Hello everyone. My name is Miyahara of the TSE. Today, I would like to talk about four topics. Classification change, corporate governance, ETF market revitalization, and data service strategies. These four points will be outlined in my presentation. First of all, I would like to talk about the review of the cash market structure. In the fall of last year, we had experts group deliberations, which has continued to March of this year. In parallel, 70 firms have been subject to hearing, and from domestic and overseas institutional investors have provided 90 comments as well on this topic. Against this backdrop, we have organized our views. There are three challenges that we have identified, which are listed here. First point is that there is ambiguous market concept impairing convenience of investors and losing attractiveness. The TSE and OSE have integrated management, and the markets has remained in parallel.
More specifically, there are the second section, Mothers and J-NET overlap are seen to be confusing. There are also differences in criteria as well. The second point is the insufficient incentives for listed companies to sustainably grow and increase corporate value. Concerns that listing criteria for step up to the first sections are not functioning sufficiently to incentivize growth. The criteria was considered to be too low. The listing on the first section is considered to be the goal. Furthermore, concerns of the need to facilitate the market participation. The third point is that we need an investable index, benchmark index, that also represents wide investment opportunities. Therefore, these are the three issues that have been identified in the context of cash market structure. Please refer to the following page. Against the backdrop of the three challenges, one view or hypothesis has been outlined.
We believe that the optimal market structure in the future has been identified. The growth stage of the listed companies as well as the investors' perspective should be considered in a segmentation. Redesigning based on this segmentation is required. This is the hypothesis that we have outlined here. More specifically, we are considering market segment A, C, and B. Market is for well-established companies with investors including retail investors. C is companies that meet requirements for investment instruments in broad range of investors. B are companies with high growth potential. These are the three segments that we have identified. If we were to reorganize based on these three segments, we have identified the criteria based on the market concept of in terms of listing criteria, governance structure, liquidity profits as well as market valuation criteria will be required for A and C.
On the other hand, for market segment B, these are listing opportunities for companies with high growth potential. Therefore, it should be less stringent criteria than those for market segments A and C. Furthermore, in terms of the exit criteria, sometimes the Japanese market is criticized for not being revitalized. Therefore, the exit criteria should be outlined based on the market valuation as well as financial results. Now, in terms of the mechanism to complement the incentives for sustainable corporate value increase of listed companies will be required as well. For example, from transfers between market segment, JPY 4 billion from Mothers has been identified to list in the first section. Will this be appropriate in terms of enhancing corporate value will have to be subject to review. Therefore, this criteria will have to take into consideration the valuation from the market as well.
In particular, the last bullet point should be referred to, which is the market segment C. It should be subject to global institutional investors as well. Therefore, that should be taken into consideration in terms of setting the criteria at any rate. Regarding this matter, currently in the Financial System Council, expert group is discussing. Therefore, the progress made in this discussion as well as the ultimate direction identified will be the basis of formulating the design. We believe that this will have an impact on various stakeholders. Therefore, as mentioned here, the impact will be fully considered in setting forth with the transition, making sure there is a soft landing. Next, I would like to talk about the improvement to the effectiveness of the Corporate Governance Code. In 2014, the Stewardship Code was formulated, and the following year, a Corporate Governance Code has been introduced.
Four or five years have already passed since then. In terms of exercising voting rights by institutional investors as well as improvement in ROE and shareholder return improvement, have shown improvement in this area. However, regarding the Corporate Governance Code reform, it should be a continuous process to make improvements. Therefore, we have had appropriate revisions as well in June of last year. As mentioned here in the revised Corporate Governance Code, the four or five changes have been made. It has been revised or added. First point is management that considers capital cost, more specifically, the business portfolio review should be included, and management resources' optimal allocation should be considered by management.
Second point is board effectiveness. Utilizing an independent advisory committee or having a nomination committee on a voluntary basis should be introduced.
