Financial Instruments and Exchange Act

It is prohibited for a bank or cooperative financial institution, or for any other financial institution specified by Cabinet Order (hereinafter collectively referred to as a "financial institution" in this Article and the following Article) to engage in securities services or investment management business; provided, however, that with regard to securities services, this does not apply if the financial institution conducts the purchase and sale of securities or securities-related derivatives transactions for the purpose of investment pursuant to the provisions of other Acts or on the account of a person that entrusts it to do so based on a trust contract.

The provisions of the main clause of the preceding paragraph do not apply if a financial institution conducts brokerage with written orders (meaning conducting a purchase and sale of securities or a securities-related derivatives transaction on a customer's account upon receiving written orders from the customer, and excluding transactions conducted based on its solicitation of a customer for such an order and transactions conducted upon the receipt of an order from the customer in connection with the financial institution's investment advisory business; the same applies in item (i) of the following Article) or performs the act set forth in the relevant of the following items in connection with the securities or transactions set forth in that item:

securities set forth in Article 2, paragraph (1), items (i) and (ii); securities set forth in Article 2, paragraph (1), item (iii) (limited to those for which the government guarantees the redemption of the principal and the payment of interest, short-term bonds prescribed in Article 54-4, paragraph (1) of the Shinkin Bank Act (Act No. 238 of 1951), and short-term agriculture and forestry bonds prescribed in Article 62-2, paragraph (1) of the Norinchukin Bank Act (Act No. 93 of 2001)); securities set forth in Article 2, paragraph (1), item (iv); securities set forth in Article 2, paragraph (1), item (v) (limited to those for which the government guarantees the redemption of the principal and the payment of interest, and short-term corporate bonds prescribed in Article 66, item (i) of the Act on Book-Entry Transfer of Corporate Bonds and Shares or those specified by Cabinet Order as similar to these); securities set forth in Article 2, paragraph (1), item (viii); securities set forth in Article 2, paragraph (1), item (xi) (limited to short-term investment corporation bonds prescribed in Article 139-12, paragraph (1) of the Act on Investment Trusts and Investment Corporations and those specified by Cabinet Order as similar to these; referred to as "short-term investment corporation bonds, etc." in the following item); securities set forth in Article 2, paragraph (1), items (xii) through (xiv); securities set forth in Article 2, paragraph (1), item (xv) (limited to those with a term between the day of issuance and the day of redemption of less than one year); securities set forth in Article 2, paragraph (1), item (xvi); securities specified by Cabinet Order among those set forth in Article 2, paragraph (1), item (xvii); securities set forth in Article 2, paragraph (1), item (xviii); securities specified by Cabinet Order among those set forth in Article 2, paragraph (1), item (xxi); and rights set forth in the items of Article 2, paragraph (2) that are deemed to be securities pursuant to the provisions of that paragraph (excluding the rights set forth in item (iii) or (iv) of that paragraph or electronically recorded transferable rights that are specified by Cabinet Order): acts set forth in Article 2, paragraph (8), items (i) through (iii), (vi), (viii), and (ix);

securities set forth in Article 2, paragraph (1), items (x) and (xi) (excluding short-term investment corporation bonds, etc.):acts set forth in Article 2, paragraph (8), items (i) through (iii), and acts set forth in Article 2, paragraph (8), item (ix) (excluding dealings in a secondary distribution of securities and in a solicitation for selling, etc. only for professional investors);

securities set forth in Article 2, paragraph (1), item (xvii) that have the nature set forth in Article 2, paragraph (1), item (i): the following acts:

market derivatives transactions, foreign market derivatives transaction, and acts set forth in Article 2, paragraph (8), item (ii) or (iii) in connection with these transactions;

dealings in a private placement; and

acts set forth in Article 2, paragraph (11), items (i) through (iii) (excluding those set forth in (a) and (b)) that the financial institution is entrusted with by a financial instruments business operator (limited to those engaged in type-I financial instruments business) and performs for that financial instruments business operator;

securities other than those set forth in the preceding three items: the following acts:

dealings in a private placement (excluding those involving securities specified by Cabinet Order); and

acts set forth in Article 2, paragraph (11), items (i) through (iii) (excluding those set forth in (a)) that the financial institution is entrusted with by a financial instruments business operator (limited to those engaged in type-I financial instruments business) and performs for that financial instruments business operator;

the following transactions: acts set forth in Article 2, paragraph (8), item (iv) (with regard to transactions set forth in (b), excluding those that fall under the category of cases specified by Cabinet Order as those in which the transaction is conducted with a large number of persons as the other parties thereto):

over-the-counter derivatives transactions of securities set forth in item (i) (including indices calculated by the method agreed upon between the parties based on the prices of two or more securities connected with the relevant securities); and

over-the-counter derivatives transactions that are connected with the securities set forth in the preceding three items (including indices calculated by the method agreed between the parties based on prices of two or more securities related to the relevant securities), and that can only be settled through the delivery and receipt of the difference in prices;

the purchase and sale of securities, securities-related derivatives transactions, and other transactions specified by Cabinet Order:brokerage for clearing of securities, etc.

