primary sources,
which are made public in each website. Also, it introduces the ethical considerations which will
guide this research, which are plagiarism, bias, reliability, and validity as well as explain the
research method and sources used.
Chapter 2 will identify the ways each stock exchange has organized its market until now. In
order to do this, the researcher will refer to each of five annual reports from 2011 to 2015. The
aim is to focus on their organisational structure and functions because annual reports mention
not only sales and expenses records but also structure and functions. Also, the sections shown
on the home page of each stock exchange are very useful because it is obvious what products
are sold and what are the differences of regulations to become a listed company.
Chapter 3 will find the strengths and weaknesses of both stock exchanges. It will take into
account the facts from Chapter 2 to answer Research Question 3 because the differences in
organisational structure and functions can be one of the factors affecting their weaknesses and
strengths. Also, it will consider the section of transaction levels and statistics in the annual
reports because it shows the records about listing businesses and the trend of cash. The
researcher will show some diagrams based on the information to make it easier for readers to
understand.
Chapter 4 will suggest how each stock exchange can take advantage of its strengths and how
each can overcome its weaknesses to improve in the future. In other words, this chapter will
draw on the ideas from previous chapters. The discussion will consider the influence of politics,
business, and finance. The researcher will collect this information from news, business journals,
and other trustworthy organisations.
Chapter 5 will give conclusions to the research questions. In other words, it will not present
any new ideas, but it will show the answer for research questions clearly. Also, it is easy for
readers who do not have enough time to read this whole report to generally understand what it
was discussing.
1.4 Importance of Research
This research is different from other studies in the same field. First, it explains

comprehensively what a stock exchange is with definition and how it works. For this reason,
this research will give benefits to those who are not familiar with this financial industry because
such people can understand what this research discusses and expand their knowledge. Also,
this research will analyze two major stock exchanges in the world to compare them. Therefore,
those who research similar topics can get some tips.
1.4.1 Interdisciplinary nature
The project will be interdisciplinary by politics, business, and finance.
Politics
When people recognized the new president of the United States on November 9th 2016, there
was a sharp decline from 17,171.38 on the preceding day to 16,251.54 on the day in the
indicator of stock prices for Nikkei 225 in accordance with the chart of Bloomberg L.P. (2016).
This research will therefore deal with the presidential election.
Business
It is essential for businesses to become a listed company in order to get a fund. Each country’s
stock exchange offers different tough requirements such as the amount of profit and the number
of shareholders, so investors can regard the businesses which met the requirements as reliable
and stable. Thus, the businesses can gain attention from investors for trade. This research will
therefore deal with the listing requirements.
Finance
This research is firstly involved with the discipline of finance as it deals with the financial
market.
1.5 Methodology
The research will be carried out based on secondary research because referring to the
completed data and experts’ opinions is the most effective method to compare two things
especially for the performance of organizations in business. Also, the research will be strongly
connected with numbers because it gets easier for readers to see the gap of JPX and ASX by
showing tangible evidence. For this reason, quantitative sources should be helpful for this
research. To collect credible information, the sources can be from annual report, libraries,

business journals and other trustworthy organizations such as government and the stock
exchanges themselves.
1.6 Literature Sources
1.6.1 Primary sources
University of Illinois (2006, p.1) defines primary sources as “those which provide first-hand
accounts of the events being researched. In general, these are documents that were created by
[those who witnessed or participated in] these events at about the time they occurred, and
include diaries, letters, reports, photographs, creative works, financial records, memos”, and
stock exchange pages. An example of a primary source used in this study is the website, called
Nikkei-225Stock Average (NKY) quote – Nikkei225 index – Bloomberg marketsby Bloomberg
L.P. (2016). It is a very useful source because it has comprehensive information including line
graphs showing the volume of Nikkei 225 using selected time frames and the best/worst ten
performers and their names. In addition, the information is presented clearly and it is much
easier for the researcher to read the volume and percentage of return.
1.6.2 Secondarysources
Virginia Polytechnic Institute and State University (2016, ¶3) defines secondary sources as
“those made by analyzing, reviewing, or summarizing based on the information of primary
resources or other secondary resources. Even sources presenting facts or descriptions about
events are secondary unless they are based on direct participation or observation. Moreover,
secondary sources often rely on other secondary sources and standard disciplinary methods to
reach results, and they provide the principle sources of analysis about primary sources.” An
example of secondary source is the website, called All of the world’s stock exchanges by size
by Desjardins (2016). The reason why this is a secondary source is that the author mentions is
based on the data from the World Federation of Exchanges monthly report from November
2015 at all. In other words, he gives his analysis to readers after referring to the trustworthy
primary source.
1.6.3 Social commentary sources
World Public Library (2016, ¶1) defines “social commentary as the act of using rhetorical
means to provide commentary on issues in a society. This is often done with the idea of