Regarding gender and international aspect, globalization should be considered in the makeup of the board as well. Fourth point is across shareholdings. This has been pointed out by many institutional investors abroad. Regarding the reduction thereof, the policy and review should be disclosed. That is included in the code anew. The roles of the corporate pension funds as asset owners will have to be improved. These are the main revisions to the Corporate Governance Code as of June last year. With the FSA, we shall continue with the follow-up in a proactive manner so that the corporate governance reform in Japan will become more effective going forward. Next, from the viewpoint of the market, I would like to talk about the market-making system incentive scheme of the ETF. On the part of the TSE, from the past, ETF has been a focus of revitalization efforts.
In terms of the listed, we have more than 230. We have seen a significant increase. However, for certain ETFs is subject to a concentration of liquidity, and investors cannot sell when they want or buy when they want. Therefore, as a first step, last year in July, for individual as well as smaller institutional investors, market nurturing has been made. It says for some ETFs, but in fact, trading value as well as the AUM has increased significantly. We have seen good results in terms of the introduction of the market making scheme. Having entered this year, for the market making incentive scheme, the institutional investors are engaging in trading, and from their side, they have requested more scope in terms of investing in market making.
Against this backdrop, from April of this year, for example, Nikkei 225 and TOPIX ETFs, enhancement has been made in terms of liquidity, which is called the Star ETFs. These are within the scope of institutional investors. For these products, we have introduced a market-making system as well. Fortunately, having started, it's already three months. In some products, we have seen significant trading value as well as trading volume, as well as AUM. There are seven market makers and 120 in terms of the ETFs. We will work continuously to improve the ETF market making incentive system. Next page is the ETF market making incentive scheme for version 2.0. Please refer to the next page. In order to revitalize the ETF market, I have already talked about liquidity, but we would like to also diversify the ETFs as well. We have been making efforts appropriately.
More recently, we have established a scheme of Japan-China ETF Connectivity. China-related ETF have been listed. Through these activities, and going forward, we would like to offer more in terms of the ETF. For example, the emerging countries as well as equity CDS are the areas we'll be focused on going forward. The last topic I would like to share with you is regarding the vision for the next-generation data business. In a nutshell, information users and the distribution system should be diversified so that ultimately it shall lead to increase in investments. That is the type of ecosystem we hope to establish. In the past, from JPX, through information vendors as well as the participants, we have provided dedicated lines to provide information. The information vendors had provided such information to the users of the services.
However, going forward, we will also link the startups and service providers. We will establish another route for startups and service providers. Specifically, market data required by startups can be provided using API as well as cloud. Next generation distribution system will be utilized for this purpose. By so doing, the market data utilization can be unleashed in areas we have not contemplated before. By so doing, ultimately, we hope that ordinary persons will have a better understanding about the Tokyo market information. It will become more familiar to the ordinary person, so that this will ultimately lead to more investments by people in general. Specifically, for startup companies and providing information to the startups together with KDDI, we are now working in collaboration. API portal site of KDDI is receiving the stock market historical data. Please refer to the next page.
This is the PoC or the Proof of concept program for utilizing data, as I have already mentioned. With parties that we had not had very strong relations in the past will now be in the scope of collaboration so that we can provide data in a wider context. In order to verify, we are doing this PoC from astamuse is a company with an enormous data bank. The intangible asset information as well as IP, human resources information, and our listed companies' data are combined so that the new program or new index can be formulated. This has been subject to the PoC program. From 10 companies, we have received inquiries to participate in this PoC program. This program has already started. Going forward, data business is very important in terms of business relationship. It is important source of revenue for us as well.
We shall continue to focus efforts in this area in a proactive manner. I would like to conclude my brief presentation. Thank you very much for your kind attention. Thank you very much.
I am Yamaji from Osaka Exchange. I'd like to go over with you our derivatives market strategy. First of all, let me give you the overview of the Osaka Exchange derivatives market. Here on this page, we have bar graphs, a bar graph as well as a line graph. If you'd be able to look at the dark blue line, this looks at the Nikkei average. The lighter blue shows the volatility index of Nikkei average or Nikkei 225. Bar graph looks into the quarterly ADV, average daily trading volume, ADTV. You also see the red line, which looks into the yearly average trading volume. We find great correlation between this blue line. In other words, I'm talking about the lighter blue. In other words, when we have more volatile index, we have more derivatives being traded.
