Financial Instruments and Exchange Act

When the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors, the Prime Minister may order a foreign financial instruments clearing organization, its clearing member, or the person that a foreign financial instruments clearing organization has entrusted with its business (including a person that has received entrustment from the person (including entrustment at two or more degrees of separation from the original entrustment); hereinafter the same applies in this Article), to report or submit materials that should serve as a reference with regard to business or assets linked to the financial instruments obligation assumption services of the foreign financial instruments clearing organization, and may have the relevant officials inspect the state of the business or assets, or the books, documents, and any other articles, of a foreign financial instruments clearing organization or the person that a foreign financial instruments clearing organization has entrusted with its business (but may only have the relevant officials inspect the person that a foreign financial instruments clearing organization has entrusted with its business as is necessary in connection with the business or assets linked to the financial instruments obligation assumption services of the foreign financial instruments clearing organization).

If the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors as concerns a foreign financial instruments clearing organization's business operations or the state of its assets related to financial instruments obligation assumption services, the Prime Minister may, to the extent necessary, order the foreign financial instruments clearing organization to change its business outline or its business methods, or otherwise take measures that are necessary for improving its business operations or the state of its assets.

If a foreign financial instruments clearing organization is discovered to have fallen under any of the categories in the items of Article 156-20-4, paragraph (2) at the time it was licensed, the Prime Minister may rescind the license.

If a foreign financial instruments clearing organization violates a law or regulation or a disposition by a government agency which is based on a law or regulation, the Prime Minister may rescind the license referred to in Article 156-20-2, order the suspension of all or part of its business during a fixed period of no longer than six months, or order the dismissal of its domestic representative (if a foreign financial instruments clearing organization has a domestic office, this includes any officer stationed there).

A foreign financial instruments clearing organization must obtain the authorization of the Prime Minister if it seeks to discontinue financial instruments obligation assumption service.

With the authorization of the Prime Minister, a financial instruments clearing organization may conclude a contract for collaborating financial instruments obligation assumption services (meaning the performance, on a regular basis, of an act specified by Cabinet Office Order as the act of having a third party bear the obligations of a clearing member related to a subject transaction that is other than a transaction set forth in Article 156-62, item (i), and to personally bear the obligations of the other party to the subject transaction with that clearing member; the same applies hereinafter) with a collaborating clearing organization, etc. (meaning another financial instruments clearing organization, foreign financial instruments clearing organization, or corporation incorporated based on foreign laws and regulations that performs services of the same type as financial instruments obligation assumption services in a foreign country; the same applies hereinafter) and may perform collaborative financial instruments obligation assumption services.

A financial instruments clearing organization must receive the authorization referred to in the preceding paragraph for each collaborating clearing organization, etc. with which it concludes a contract for collaborative financial instruments obligation assumption services.

Notwithstanding the provisions of the preceding two Sections, the collaborating clearing organization, etc. (limited to those other than financial instruments clearing organization or foreign financial instruments clearing organization) that concluded a contract for collaborative financial instruments obligation assumption services with a financial instruments clearing organization that has obtained the authorization under paragraph (1) (hereinafter referred to as "authorized financial instruments clearing organization" in this Section) may conduct a financial instruments obligation assumption service relating to the collaborative financial instruments obligation assumption services.

The provisions of Article 30-2 apply mutatis mutandis to the authorization referred to in paragraph (1).

A financial instruments clearing organization seeking the authorization referred to in paragraph (1) of the preceding Article must submit a written application for authorization to the Prime Minister, in which it states the following particulars:

its trade name;

the trade name or name of the collaborating clearing organization, etc.;

if the collaborating clearing organization, etc. is neither a financial instruments clearing organization nor a foreign financial instruments clearing organization, the following matters:

the amount of stated capital or total amount of contributions of the collaborating clearing organization, etc.;

the location of the head office or principal office of the collaborating clearing organization, etc.;

if an office of the collaborating clearing organization, etc. is in Japan, its location; and

the titles and names of the officers of the collaborating clearing organization, etc.;

the transactions giving rise to obligations that are subject to collaborative financial instruments obligation assumption services; and

the particulars of the business method for collaborative financial instruments obligation assumption services.

The following documents must accompany the written application for authorization referred to in the preceding paragraph:

a copy of the contract for collaborative financial instruments obligation assumption services (hereinafter referred to as the "collaboration agreement");

a document stating the things specified by Cabinet Office Order as constituting the business outline and business methods for collaborative financial instruments obligation assumption services;

if the collaborating clearing organization, etc. is neither a financial instruments clearing organization nor a foreign financial instruments clearing organization, the following matters:

a document pledging that the collaborating clearing organization, etc. does not fall under the purview of the requirement set forth in paragraph (2), items (i) through (iv) of the following Article;

the articles of incorporation and business rules of the collaborating clearing organization, etc. (including anything equivalent to these, and limited to those that are related to collaborative financial instruments obligation assumption services; hereinafter the same applies in this Section);

a document stating the things specified by Cabinet Office Order as constituting the business outline and business methods of the collaborating clearing organization, etc. (limited to business related to collaborating financial instruments obligation assumption services);

the balance sheet and profit and loss statement of the collaborating clearing organization, etc.; and

documents stating the expected income and expenditures of the collaborating clearing organization, etc.;

a document outlining the method of securing the collateral needed to settle outstanding obligations (meaning outstanding obligations as prescribed in Article 156-20-19, paragraph (1); hereinafter the same applies in paragraph (1), item (v) of the following Article) and other arrangements for settling them, and outlining the facilities, staff, and other systems for performing such settlement operations; and

beyond what is set forth in the preceding items, documents specified by Cabinet Office Order.

In the case referred to in the preceding paragraph, if the articles of incorporation or balance sheet has been prepared as an electronic or magnetic record or an electronic or magnetic record has been prepared for a profit and loss statement in lieu of a written document, the electronic or magnetic record (limited to those specified by Cabinet Office Order) may accompany the written application for authorization in lieu of the written document.