implementing or promoting change by informing the general people about a given problem and
appealing to people's sense of justice. Social commentary can be practiced through all forms
of communication, from printed form, to conversations to computerized communication.” An
example of a social commentary source is the website, called Australian stockmarket’s worst
return since 2011 as ASX 200 gains 1.1pc. by Rogers (2015). The reason why this is a social
commentary source is The Weekend Australian is a news media, and Rogers writes his article
as a journalist. According to the article, the Australian share market has turned in its worst
annual performance in three years. Since this article was uploaded on January 1 in 2015, it
indicates the worst performance in 2014. 1.1 per cent is the smallest gain since 2011, so there
is a room for further discussion to analyze why the result was brought about and whether it was
solved by 2015.
1.7 Ethical Considerations
1.7.1 Plagiarism
Robson (2014, p.137) defines plagiarism as “the passing off of someone else’s work as your
own.” This research will use quantitative data to compare each liquidity and performance, and
qualitative data to analyze each organisational structure and functions from mainly their annual
reports. Therefore, it is necessary for the research to respect their achievement. In order to
avoid plagiarizing, the researcher will use quotation marks if he will copy their words without
paraphrasing. Also, the researcher will identify where the sources come from with APA
(American Psychological Association) style.
1.7.2 Bias
White (2017, ¶3) defines that “bias is a lack of objectivity or an inclination to favor one thing
or person over another.” This research is based on the annual reports from each stock exchange,
but this way can cause a bias. Therefore, it is important for this research to refer to many sources
because objectivity can be proved if these sources show same information.
1.7.3 Reliability
Phelan & Wren (2005-6, ¶1) define reliability as “the degree to which an assessment tool
produces stable and consistent results.” In terms of trustworthiness, the annual reports should
be reliable because credible organizations have produced them. Moreover, if other credible

organizations show the same results, the fact testifies to the reliability of information.
1.7.4 Validity
Robson (2014, p.56) defines that “validity refers to whether or not something actually
measures what it claims to measure.” In carrying out this research, it is sometimes hard to
interpret the data with terminology so it may cause a lack of validity. In order to prevent this,
the researcher will have meetings with one of his supervisors who is familiar with this topic
frequently and have him check to make sure this report discusses issues logically.

2. Chapter2: Organisationaldifferencesbetween JPXand ASX
The success of a stock exchange depends on its organisational structure and functions. This
chapter will focus on these aspects in order to analyze the differences between JPX and ASX
in the way each one organises its markets. The chapter is divided into three parts. The first part
of the chapter identifies how many markets each stock exchange has and analyzes their purpose.
The second part clarifies how each set of requirements for listing on the markets works as one
of the functions. The final part of the chapter explores the financial instruments the investors
of each stock exchange invest in. The researcher will do this by using the relationship between
each stock exchange and its listed companies as an example.
2.1 Organisational structure
JPX and ASX differ in their organisational structures. This section discusses how many
markets each of these stock exchanges has and what kind of concepts the markets have, in order
to analyze the scale of markets before highlighting the differences between them.
2.1.1 JPX
JPX has three markets for a company to be listed on. They are broadly classified into two
emerging markets: Market of the high-growth and emerging stocks (Mothers) and Japan
Securities Dealers Association automated Quotation (JASDAQ), and the Main Market which
is the largest and most established and consists of the Second Section and First Section. (see
Figure 1)
Source: Adapted from Japan Exchange Group, Inc., 2016b; ¶1
Figure 1: This figure shows JPX’s three markets which businesses can get listed on.
Kinds of Market JPX Has

