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Comment for the Effect of the Tender Offer by TSE Group

Aug. 23, 2012

Prior to a business combination, the tender offer for shares of Osaka Securities Exchange Co., Ltd. commenced by Tokyo Stock Exchange Group, Inc. on July 11, 2012 and completed on August 22, 2012 has been effected. Creation of a combined holding company, "Japan Exchange Group, Inc. (tentative name)", on January 1st next year following a closing of the merger, whereby OSE will be the surviving company, is now in prospect. (It is subject to approvals at Extraordinary Shareholder Meetings of both companies.) Thus, Michio Yoneda, President and CEO of OSE made a comment as follows.

"The days when we were competing with TSE in "a small glass" are over." I understood so and decided the business combination with TSE. The world exchange industry got into the age of global market competition, and each market is competing for investors cross borders. If all employees of OSE and TSE don't unify into one team and don't aim for "the Asia's number-one" exchange, there is no point in the business combination.

Pre-Christian Greece challenged for fusion with entirely different ancient Oriental cultures. It is said that their challenge beard fruit as "Hellenism", and Greek gained the power of further developments. We also challenge for fusion of each company culture grown by each exchange in East and West and create the completely new culture adopting both companies’ strengths. For this, every employee has to have a consciousness of being a "pioneer" and bring out their frontier splits to carve out the unknown world. We throw off cloak of OSE or TSE and create the "all-Japan" exchange from scratch.

OSE realized demutualization and listing for the first time among exchanges in Japan and have been improving from the unchanged old company quality. We are proud that we realized many innovations in derivative business and succeeded the integration with JASDAQ, the Japan's leading growth market.

However, comparing to Japan's leading companies competing in fierce global markets, we are still immature. Firstly, all who work for an exchange have to have a consciousness of being engaged in the "financial services". We are engaged in a service business like the convenience-store business or the family-restaurant business. Besides what we serve for clients are financial products such as stocks or derivatives, there is no difference from the convenience-store business or the family-restaurant business in a sense of "providing the maximum satisfaction with clients". Securing stable income as a demutualized company by excellent financial services is essential for an exchange to become a sustainable organization.

On the other hand, our business is a licensed business from the national government, and we have to seek the public nature as "social infrastructure", which is essential for nation's life. If I boldly explain the "public nature", it will be that its meaning is "building up solid fans that place their confidence in the exchange as many as possible". The Japan Exchange Group strives for establishing the nation's reputation as "thanks for the birth of the Japan Exchange Group, Japanese economy get a new driver for growth".

Michio Yoneda
President & CEO