The provisions of Article 29 do not apply if a financial institution performs on a regular basis acts, among the following acts (hereinafter referred to as "derivatives transactions, etc."), other than those set forth in Article 28, paragraph (8), items (iii) through (vi) (hereinafter referred to as "securities-related derivatives transactions, etc."), performs acts other than those set forth in Article 28, paragraph (8), item (vii) among those specified in Article 2, paragraph (8), item (v) on a regular basis, performs acts set forth in Article 2, paragraph (8), item (vii) on a regular basis, provides investment advisory and agency business, or provides securities, etc. management or performs on a regular basis acts specified by Cabinet Order as cases equivalent thereto:

market derivatives transactions, etc. (meaning market derivatives transactions or acts set forth in Article 2, paragraph (8), item (ii) or (iii) in connection with the transactions);

over-the-counter derivatives transactions, etc.; and

foreign market derivatives transaction, etc. (meaning foreign market derivatives transaction or acts set forth in Article 2, paragraph (8), item (ii) or (iii) in connection with the transaction).

A financial institution must be registered by the Prime Minister if it seeks to perform any of the following acts on a regular basis, or if it seeks to provide investment advisory and agency business or engage in securities, etc. management:

brokerage with written orders;

an act specified in the items of paragraph (2) of the preceding Article in connection with the securities or transactions set forth in the relevant item (excluding those falling under the proviso to paragraph (1) of that Article);

derivatives transactions, etc. other than securities-related derivatives transactions, etc. (excluding those conducted for the purpose of investment pursuant to the provisions of other Acts or on the account of a person that entrusts the financial institution to do so based on a trust contract and commodity-related market derivatives transactions), or acts other than those set forth in Article 28, paragraph (8), item (vii) among those specified in Article 2, paragraph (8), item (v); or

acts set forth in Article 2, paragraph (8), item (vii).

acts specified by Cabinet Order as prescribed in paragraph (3) of the preceding Article.

A person seeking the registration referred to in the preceding Article must submit a written application for registration to the Prime Minister, in which it states the following particulars:

its trade name or name;

the amount of stated capital, the total amount of funds, or the total amount of contributions;

the names of its officers;

the names of its accounting advisors, if it is a company with accounting advisors;

if the person provides an electronic offering service or electronic public offering service with regard to securities set forth in the items of Article 3 or securities not listed on a financial instruments exchange (excluding those specified by Cabinet Order as prescribed in Article 29-2, paragraph (1), item (vi)), an indication of this;

the following particulars concerning high-speed trading:

if the person conducts high-speed trading as registered financial institution business (meaning business in connection with the registration set forth in the preceding Article; the same applies hereinafter), an indication of this; and

beyond the case provided for in (a), if the person conducts high-speed trading, an indication of this;

if the person conducts, as a business, the acts set forth in Article 2, paragraph (8), items (vii) through (ix) with regard to rights in a lending business, etc., an indication of this;

the names and locations of its head office and other business offices or offices;

if the person engages in other business, the business type; and

other particulars specified by Cabinet Office Order.

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

a document pledging that the applicant does not fall under Article 33-5, paragraph (1), items (i) and (ii);

a document stating the person's way of managing the risk of loss, the way that duties are divided, and the other things specified by Cabinet Office Order as constituting the business outline and business methods;

a document stating the things specified by Cabinet Office Order as constituting the person's status as a parent corporation, etc., subsidiary corporation, etc., or other affiliated company; and

its articles of incorporation, certificate of registered information, balance sheet, profit and loss statement, and other documents specified by Cabinet Office Order, other than those that are set forth in the preceding three items.

As concerns the documents set forth in item (iv) of the preceding paragraph accompanying a written application for registration, if the articles of incorporation or balance sheet have been prepared as electronic or magnetic records or if electronic or magnetic records have been prepared for a profit and loss statement in lieu of a written document, such electronic or magnetic records (limited to those specified by Cabinet Office Order) may accompany the written application for registration in lieu of the written documents.

When an application is filed for the registration referred to in Article 33-2, unless the Prime Minister refuses the registration pursuant to the provisions of paragraph (1) of the following Article, the Prime Minister must register the following particulars in a financial institutions register:

the particulars set forth in the items of paragraph (1) of the preceding Article; and

the date of registration and the registration number.

The Prime Minister must make the financial institutions register available for public inspection.