Tokyo Stock Exchange

The Tokyo Stock Exchange opened in 1878, a decade into the Meiji Restoration, as Japan built Western-style financial institutions almost from scratch. It grew with Japan's industrialisation, was shuttered in the final months of the Second World War, and reopened in 1949 under the new post-war securities laws. Its most extraordinary era was the 1980s asset bubble, when Tokyo briefly became the largest stock market in the world and the Nikkei 225 touched 38,915 in December 1989 — a peak that then stood unmatched for thirty-four years, through the long deflationary decades Japanese investors call the 'lost decades', until the index finally surpassed it in early 2024.

In 2013 the TSE merged with the Osaka Securities Exchange to form the Japan Exchange Group (JPX), concentrating cash equity trading in Tokyo and derivatives in Osaka. A sweeping 2022 reorganisation replaced the old First and Second Sections with three new market segments — Prime, Standard, and Growth — paired with governance reforms that pressed listed companies to improve capital efficiency and unwind cross-shareholdings, a campaign widely credited with helping reignite global investor interest in Japanese equities.

Tokyo trades in two sessions: a morning session from 9:00 AM to 11:30 AM and an afternoon session from 12:30 PM to 3:30 PM Japan Standard Time, separated by a lunch break — a structure once common across Asia and still a distinctive feature of the Japanese market day. Each session opens with an auction (the itayose method) that aggregates accumulated orders into a single price; the afternoon close at 3:30 PM, extended from 3:00 PM in late 2024, sets the day's official closing prices. Japan does not observe daylight saving time, so the TSE's UTC hours are constant all year while its offset to New York and London shifts with their clock changes.

The market operates strict daily price limits: each stock may move only a fixed amount from its previous close, with trading effectively pausing at the limit — a mechanism that spreads violent repricings over several days rather than absorbing them in one session. Continuous trading runs on the arrowhead platform, one of the fastest matching engines in the world, a deliberate investment after system capacity problems in the 2000s.

Japan's two benchmark indices measure different things. The Nikkei 225, calculated by the Nikkei newspaper since 1950, is price-weighted like the Dow Jones Industrial Average — so high-priced shares dominate it regardless of company size. TOPIX, the exchange's own index, weights companies by market value and is the broader institutional benchmark. The divergence between them matters: a handful of high-priced technology and retail shares can move the Nikkei sharply while TOPIX barely stirs.

The exchange lists nearly 4,000 companies, from global names in automobiles, electronics, and precision machinery to a deep bench of industrial specialists found nowhere else. Because Japan's trading day ends before Europe opens, Tokyo's close is the first major daily verdict on overnight news from the United States — and the yen's exchange rate, which shapes exporter earnings, is watched as closely inside the market as any domestic indicator.