The Nikkei Average volatility itself is not exactly what I'd be focusing on. The volatility is actually what I'd be looking at. Whenever there is a shock, that does have a correlation with the tradings of the derivatives. For example, in 2015, there was the China shock in summer, but if you exclude this event, you can find that at the early part of the year, that would be the first and second quarter. In other words, April all the way to September, would usually be the time when we have less ADV. Towards the second half, you have more volatility, which means you have more ADTV. This is the pattern that we have been continuously seeing, especially last year. That would be FY 2018.
We were able to have a very high ADTV, the second record high after 2015. Looking at our main products, that would be the next slide. You know that we have Nikkei 225 Large and mini, we also have TOPIX Futures, we also have Nikkei 225 Option. These would be our main product lines. When TSE and OSE was merged, we were able to have the two markets merged, we were able to have an expansion of the investment as well as improvement in liquidity. There were more trading volume. At the same time, we have more passive management. I think this is also coming from the increased liquidity. With that, ever since 2013, TOPIX Futures and Nikkei 225, the trading volume has been increasing.
At the moment, we have been able to reach the second highest on record. There's also another main product, which would be the 10-year JGB Futures. In January 2016, this was a time when BOJ introduced negative interest rate, the negative rate. Right after that, the trading volume declined quite immensely. I think this is something you'd be able to see on this bar graph, the blue bar graph. 2016, it falls. Recently you can find that it's been going up again. Especially last year, there were more than 40,000 contracts of ADV. One would be JPY 100 million. That means we're talking about JPY 4 trillion size of trade being done in a day. One reason behind that is because this one tip is JPY 10,000, so the notional capital becomes large.
It's not about the direction per se, but even when you'd be able to still enjoy large yield. These are the styles of the investment that we're finding amongst investors. Some of the investors which were reluctant, for example, we're now having prop desks of securities people being more active in the 10-year JGB Futures. Other than these main products, that's something that we have also specified in the following page. Here you have the blue bar graph, which looks at the Mothers Index Futures. Yellow looks at the Nikkei 225 Weekly Option. Green would be TSE REIT Index Futures. You can see that many people are spending more work, effort, and time into these non-major products.
We are trying to pursue that, pursue this trend, endorse this trend. We are trying to hold seminars together with some of the online securities people as well. This has contributed in record high trade volume. Even for Mothers, it's not even reached JPY 30 million. It's still small to be called a major or even a sub-major product. We do believe these products would well become a next promising product as we look towards the future. Going to the next page. Here, we look at the night session trading. From 2016, we've expanded, extended the trading hours till 5:30 A.M. of the following day. Summertime, it is open until 4:30 in U.S. That means you'd be able to cover the entire market hours of the U.S.
In winter, the time gap would be 10 hours. That means there is this very final part where we would not be able to cover from Tokyo side, from Japan side. Europe or the U.S., especially now we have Donald Trump, there are a lot of events coming from the U.S. That seems to trigger the actions in the other global markets as well. With that, our night session trading, in other words, from 4:30 P.M. Japan time, all the way to 5:30 A.M. on the following day, that would be 13 hours. There are tradings going on all through the hours. This now is more than 40%. It's actually exceeded 40%. It's almost up to 46% in October 2018. That is the amount of the share of these night session within the entire trading.
Of course, night session trading, you would be able to have double the time of the usual trading session in Japan. We do believe this share will keep on increasing. Now let me go into the third mid-term management plan, and I will be focusing on the derivatives part. In other words, what we aim to achieve. The first part is about realizing the comprehensive exchange. This was two years ago when we were able to speak about this in this similar occasion, and I also emphasized the significance of realizing comprehensive exchange. The FSA or METI or the Ministry of Agriculture was also able to back up in creating this comprehensive exchange. We were able to make a large step ahead.
