The operator of the Tokyo Stock Exchange said Friday it will set up three new trading sections on April 4, 2022, as the bourse looks to improve its market availability.
Japan Exchange Group Inc. said it will reorganize the current four trading sections into Prime, Standard and Growth sections.
Companies will choose which section they want to be listed on between September and December next year. JPX plans to announce lists of companies on each of the new sections in January 2022.
The restructuring comes as Japan is seeking to boost its global standing as a financial center at a time when Beijing’s tightening of controls over Hong Kong has raised concerns about the major Asian financial hub.
The bourse, which was recently hit by a full-day trading glitch caused by a system failure, aims to attract foreign investors who have a big presence in the market.
The Prime section or the top-tier market, equivalent to the current First Section, will have a greater focus on liquidity with an eye to attracting a variety of institutional investors.
Companies to be listed on this section will need to have at least ¥10 billion worth of floating shares, which will have to account for 35% or more of their outstanding shares in principle.
These companies will be required to have at least ¥2.5 billion in profit for two business years prior to listing, with stringent governance and other criteria to be set.
Currently, firms seeking to be listed on the First Section need to have a market capitalization of at least ¥25 billion.
JPX said it will start reviewing constituents of the Topix, which currently targets shares of companies on the First Section, in October 2022 and plans to complete the review in January 2025. JPX said it aims to gradually exclude companies with market capitalization of less than ¥10 billion from the index starting from October 2022.
The Standard section will be created through the merger of the Second Section and the Jasdaq, a market mainly for midsize companies. The Mothers market for up-and-coming companies will be renamed the Growth section.
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