With the Japanese stock market at 16-month lows, foreign investors fleeing the market and the strong yen decimating the country's leading exporters, the Tokyo Stock Exchange is fighting to remain relevant and compete with its Asian rivals—especially those in China.

The outlook for the TSE isn't bright. Having seen declines in sales and losses on the bottom line for the past two years, the bourse is poised to again delay its plan to go public. The exchange is facing falling trade volume as well. Public listings...