Each of the three markets has a different concept. Japan Exchange Group, Inc. (2016b, ¶3)
explains that Mothers puts emphasis on the growth potential of businesses in terms of eligibility
requirements. Also, Japan Exchange Group, Inc. (2016b, ¶4) defines “JASDAQ as a market
characterized by the three concepts of reliability, innovativeness, and regionalism and
internationalism as its concept”, and consists of JASDAQ Standard and JASDAQ Growth.
JASDAQ Growth focuses on growth potential, whereas JASDAQ Standard is all about stability.
Moreover, Main Market focuses on corporate continuity and profitability, but “the First Section
is especially recognized as one of the top rank markets in terms of its size and liquidity” (Japan
Exchange Group, Inc., 2016b, ¶2).
2.1.2 ASX
ASX has also three main markets for companies to be listed: ASX Listing, ASX Debt Listing,
and ASX Foreign Exempt Listing. (see Table 1)
Table 1: This table explains ASX has three categories for listing.
___________________________________________________________________________
___________________________________________________________________________
Source: ASX Limited, 2016; p.101
ASX Listing is general and it is designed for companies domiciled in Australia. Also, ASX
Debt Listing is for a company which aim to only issue ‘bonds’. Investopedia, LLC (2017c)
defines bonds as “a debt investment in which an investor loans money to an entity (typically
corporate or governmental) which borrows the funds for a defined period of time at a variable
or fixed interest rate.” In addition, ASX Foreign Exempt Listing means that “an entity admitted
as an ASX Foreign Exempt Listing is required to comply with the rules of its overseas home
Kinds of Market ASX Has
Category of Listing Target
ASX Listing Ordinary Companies
ASX Debt Listing Companies which aim to only issue bonds
ASX Foreign Exempt Listing Companies listed on a foreign stock exchange*
*stock exchanges joining World Federation of Exchanges (WFE)

exchange and to release information to ASX that is released to its overseas home exchange ”
(ASX Limited, 2016, p.101). In other words, ASX Foreign Exempt is intended for a company
whether Australian or international which is listed on a foreign stock exchange joining WFE.
2.1.3 Comparison between organisational structure of JPX and ASX
A comparison can now be made regarding of the organisational structures of JPX and ASX by
using the listed information in sections 2.1.1 and 2.1.2. JPX is more attractive for businesses
in terms of the number of markets. That is because they can choose from one of these markets
which fits their conditions if there are a variety of markets. JPX does not set only a trustworthy
market for investment like Main Market but also an apparently uncertain market like emerging
markets. Also, JPX sets a step by step approach to get listed on emerging markets including
Mothers and JASDAQ. That is because Mothers allow businesses to become listed even if they
have losses and bonds at initial public offering (IPO) but pass other criteria while JASDAQ
Growth allows businesses to be listed if they do not have a deficit during a quarter before the
application period. Therefore, JPX is very attractive for domestic companies. However, ASX
might be more attractive for some businesses to get listed in rather than JPX. That is because
JPX does not have a market involved with foreign stock exchanges, but ASX has ASX Foreign
Exempt Listing designed for companies listed on a foreign stock exchange to be able to join
WFE. For this reason, ASX supports domestic companies who have expanded their business
overseas.
2.2 Function: requirements for listing on the market
This section examines each criterion a company has to meet to become listed on either JPX or
ASX, in order to clarify what each of these stock exchanges prioritizes.
2.2.1 JPX
A company typically aims to become listed first on Mothers and/or JASDAQ, and then on the
Second Section and the First Section in turn (see Table 2). As discussed in 2.1.1, each of the
three markets has a different concept. Accordingly, each market sets a different level of
requirements for listing. First of all, Mothers requires a company to have more than 200
shareholders and 2,000 units of tradable shares. JASDAQ also requires a company to have
more than 200 shareholders, but a company does not need to have any tradable shares. In
addition, JASDAQ consists of JASDAQ Standard and JASDAQ Growth. The difference of

requirements for listing between these two markets is JASDAQ Standard requires a company
to have more than Japanese Yen (JPY) 200 million [United States Dollar (USD) 2 million], but
JASDAQ Growth permits listing of a company as long as it is not negative in terms of
shareholders’ equity. Then, the next market up is the main market, and the Second Section. The
Second Section sets easier admission criteria and tests to pass than the First Section. For
example, the admission criteria require a company to have more than 800 shareholders, 4,000
units of tradable shares, and JPY 2 billion (USD 20 million) of market capitalization as of the
listing day. On the other hand, the First Section presents the hardest 14 admission criteria and
a series of five tests to authorize a company to become listed (Japan Exchange Group, Inc.,
2012). For example, its admission criteria require a company to have more than 2,200
shareholders, 20,000 units of tradable shares, and JPY 25 billion (USD 250 million) of market
capitalization as of the listing day.
Table 2: This table explains what requirements for listing on each market in JPX presents.
___________________________________________________________________________
___________________________________________________________________________
Formal requirements

