Financial Instruments and Exchange Act

A financial instruments business operator (limited to one engaged in type-I financial instruments business or investment management business; hereinafter the same applies in this Article), in addition to the financial instruments business, may perform the following acts on a regular basis and provide any other services incidental to the financial instruments business:

the lending and borrowing of securities, or intermediation or agency for the same;

money lending incidental to margin transactions prescribed in Article 156-24, paragraph (1);

money lending secured by securities that are deposited for safe custody by customers (limited to those specified by Cabinet Office Order);

the provision of agency for customers in connection with securities;

the provision of agency for services by the settlor company of an investment trust defined in Article 2, paragraph (11) of the Act on Investment Trusts and Investment Corporations, which involve the payment of earnings, redemption moneys, or cancellation moneys in connection with securities set forth in Article 2, paragraph (1), item (x), or for services by such a settler company which involve the delivery of securities or any other assets that are among trust property in connection with the relevant securities;

the provision of agency for services by an investment corporation as defined in Article 2, paragraph (12) of the Act on Investment Trusts and Investment Corporations, which involve the distribution of money, the distribution of refunds or residual assets, or the payment of interest or redemption moneys in connection with securities set forth in Article 2, paragraph (1), item (xi) conducted;

the conclusion of a contract for cumulative investment (meaning a contract in which a financial instruments business operator (limited to one that engages in securities, etc. management) receives money deposited by a customer and sells securities to that customer continuously on dates designated in advance while receiving consideration from that money) (limited to contracts specified by Cabinet Office Order);

the provision of information or advice in relation to securities (excluding acts falling under Article 2, paragraph (8), item (xi));

the provision of agency for services by a counterparty financial instruments business operator, etc. (limited to agency involving the financial instruments business (including services of a registered financial institution conducted by a registered financial institution) and any other services incidental to the financial instruments business (excluding services prescribed in this item), which the relevant financial instruments business operator, etc. may conduct, and excluding those specified in item (v) above);

the retention of the assets of a registered investment corporation as defined in Article 2, paragraph (13) of the Act on Investment Trusts and Investment Corporations;

the provision of consultation or intermediary services to any other business operator with regard to a business transfer, merger, company split, share exchange, share transfer, or partial share exchange;

the provision of consultation to any other business operator with regard to business management;

the purchase and sale of currencies and other assets (excluding crypto-and other assets; the same applies in item (xv) of this paragraph and item (vi) of the following paragraph) specified by Cabinet Order as being related to derivatives transactions (excluding securities-related derivatives transactions) or intermediation, brokerage, or agency for them;

the purchase and sale of negotiable deposits and other monetary claims (excluding those that fall under the category of securities), or intermediation, brokerage, or agency for the same; and

investing investment property (meaning money and other property invested by a financial instruments business operator, etc. that is engaged in investment management business on behalf of a rights holder provided for in Article 42, paragraph (1); the same applies hereinafter) as investment of the following assets:

specified assets as defined in Article 2, paragraph (1) of the Act on Investment Trusts and Investment Corporations (excluding real estate and other assets specified by Cabinet Order);

assets specified by Cabinet Order other than those set forth in (a);

provision of customer information acquired from the customer to a third party with the consent of the customer or any other provision of information held by the financial instruments business operator to a third party, which contributes to advancement of the financial instruments business that the financial instruments business operator conducts or to improvement of convenience for users of the financial instruments business operator (excluding an act that falls under the category of the act set forth in item (viii)); and

an act to be performed by mainly utilizing human resources, information and communications technology, equipment, and any other management resources possessed by the financial instruments business operator related to the financial instruments business conducted by the financial instruments business operator, which is specified by Cabinet Office Order as an act that contributes to regional revitalization, improvement of industrial productivity, and establishment of a sustainable society.

A financial instruments business operator, beyond the financial instruments business and other services provided pursuant to the provisions of the preceding paragraph, may provide the following services:

services connected with transactions on a commodity market, etc. as defined in Article 2, paragraph (21) of the Commodity Derivatives Transaction Act;

services connected with transactions conducted by using fluctuations in commodity prices and other indicators, market gaps, etc. as specified by Cabinet Office Order (other than services already specified in the preceding item);

services connected with the money lending business as defined in Article 2, paragraph (1) of the Money Lending Business Act or other money loans, or intermediation for the lending and borrowing of money;

services connected with real estate brokerage as defined in Article 2, item (ii) of the Real Estate Brokerage Act or with the lease of real estate prescribed in item (i) of that Article;

specified joint real estate ventures as defined in Article 2, paragraph (4) of the Act on Specified Joint Real Estate Ventures;

services for investing money or other assets on behalf of another person, by means of commodity investment defined by Article 2, paragraph (1) of the Act Regulating Business Involving Commodity Investment, or through the acquisition (including production), transfer, or use of goods with substantial price volatility or goods specified by Cabinet Order as goods that make it difficult to estimate the profit generated from their use (excluding the designated items prescribed in item (iii) of that paragraph) or by means of having such goods used (excluding services that fall under the category of service set forth in items (i) and (ii));

services for investing investment property (excluding services of performing the acts set forth in item (xv) of the preceding paragraph and services that fall under the services set forth in items (i), (ii), and the preceding item) as an investment in assets other than securities or rights arising from derivatives transactions; and

other services specified by Cabinet Office Order.