We've been able to sign a basic agreement this March, and we are going through the due diligence, and we are almost about to decide on the TOB pricing. When we realize a comprehensive exchange, what can happen? The global futures or the derivatives, this has been expanding by five times over the past decade. In Japan, on the contrary, it's been reduced to one-fifth. There are several reasons behind this. One would be, for example, TOCOM. The credibility of TOCOM has not been assessed properly, and so some investors are hesitant in the commodity market. Also the clearings function. It seems like the credibility of the clearings corporation lacks the credibility. If we'll be able to consolidate all as JPX Group, we do believe it should make it easier for more investors to come in this space.
Also, FSA, of course, would be regulating us, the Financial Instruments and Exchange Act. There will be other regulators, including METI or the MAFF, in terms of the futures trading. Investors who'll be globally investing on these derivatives would only be looking into the Tokyo side. If we'd be able to take in the needs of the financial players, their flow, we should be able to enhance more liquidity. Again, I mentioned the liquidity has become very low. Therefore, people who would have the actual needs or the actual business operators, business participants, their needs have not been well captured. If we'd be able to enhance the liquidity, I think it should be a very positive turn for the business participants as well. Where are we trying to focus?
We're trying to make sure we'd be able to enhance the competitiveness of Japan, the Japanese economy, and the capital market. For example, Dalian and Shanghai, we know that there would be very high activities. There was this China shock, also in Zhengzhou. With the China shock, investors would be looking at the lack of stability, which is also something that would be related to political standard. Looking at the political structure, Japan would be deemed as more stable. That is why more investors would be expecting more to Japan. With that all in mind, if we'd be able to enhance the competitiveness of Japan, the Japanese market, we should be able to enhance the competitiveness of Japan as a whole. We certainly do have more we need to do. It is unfortunately going to take more time.
We need to look at different rules and regulations. We need to talk to different authorities. When we merged TSE and OSE, it was a merge of people doing the same work. We are talking about trying to merge people who've been engaged in different fields, different sphere. There are more hurdles that we need to overcome, but we still do want to make sure we'd be able to make steps forward. Now we have J-GATE or the 2nd version of J-GATE for the transaction, the trading. In 2016, as we've been able to start J-GATE, and so we've tried to replace this once in 5 years. The next one is going to come in 2021. We're preparing for this 2021. We're trying to select the right vendor for this. The 1st generation was launched in 2011.
We tried to upgrade into the 2nd version, we were able to listen to many investors, and a lot of the requests were about the processing speed. People wanted more speed, and so a millisecond to microsecond was something that we tried to upgrade ourselves in terms of the processing speed. As we tried to migrate into the 3rd generation, we again did this market research of what the requests were. Would people want to go into nano speed? That wasn't exactly it. It was about the robustness of the matching engine. I've also wrote as the core concept, but it's really about launch timely. In other words, it's really about how timely we'd be able to, and flexibly we'd be able to launch in new products.
That was the request, and so that is going to be the important core concept as we try to launch the next version of J-GATE. It is 2019 now. In other words, we have two more years for the development. We do want to make sure we be able to create a very competitive system or competitive matching engine. Next page looks into some of the changes in the market environment and how we want to create a market platform that adapts to the market needs. After Lehman shock, many regulators around the world wanted to pursue for more OTC trading going onto regulated exchanges. OTC trade, this is something that people would be on a bilateral end. If it is on exchange system, the regulated exchanges, it would be different. We have the J-NET.
This OTC, we were working with IDB or inter-dealer brokers. These were the people who worked between the players to match the needs of the participants. If we're going to put this into the regulated exchanges, that means we need to bring it to our side, but then inter-dealer broker, we're not direct participants. In other words, we used to have the limit in going directly into this inter-dealer broker activities. Through J-NET Portal, we now have the flexibility to do this. This enables us to have a more smoother trading, so that the trade will be executed under J-NET trading, and we're trying to make sure we be able to launch this during 2019. There was a question earlier about information service, but then again, we are going to be utilizing AWS in offering information.
For example, all the order data is already being flowed. Some of the other, for example, order data that had not been put into the information system, is going to be available to people who will be able to access to AWS. At the moment, we know that there is this certain amount of demand, and we hope to be able to start this data service. That was a very brief overview of what we are trying to do. Thank you very much.