Source: Japan Exchange Group. Inc., 2015a; ¶1
2.2.2 ASX
ASX has three markets for listing: ASX Listing, ASX Debt Listing, and ASX Foreign Exempt
Listing. However, all companies need to pass general requirements for listing on ASX
regardless of listing category (see Table 3). ASX Listing has three main listing requirements to
be met: there are meet 20 conditions, to pass either the profit test or the assets test, and to
submit an information memorandum. The 20 conditions include “having a constitution which
is consistent with the listing rules and be supported by at least 300 non-affiliated security
holders who holds a parcel of the main class of securities with a value of at least Australian
Dollar (ASD) 2,000” (ASX Limited, 2016, pp.102-103). Also, passing either the profit test or
assets test is one of the conditions. Specifically, the profit test is to examine whether “the
entity’s aggregated profit from continuing operations for the last three full financial years [was]
at least ASD 1 million, and the entity’s consolidated profit from continuing operations for the
12 months to a date no more than two months before the date the entity applied for admission
must exceed ASD 500,000” (ASX Limited, 2016, p.106). Moreover, assets test is to examine
whether “an entity that is not an investment entity must have ASD 4 million net tangible assets
or ASD 15 million market capitalisation at the time of admission” (ASX Limited, 2016, p.106).
ASX Debt Listing also presents 12 conditions but it does not require to take any tests because
originally ASX Debt Listing is designed for the businesses which get only authority to issue
bond. Finally, ASX Foreign Exempt Listing presents 12 conditions as well but it requires to
pass either the profit test or assets test. Concretely, the entity’s operating profit before income
tax for each of the last 3 full financial years must have been at least ASD 200 million, or an
entity must have net tangible assets of at least ASD 2,000 million or a market capitalisation of
at least ASD 2,000 million (ASX Limited, 2016, p.116).
Table 3: This table describes the general requirements to get listed on ASX.
__________________________________________________________________________________
General requirements for listing on ASX
Admission Criteria General Requirements
Number of Shareholders Minimum 300 non-affiliated investors @ A$2,000
Free Float 20%
Company Size
Profit Test
A$1 million aggregated profit from continuing operations over past 3
years + A$500,000 consolidated profit from continuing operations over
the last 12 months
Assets Test
A$4 million net tangible assets
or
A$15 million market capitalisation

___________________________________________________________________________
Source: ASX Limited, 2017b; ¶1
2.2.3 Comparison between requirements of JPX and ASX
A comparison can now be made regarding of the listing requirements of JPX and ASX by using
the listed information in sections 2.2.1 and 2.2.2. In comparing JPX with ASX, there are two
main points to consider in regards to the requirements of listing, which is one of the functions.
Firstly, the minimum number of shareholders which JPX requires is less than the number ASX
requires. Both stock exchanges have three main markets. However, each market in JPX requires
a different number of shareholders, which ranges from at least 200 to more than 2,000, while
all markets in ASX requires a company to have at least 300 shareholders. Secondly, the
minimum number of years of business operation which JPX requires is less than the number
ASX requires as well. Both stock exchanges require a company to operate some years at the
time of admission. For instance, JPX has both a market requiring more than 3 years of business
operation and a market requiring more than 1 year of business operation. On the other hand,
all the markets in ASX require more than 3 years of business operation. Therefore, it is better
for both small and medium-sized companies, and large companies, to be listed on JPX because
JPX has a wider range of listing.
2.3 Financial instruments
This section examines each set of financial instruments for an investor to buy and sell, in order
to explore how each stock exchange operates and gets profit. WebFinance, Inc (2017c) defined
financial instruments as “a document that has a monetary value or represents a legally
enforceable agreement between two or more parties regarding a right to payment of money.”
In fact, listing can be one of the financial instruments for a stock exchange. As discussed in the
previous sections, a company typically aims to become listed and a stock exchange sets
requirements of listing on the market. Basically, the reason why a company aims to get listed
is to collect funds for its operation from investors by selling their shares as a financial
instrument. However, it is uneasy for investors to invest in companies which have potential for
bankruptcy due to financial difficulty because their shares can lose all value. For this reason,
stock exchanges such as JPX and ASX set a reliable market like main market for Japan and
ASX Listing for Australia consisting of listed companies recognised enough for their corporate
continuity and profitability. Therefore, stock exchanges and companies can regard listing as a
viable financial instrument.