If a financial instruments business operator comes to engage in any of the services set forth in the items of the preceding paragraph, it must notify the Prime Minister of this without delay pursuant to the provisions of Cabinet Office Order.

A financial instruments business operator, beyond the financial instruments business and the services provided pursuant to paragraph (1) and paragraph (2), may conduct services for which it has obtained the approval of the Prime Minister.

When an application is filed for the approval referred to in the preceding paragraph, the Prime Minister may only choose not to grant approval if it is found that the provision of the services under the application would be contrary to the public interest or if it is found that they would compromise the protection of investors due to the difficulty in managing the risk of loss in connection with the services.

If a financial instruments business operator discontinues services of which it has given notice pursuant to paragraph (3) or services for which it has obtained approval pursuant to paragraph (4), it must notify the Prime Minister of this without delay.

If a financial instruments business operator engages in services set forth in the items of paragraph (1) or items of paragraph (2) or engages in services for which it has received the approval referred to in paragraph (4), the provisions of paragraph (1), paragraph (2), and paragraph (4) must not be construed to preclude the application of Acts concerning these services.

A financial instruments business operator (limited to one that only engages in type-II financial instruments business or investment advisory and agency business; the same applies in the following paragraph), in addition to doing financial instruments business (limited to type-II financial instruments business or investment advisory and agency business), may also do other business, concurrently.

If a financial instruments business operator does any other business concurrently as prescribed in the preceding paragraph, the provisions of that paragraph must not be construed to preclude the application of Acts concerning that business.

A financial instruments business operator, etc. must establish an operational control system for the fair and appropriate performance of its financial instruments business or services of a registered financial institution, pursuant to the provisions of Cabinet Office Order.

A specified financial instruments business operator, etc., pursuant to the provisions of Cabinet Office Order, must appropriately manage information connected with financial instruments services (meaning services entailing acts that constitute financial instruments transactions and any other services specified by Cabinet Office Order), and must establish a system for properly supervising the implementation status of financial instruments services and take any other measures as are necessary, in line with the transactions that the specified financial instruments business operator, etc. or its parent financial institution, etc. or subsidiary financial institution, etc. conducts, so that the interests of the customers of the financial instruments services that the specified financial instruments business operator, etc. or its subsidiary financial institution, etc. provides are not unjustly prejudiced.

The term "specified financial instruments business operator, etc." as used in this Article means a financial instruments business operator, etc. that conducts securities services (limited to a person registered as referred to in Article 29 to engage in type-I financial instruments business), or that is specified by Cabinet Order.

The term "parent financial institution, etc." as used in paragraph (1) means, among persons that Cabinet Order specifies as persons that hold the majority of the voting rights held by all the shareholders, etc. in a specified financial instruments business operator, etc. or as persons otherwise closely related to the relevant specified financial instruments business operator, etc., a financial instruments business operator, a bank, a cooperative financial institution, or any other person engaged in a financial business specified by Cabinet Order.

The term "subsidiary financial institution, etc." as used in paragraph (1) means, among persons that Cabinet Order specifies as persons in which a specified financial instruments business operator, etc. holds the majority of the voting rights held by all the shareholders, etc. or as persons otherwise closely related to the relevant specified financial instruments business operator, etc., a financial instruments business operator, a bank, a cooperative financial institution, or any other person engaged in a financial business specified by Cabinet Order.

A financial instruments business operator, etc. must post a sign in the format specified by Cabinet Office Order in a place that is easily seen by the public at each of its business offices or other offices.

A financial instruments business operator, etc. must, pursuant to the provisions of Cabinet Office Order, make its trade name, name, or full name and other particulars specified by Cabinet Office Order available for public viewing by means of automatic public transmission conducted by connecting to a telecommunication line (meaning automatically transmitting in response to a request from the public for the purpose of direct reception by the public, excluding that which constitutes broadcasting or wire broadcasting; the same applies in Article 66-8, paragraph (2)); provided, however, that this does not apply in the case where the scale of its business is extremely small or any other case specified by Cabinet Office Order (excluding the case where the person is a type-I small amount electronic public offering service provider prescribed in Article 29-4-2, paragraph (8) or a type-II small amount electronic public offering service provider prescribed in Article 29-4-3, paragraph (2)).

A person other than a financial instruments business operator, etc. (limited to a financial instruments intermediary service provider or any other person that is allowed to engage in financial instruments business under the provisions of laws and regulations) must not post the sign referred to in paragraph (1) or a sign similar thereto.

A financial instruments business operator, etc. must not allow another person to engage in financial instruments business (or, if it is a registered financial institution, to engage in the services of a registered financial institution; hereinafter the same applies in this Subsection) using the name of the relevant financial instruments business operator, etc.

A financial instruments business operator (limited to one that engages in securities services; the same applies in the following paragraph) may not become a bond administrator provided for in Article 702 of the Companies Act, a bond administration assistant provided in Article 714-2 of that Act, or the trustee company under a trust contract as defined in Article 2, paragraph (1) of the Secured Bonds Trust Act.

Notwithstanding the provisions of other Acts, a financial instruments business operator may become an underwriter.