Japan Exchange Group implements TOPIX index restructuring

The Japan Exchange Group (JPX) has initiated a major restructuring of the TOPIX index, marking the first periodic rebalancing on October 30. This reform aims to improve the index's usability and liquidity by shifting from a market-segment-based selection to a criteria-based system focusing on free-float market capitalization and annual trading turnover.

Under the new rules, the index will be more streamlined. While the previous version included all Prime market stocks, the new methodology selects stocks from all market segments, including Standard and Growth, based on trading activity. Approximately 35 companies, such as McDonald's Holdings Japan, Seria, and Trial Holdings, are being newly adopted.

To ensure market stability, 683 stocks that did not meet the new criteria have been designated as transition stocks. These companies will not be removed immediately; instead, their weightings will be reduced incrementally over several stages. This transition period is expected to conclude by July 2028, at which point the index will consist of approximately 986 stocks, a reduction of about 40 percent from previous levels.