2.3.1 JPX
Shares are an important financial instrument. In fact, JPX has 20 kinds of products in total. 13
out of 20 products are categorised as equities and remaining 7 products are derivatives (see
Table 4).
Table 4: This table shows all the financial instruments which JPX has.
___________________________________________________________________________
All the financial instruments which JPX has
Equities domestic stocks, foreign stocks, Exchange Traded Fund (ETFs), Exchange
Traded Note (ETNs), Real Estate Investment Trust (REITs), venture funds,
country funds, infrastructure funds, preferred stocks, etc., Japanese
government bonds, convertible bonds, subscription warrant securities, and
preferred equity investment securities
Derivatives Japanese indices, overseas indices, dividends indices, volatility indices, REIT
indices, bond, and individual security
___________________________________________________________________________
Sources: Japan Exchange Group, 2017a; p.1 and 2017b; p.1
Compared to ASX, JPX has three characteristic financial instruments. The first different
instrument is venture funds. They are intended for investment corporations which regard
privately held companies as investment outlet. The second instrument is country funds. They
are dealt with by investors in order to invest in a particular country or area. The third instrument
is infrastructure funds. They focus on infrastructure such as solar facility and harbor facility
for investment. All of these instruments in Table 4 contribute to the trading services revenue.
Total operating revenue is 46% which means JPY 48.6 billion (see Figure 2). Also, cash
equities occupy 71.4% of total trading services revenue while derivatives occupy 28.6% of that
in details (see Table 5).

Source: Adapted from Japan Exchange Group, Inc., 2015b; p.7
Figure 2. This doughnut chart illustrates JPX’s operating revenue in financial year (FY) 2014
is composed of five categories both in percentage and in billions of yen.
Table 5: This table explains a breakdown of trading services revenue in financial year 2014.
___________________________________________________________________________
A breakdown of trading services revenue in financial year 2014
Subject Amount (Millions of yen) Ratio (%)
Trading Services Revenue 48,698(1)+(2)+(3)+(4)+(5)+(6) -
Transaction Fees 40,221(1)+(2) -
Cash Equities 28,705(1) 71.4%
Derivatives 11,515(2) 28.6%
Basic Fees 1,067(3) -
Access Fees 4,730(4) -
Facilities Usage Fees 2,600(5) -
Others 79(6) -
___________________________________________________________________________
Source: Japan Exchange Group, Inc., 2015b; p.66
2.3.2 ASX
Compared to JPX, ASX has two characteristic financial instruments (see Table 6). The first
different instrument is hybrid securities. ASX Limited (2017c, ¶1) explains “Hybrid securities
typically promise to pay a rate of return (fixed or floating) until a certain date, in the same way
debt securities do. However, they also have equity-like features that can mean they may provide
Composition of Operating Revenue in FY 2014

a higher rate of return than regular debt securities.” The second instrument is grains derivatives.
Australian Trade and Investment Commission (2017, ¶1) states “Australia is the sixth largest
country by total area and also known as an agricultural country because 60 percent of national
land is used for agriculture and 60 percent of production is exported to other countries.” From
this background, ASX has grains derivatives which other stock exchanges do not have.
Table 6: This table shows all the financial instruments which ASX has.
___________________________________________________________________________
All the financial instruments which ASX has
Cash market shares, indices, bonds, hybrid securities, ETFs and other Exchange
Traded Product (ETPs), managed funds, and warrants
Derivatives and over-
the-counter (OTC)
options, index derivatives, interest rate derivatives, grains
derivatives, and energy derivatives
___________________________________________________________________________
Source: ASX Limited, 2017d; p.1
Cash market in Table 6 contributes to 5% of total operating revenues while derivatives and
OTC market contributes to 32% of them (see Figure 3).
Source: Adapted from ASX Limited, 2014; p.1
Figure 3. This doughnut chart illustrates ASX’s composition of operating revenue in financial
year 2014.
24%
5%
7%
6%
32%
10%
8%
6% 2%
Operating revenues mix
Listings and Issuer Services
Cash Market Trading
Cash Market Clearing
Cash Market Settlement
Derivatives and OTC Markets
Information Services
Technical Services
Austraclear
Other revenue
ASD 658.3 million

