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The Tokyo Stock Exchange plans to realign its current four trading markets into three in April 2022, sources familiar with the matter have said.

Of the three, the top-tier “prime” section will have the most rigorous listing standards. Companies that do not meet them will be delisted.

Listing standards proposed by the Financial System Council, an advisory panel to the finance minister, call on companies listed on the prime section to have market capitalization of at least ¥10 billion in tradable shares.

But the TSE plans to exempt prime-section companies from meeting new listing standards for a set period to avoid confusion.

Currently, companies with excessive debt on the TSE’s first section can remain listed by transferring to the second section. Under the reform plan, such companies will be delisted in principle.

But during the transition period, such companies will be able to stay on the prime section by meeting requirements such as strengthening corporate governance.

The other two new markets will be a “standard” section, for midsize firms, and a “growth” section, for startups.

The Topix index of all TSE first-section stocks will be changed into a new index that will mainly cover issues traded on the prime section.

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