Tokyo Stock Exchange (TSE) 2025: Overview, History, and How It Operates

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What Is the Tokyo Stock Exchange (TSE)?

The Tokyo Stock Exchange (TSE) stands as Japan's premier stock exchange, headquartered in Tokyo. Founded on May 15, 1878, it currently hosts 3,784 listed companies as of September 2021. Managed by the Japan Exchange Group, the TSE features Japan’s largest and most influential corporations with a global footprint, including Toyota, Honda, and Mitsubishi.

The exchange provides comprehensive trading data, including real-time and historical index quotes, market statistics, and specialist insights. It’s important to distinguish TSE (Tokyo Stock Exchange) from TSX, which refers to the Toronto Stock Exchange in Canada.

Key Highlights

• The TSE is Japan’s largest stock exchange with 3,784 companies listed as of 2021.
• Between 1991 and 2001, the TSE experienced significant contraction due to Japan’s economic downturn following asset bubbles bursting.
• Major listed companies include Toyota, SoftBank, Keyence Corporation, Sony, and Chugai Pharmaceutical.
• The exchange is divided into five sections, with the first two sections forming the "Main Market" for large and mid-cap companies.
• Two sections focus on startups, while the final section is reserved exclusively for professional investors.

Understanding the Tokyo Stock Exchange (TSE)

At the height of Japan’s asset price bubble in December 1989, the Nikkei 225 index peaked at an unprecedented 38,916 points. Over the following two decades, the TSE’s total market capitalization declined sharply as the economy faced recession and the Nikkei index dropped significantly.

As of September 2021, the Tokyo Stock Exchange’s board includes Chairperson Tsuda Hiroki, Group CEO Kiyota Akira, Group COO Yamaji Hiromi, and Directors Iwanaga Moriyuki and Shizuka Masaki.

The top five companies by market capitalization on the TSE as of July 2021 were:

1. Toyota Motor Corporation (¥31.99 trillion)
2. Keyence Corporation (¥14.77 trillion)
3. Sony Group Corporation (¥14.34 trillion)
4. SoftBank Group Corp. (¥11.78 trillion)
5. Recruit Holdings Co. (¥9.55 trillion)

Interesting Fact

When the Tokyo Stock Exchange opened in 1878, some of its earliest traders were former samurai who traded government-issued bonds.

Major Global Stock Exchanges

Besides the Tokyo Stock Exchange, other leading global exchanges include the New York Stock Exchange (NYSE), Nasdaq, and London Stock Exchange (LSE). Each has distinct listing criteria, often requiring regular audited financial reports and minimum capital thresholds.

For example, the NYSE mandates at least 1.1 million publicly traded shares priced at a minimum of $4 each and requires companies to have earned a combined pre-tax income of $10 million over the past three fiscal years, with at least $2 million in the last two years. Nasdaq requires a minimum aggregate pre-tax income of $11 million over three years and a minimum bid price of $4.

Critiques and Reforms of the Tokyo Stock Exchange

Some market participants argue that the TSE’s structure has become overly complex compared to other global exchanges. The five-section system includes the "Main Markets" (first and second sections for large and medium companies), two sections for startups (Mothers and Jasdaq), and the Tokyo Pro Market for professional investors.

Each section carries distinct listing requirements, leading to complexity. As of September 2021, the first section alone listed about 2,190 companies, nearly double the number from 1990. Proposed reforms aim to simplify the market structure by consolidating sections into three categories: Prime, Standard, and Growth. Additionally, increasing market capitalization requirements may reduce the number of companies in the top tier, enhancing market efficiency.

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