2.3.3 Comparison between the financial instruments of JPX and ASX
A comparison can now be made regarding of the financial instruments of JPX and ASX by
using the listed information in sections 2.3.1 and 2.3.2. JPX puts emphasis on funds while ASX
puts emphasis on derivatives. In comparing JPX with ASX, JPX has three characteristic
financial instruments: venture funds, country funds, and infrastructure funds. On the other hand,
ASX takes advantage of its competitive agriculture with other countries and subsequently it
has grains derivatives. In terms of operating revenues, it is obvious that JPX focuses on equity,
whereas ASX focuses on derivatives as Figures 2 and 3 show. That is, the proportion of JPX’s
operating revenue is 71.4% for cash equities and 28.6 % derivatives, but the proportion of
ASX’s operating revenue is 5% for cash market trading, and 32% for derivatives and OTC
market. However, surprisingly, investors deal with JPX’s derivatives more than ASX’s
derivatives (see Figure 4).
Source: Adapted from Japan Exchange Group, Inc., 2015b; p.13
Figure 4. This clustered bar illustrates how many billions of contracts stock exchanges have
carried out in terms of derivatives.
2.4 Chapter summary
This chapter consisted of three parts: organisational structure in 2.1, requirements for listing
as a function in 2.2, and financial instruments in 2.3. The first part identified both JPX and
ASX have three markets and analyzed each focus on domestic and foreign aspects. The second
part clarified the level of JPX’s listing requirements is more extensive range than ASX’s listing
requirements. The final part explored JPX focuses on equity while ASX focuses on derivatives,
but the volume of contracts for derivatives in JPX is more than ASX’s.
Derivatives Volume Rankings

References
ASX Limited. (2014). Shareholder report – annual report 2014. Retrieved on March 9, 2017,
from http://www.asx.com.au/documents/asx-news/ASX_Ltd_Full-Year_Results_Ann
ual_Report_August_2014.pdf
ASX Limited. (2016). ASX listing rules: Chapter 1 – admission. Retrieved on March 2, 2017,
from http://www.asx.com.au/documents/rules/Chapter01.pdf
ASX Limited. (2017a). History. Retrieved on January 15, 2017, from
http://www.asx.com.au/about/history.htm
ASX Limited. (2017b). Listing requirements. Retrieved on February 15, 2017, from
http://www.asx.com.au/listings/listing-with-asx/listing-requirements.htm
ASX Limited. (2017c). Hybrid securities. Retrieved on March 6, 2017, from
http://www.asx.com.au/products/hybrid-securities.htm
ASX Limited. (2017d). Products. Retrieved on March 9, 2017, from
http://www.asx.com.au/products.htm
Australian Trade and Investment Commission. (2017). Australia karano yunyuu – kokumotsu
[Import from Australia – grains]. Retrieved on March 5, 2017, from
http://www.austrade.gov.au/Local-Sites/Japan/Buy-from-Australia/Industry-
Information/Grain
Bloomberg L.P. (2016). NKY quote – Nikkei 225 index – Bloomberg markets.
Retrieved on November 9, 2016, from https://www.bloomberg.com/
quote/NKY:IND
Desjardins J. (2016). All of the world’s stock exchanges by size.
Retrieved on January 19, 2017, from http://money.visualcapitalist.com/all-of-the-
worlds-stock-exchanges-by-size/
Financial Services Agency. (n.d.). Akusesu FSA dai 15 gou. [Access FSA the 15th edition.].
Retrieved on January 16, 2017, from http://www.fsa.go.jp/access/16/200402e.html
Financial Services Agency. (2017). Kinyuu Shohin Torihiki Hou ni Tsuite.
[About Financial Instruments and Echange Act]. Retrieved on January 16, 2017,
from http://www.fsa.go.jp/policy/kinyusyohin/
Investopedia, LLC. (2017a). Liquidity. Retrieved on February 8, 2017, from
http://www.investopedia.com/terms/l/liquidity.asp
Investopedia, LLC. (2017b). Market capitalization. Retrieved on February 8, 2017, from
http://www.investopedia.com/terms/m/marketcapitalization.asp
Investopedia, LLC. (2017c). Bond. Retrieved on March 10, 2017, from
http://www.investopedia.com/terms/b/bond.asp