My name is Hironaga Miyama of JSCC. For my part, I would like to start off with talking about the outline of the JSCC business and then talk about the strategy thereafter. First of all, this is the JSCC business scope. We are not well-known, so many people do not understand what we are doing. We started clearing services related to listed products in 2003 and expanded this clearing coverage to OTC derivatives as well as others we have conducted for OTC derivatives. As you can see here, we are providing clearing for the listed products as well as for the OTC transactions, CDS, as well as IRS, and JGB bond as well. Regarding CDS, we had 10 indices in the beginning, but a single name have been added as well. We have 53 altogether now. Is the status of the JSCC revenue.
Please refer to the bar graphs. As for the operating revenues, we have been benefiting from Abenomics, and operating revenue has been showing a moderate expansion trend. Now share of OTC transactions in operating revenue has gradually increased and reached 26% in fiscal year 2018. Share of revenue from clearing services in operating revenue of the entire JPX has suddenly shifted to approximately 20%. Please refer to the bar graphs. On the left-hand side, the JSCC operating revenue is provided from 2014. You can see that in 2018, other than the listed products, you can see a growth. OTC derivatives and T+2 has been very beneficial. With that, we have reviewed the fees. With that, operating revenues for OTC derivatives have increased significantly. This is no longer significantly impacted from the performance of the listed products. The JSCC management policy is outlined.
Left-hand side is the management policy and core strategies under JPX, the medium-term management plan. Specific to JSCC, there is the shortening of the stock settlement cycle. The second is the launch and develop a comprehensive exchange. Mr. Yamaji has already provided explanations on this matter, and various questions were received. We would like to enhance the reliability by adopting measures for clearing commodity derivatives. As a clearing function, we shall reinforce the basic functions and offer clearing services responsive to new needs. These are the two focus strategies for JSCC.
From here on, I'd like to go over the future business strategies in each clearing service. First of all, for the listed products clearing service. We have cash equities and derivatives. We first of all, do want to reinforce the basic functions at CCP. First of all, it's about shortening the stock settlement cycle. We're trying to implement this new cycle on July 16. At the moment, we don't find any problems, so we should be able to implement as scheduled on July 16. Also, we want to sophisticate margin calculation method for the listed derivatives. Now, we have a CME SPAN that we are using. It is being used widely, especially from the U.S., and it be able to have a more specific calculation. We wanted to search in how we'd be able to adopt this for Japan.
Also the CME. We have SPAN 2. It goes under a very different concept, value-at-risk method is something that we want to capture, especially from the commodity side, first of all. We've been trying to capture the necessary information so that we'd be able to implement this as soon as possible on our side. The second part is about offering clearing services responding to new needs. It becomes a bit technical, but when we have ETF creation and redemption, there's lots of back-office work, and we want to make sure we'd be able to do this more smoothly. We're trying to create a system to enable us to do this. We already heard from Mr. Miyahara from TSE, but the market making on the ETF side, it needs to be done in a more smoother way.
If we'd be able to have a better clearing service or have more smoother operation around ETF creation redemption, that should help more activities in ETF. This is something that we're already finding outside Japan, we're trying to do this in Japan as well. By being able to offer this service, whether or not our part of the revenue really increases is something that we would not be able to say. If we'd be able to activate the ETF market, I'm sure that would increase the trade value that we'd be able to enjoy. It may not go exactly in a short-term basis, but this is something that should add benefit in the end. Next is about OTC derivative clearing service. Within the activities that we're trying to do. For example, LIBOR.
In 2011, there's been a lot of reasons, but the LIBOR calculation is going to be discontinued. For example, there's JPY 1,400 trillion amount of an interest. If we'd be able to have a smooth transition, that is going to be very beneficial, and we currently are trying to make sure we'd be able to discuss with the necessary parties. Next is about offering services to new needs. It's about enhancing the ease of use. First, it's about increasing the participants, the clearing participants. That is going to be very important. If you'd be able to look at the bottom right, we've been keeping track of the number of clearing participants, and we are trying to increase this steadily. For interest rates, JSCC has a 60% share at the moment. Number 3 is about OTC JGB clearing service.
