First Section (Tokyo Stock Exchange)

First Section (Tokyo Stock Exchange)
Name	First Section (Tokyo Stock Exchange)
Native name	東証一部
Type	Stock market segment
City	Tokyo
Country	Japan
Owner	Japan Exchange Group
Founded	1949
Currency	Japanese yen

First Section (Tokyo Stock Exchange) The First Section (Tokyo Stock Exchange) is the principal large-cap equities segment of the Tokyo Stock Exchange, operated by the Japan Exchange Group. It historically hosts major corporations such as Toyota Motor Corporation, Mitsubishi UFJ Financial Group, Sony Group Corporation, Keyence Corporation and SoftBank Group, and serves institutional investors including the Bank of Japan, Government Pension Investment Fund (Japan), Nomura Holdings, Mizuho Financial Group and Daiwa Securities Group. The segment is central to Tokyo's role as a global financial center alongside New York Stock Exchange, London Stock Exchange, NASDAQ and Shanghai Stock Exchange.

Overview

The First Section is a market segment within the Tokyo Stock Exchange created when the exchange reorganized post-World War II and later consolidated under the Japan Exchange Group merger with the Osaka Exchange. It lists blue-chip companies such as Nippon Telegraph and Telephone, Japan Tobacco, Honda Motor Company, Canon Inc., KDDI Corporation, Takeda Pharmaceutical Company Limited and Panasonic Holdings Corporation. Market infrastructure providers like Japan Securities Clearing Corporation and indices managers such as FTSE Russell, MSCI, S&P Dow Jones Indices and Tokyo Stock Exchange Price Index stakeholders use First Section constituents to compile benchmarks for passive funds managed by firms like BlackRock, Vanguard Group, State Street Corporation and Nomura Asset Management. The segment is a component of regional linkages with Asia Pacific, Hong Kong Stock Exchange and Singapore Exchange.

History

The roots of the First Section trace to securities trading in Edo period and formalization under the Securities and Exchange Act framework in the 20th century, transitioning through prewar exchanges and postwar reforms led by the Ministry of Finance (Japan). The modern First Section emerged after the 1949 reorganization of the Tokyo Stock Exchange and later evolved through episodes such as the 1980s asset bubble involving conglomerates like Mitsubishi Estate and Sumitomo Realty & Development, the 1990s "Lost Decade" that affected firms including Nippon Steel and Nomura Securities, and the 2013 consolidation creating the Japan Exchange Group from a merger of Tokyo Stock Exchange Group and Osaka Exchange. Regulatory reforms influenced by entities like the Financial Services Agency (Japan), Securities and Exchange Surveillance Commission and international standards bodies such as the International Organization of Securities Commissions shaped listing and disclosure practices.

Listing Criteria and Market Structure

Companies qualify for First Section listing by meeting quantitative and qualitative criteria administered by the Tokyo Stock Exchange and overseen by the Financial Services Agency (Japan). Quantitative thresholds involve market capitalization and shareholder base comparable to listings on New York Stock Exchange and London Stock Exchange, while governance expectations reference codes such as the Corporate Governance Code and recommendations from organizations like the Tokyo Stock Exchange Exchange Council. Eligible issuers include industrial conglomerates like Ishihara Sangyo Kaisha, financial institutions including Sumitomo Mitsui Financial Group and pharmaceuticals like Astellas Pharma. The First Section coexists with other segments such as the Second Section (Tokyo Stock Exchange), Mothers (Tokyo Stock Exchange), and the JASDAQ market, forming a multi-tiered structure similar to NASDAQ Global Select Market and Euronext segments.

Trading Mechanisms and Hours

Trading on the First Section follows electronic order-driven mechanisms managed by the Tokyo Stock Exchange's trading systems, which integrate clearing by the Japan Securities Clearing Corporation and settlement standards aligned with international practices from Continuous Net Settlement (CNS)-style systems. Regular trading hours coordinate with the Japan time zone and market sessions used by counterparties such as European Central Bank-linked fund managers and Federal Reserve-focused hedge funds; key sessions overlap with London Stock Exchange and end before New York Stock Exchange close. Trading rules include tick sizes and price limits, circuit breakers and auction mechanisms similar to those used by NASDAQ and NYSE Arca to manage volatility.

Market Participants and Indices

Participants in the First Section include domestic broker-dealers such as Nomura Securities and Daiwa Securities Group, global banks like Goldman Sachs, Morgan Stanley, Deutsche Bank and asset managers including BlackRock and Fidelity Investments. Indices tracking the segment consist of the TOPIX (Tokyo Stock Price Index) and subsets used by index providers MSCI and FTSE Russell to create investable benchmarks for exchange-traded funds (ETFs) listed by issuers like Nomura Asset Management and Nikko Asset Management. Pension funds such as the Government Pension Investment Fund (Japan) and sovereign wealth counterparts monitor First Section performance alongside regional indices including the Hang Seng Index and S&P/ASX 200.

Regulation and Governance

Regulation of First Section issuers involves disclosure standards enforced by the Financial Services Agency (Japan) and market surveillance by the Securities and Exchange Surveillance Commission. Corporate governance reforms reference the Corporate Governance Code and stewardship principles advocated by groups like the Japan Exchange Group and international bodies including the OECD and International Corporate Governance Network. Enforcement actions have involved cooperation with auditing firms such as KPMG, Ernst & Young, Deloitte, and PricewaterhouseCoopers as well as coordination with legal frameworks like the Financial Instruments and Exchange Act.

Performance and Notable Events

The First Section's performance has reflected macroeconomic cycles: the 1989 peak amid the Japanese asset price bubble, declines through the 1990s affecting firms like Nissan Motor Co. and Fuji Heavy Industries, recoveries during the 2000s with exporters such as Toyota Motor Corporation and technology firms including Sony Group Corporation, and volatility episodes tied to global crises like the 2008 financial crisis and the COVID-19 pandemic. Notable listings and delistings have included corporate actions by SoftBank Group and mergers like Mitsubishi UFJ Financial Group's consolidation. Market milestones involve integration with international clearing and the 2013 formation of the Japan Exchange Group that reshaped the First Section's governance and global connectivity.

Category:Tokyo Stock Exchange Category:Stock exchanges in Japan