Japan Exchange Group, Inc. (2012). Criteria for listing – main markets. Retrieved on
February 15, 2017, from http://www.jpx.co.jp/english/equities/listing/criteria/listing/
Japan Exchange Group, Inc. (2015a). Overview of IPO – listing requirements.
Retrieved on March 2, 2017, from http://www.jpx.co.jp/english/equities/listing-on-
tse/new/basic/01.html
Japan Exchange Group, Inc. (2015b). Annual reports: Archives – JPX report 2015.
Retrieved on March 9, 2017, from http://www.jpx.co.jp/english/corporate/investor-
relations/ir-library/annual-reports/tvdivq0000008t9q-att/2015_jpxreport_e_all.pdf
Japan Exchange Group. (2016a). Overview of JPX. Retrieved on March 13, 2017, from
http://www.jpx.co.jp/english/corporate/investor-relations/ir-library/annual-
reports/tvdivq0000008t9q-att/p2_17_e.pdf
Japan Exchange Group, Inc. (2016b). Overview of IPO –market structure / IPO company
size. Retrieved on February 16, 2017, from http://www.jpx.co.jp/english/equities/
listing-on-tse/new/basic/
Japan Exchange Group, Inc. (2017a). Products – equities. Retrieved on March 9, 2017, from
http://www.jpx.co.jp/english/equities/products/index.html
Japan Exchange Group, Inc. (2017b). Products – derivatives. Retrieve on March 9, 2017,
from http://www.jpx.co.jp/english/derivatives/products/index.html
Market Index. (2017). History of the ASX. Retrieved on January 15, 2017, from
http://www.marketindex.com.au/history
Phelan, C & Wren, J. (2005-6). Reliability and validity. Retrieved on February 2, 2017,
from https://www.uni.edu/chfasoa/reliabilityandvalidity.htm
Robson, C. (2014). How to do a research project: A guide for undergraduate students
(2nd ed.). Chichester: John Wiley & Sons Ltd.
Rogers, D. (2015, January 1). Australian stockmarket’s worst return since 2011 as ASX 200
gains 1.1pc. Retrieved on January 26, 2017, from http://www.theaustralian.com.
au/business/markets/australianstockmarkets-worst-return-since-2011-as-asx-200-
gains-11pc/news-story/e150c6005e34495d3bfc216f75436cba
University of Illinois. (2006). A definition of primary source. Retrieved on October 16,
2016, from http://www.library.illinois.edu/village/primarysource/mod1/pg1.htm
Virginia Polytechnic Institute and State University. (2016).
Primary, secondary, and tertiary sources. Retrieved on October 16, 2016,
from http://www.lib.vt.edu/help/research/primary-secondary-tertiary.html
WebFinance Inc. (2017a). What is a stock exchange? Retrieved on January 24, 2017,
from http://www.businessdictionary.com/definition/stock-exchange.html

WebFinance Inc. (2017b). What is a listed company? Retrieved on February 8, 2017, from
http://www.businessdictionary.com/definition/listed-company.html
WebFinance Inc. (2017c). What is financial instrument? Retrieved on March 9, 2017, from
http://www.businessdictionary.com/definition/financial-instrument.html
White, D. (2017). What is bias? – definition & types. Retrieved on February 2, 2017,
from http://study.com/academy/lesson/what-is-bias-definition-types.html
World Public Library. (2016). Social commentary. Retrieved on October 16, 2016,
from http://worldlibrary.org/articles/social_commentary

Comparing Japan Exchange Group and Australian Securities Exchange 2011-2015

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (7)

Similar to Comparing Japan Exchange Group and Australian Securities Exchange 2011-2015

Similar to Comparing Japan Exchange Group and Australian Securities Exchange 2011-2015 (20)

Recently uploaded

Recently uploaded (20)

Comparing Japan Exchange Group and Australian Securities Exchange 2011-2015