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Proposed rule changes for Nikkei 225 index open for public comment

Revisions aim to reflect changes in Tokyo stock market structure

On May 10, Nikkei summarized proposed revisions to the rules for calculating and selecting the constituents of the Nikkei Stock Average. Presumed par value will no longer be used to adjust stock price levels. Instead each constituent stock will be adjusted using a price adjustment factor. This proposed revision will be finalized after soliciting opinions from the public.

The price adjustment factor will be applied following the regular review in 2021. When the constituents are changed, the Nikkei 225 has maintained its continuity by adjusting the divisor, regardless of stock prices. There will be no change to that mechanism.

The proposed revisions will set an upper limit on the number of regular replacements of constituent stocks, with a maximum of three. In addition, in line with the change in market classifications of the Tokyo Stock Exchange, constituent stocks will no longer be selected from the TSE first section, but rather from the TSE prime market, starting in April 2022.

User comments will be accepted until June 13, 2021 on the Nikkei Index's official website, "Nikkei Indexes" (https://indexes.nikkei.co.jp/en/nkave/). The website contains detailed information about the changes, and a list of frequently asked questions and answers.

The market environment of the Nikkei 225 has changed drastically with the unification of stock trading units and market reforms at the TSE. These rules changes were deemed necessary to maintain and improve the quality of the index.

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