It was last May when we tried to shorten the settlement cycle to T+1. If you'd be able to look at this graph, it's been a bit slow. There's a bit of an idling period. We have been able to promote the system, and also some of the major participants have been able to become more confident. From December, you can see the trade, the clearing volume has been increasing. DVP settlement of JGB, BOJ. In the past, our share was just like 60%, but now it is reaching 80%. What does this mean? JGB transaction. We do believe the major participants in JGB investments is now utilizing our clearing service. There will be insurance companies as well as the banks. It's not that these people would be making very large transaction volumes.
If we'd be able to increase this 80% further is still a question to be asked. If we'd be able to capture, we have been able to capture more clearance participants. If we have 80% of the share, that also means we have to be more responsible in making sure we have a stable infrastructure. We are trying to make sure we'd be able to offer stability. Also with T+1, we had to make a lot of capital expenditure. We are at the moment reviewing our fee structure. That is why operating revenue has been increasing. Of course, the fee itself is increasing. I think this is one area that we have to really focus on. It's about the new service, and about the commodities clearing.
You've just heard from Mr. Yamaji that OSE and TOCOM, in the end, is going to become a subsidiary of JPX. Some of the products will be transferred to Osaka Exchange. As for the clearings, there's also the rice from the Osaka Dojima Commodity Exchange. We have to really make a very large step forward as the CCP. JCCH, which is TOCOM's 100% subsidiary, Japan Commodity Clearing House, is now being merged. It's going to be merged with JSCC. We are going to be taking all of the activities done at JCCH. The front-office part, TOCOM is already using the system that is being utilized at OSE, so that itself would not become a problem. When it comes to the clearance part, we use different system.
How much expense is going to be required to go through the integration is something that we still are researching. Maybe at the point of integration, maybe we might want to have two systems running at the same time, or maybe we might want to integrate soon. This is something that we still are discussing. Probably what you would be interested is whether or not we'd be able to really enhance the credibility through these activities. I think there are two things that we have to look at. One, credibility as the CCP. JCCH has not been seeing a loss, whereas TOCOM has. Probably not many would be able to simply enhance the credibility of an entity that had been seeing a loss. When it comes to the capital side, it's just about one-tenth.
We are trying to make sure we'd be able to enhance the credibility as the first step. For the commodities, the futures. There is still a gap in the financial durability or the robustness. That is one reason why we have to make sure all the commodity derivatives be transferred to OSE, where you have very strong market players there. I think this is really up to whether or not we'd be able to go through a thorough risk management and whether or not we'd be able to invite overseas investors. To do that, we need to make sure we have a very robust clearing function available. Osaka derivatives, more than commodities, I think these non-resident players, how they'd be able to take part in the activity is just going to be immensely important.
Once we'd be able to have that, I think we'd be able to make the sea change. Again, when it comes to risk management, the current JSCC activity will be continued, and depending on participants, maybe become tougher. We'd like to place a specific grace period, if you will. We expect JSCC activity is what would be the mainstay. JCCH, Japan Commodity Clearing House. When this JCCH was established, a lot of members from JSCC went to help. That means the thought behind risk management is the same. Rules have changed, margin regulations have also been changing. There were some activities where JSCC had been trying to keep up with, whereas JCCH was a bit lagging behind.
If we'd be able to enhance that part in enhancing our risk management, I think we should be able to see a very good result. Of course, the question is how much we'd be able to do within the limited amount of time. If the market expands, that means we will be able to enjoy more operating revenue. On the backside, we will make sure we'd be able to strengthen the credibility. We, first of all, do want to make sure that the market size would become larger. TOCOM is still going to remain. In other words, oil will stay in TOCOM. As for the listings for the electricity, in the end, it would come into JSCC. When it comes to electric futures, there was a participant that failed in Europe. I know there were a lot of discussions behind that.
When it comes to electric futures, a lot of overseas investors would be very strict here. In other words, especially in terms of the risk management, because there was such an event in Europe. That is something that we have to keep in mind. That ends my presentation.