Financial Instruments and Exchange Act

If an authorized association seeks to make a registration under Article 67-11, paragraph (1) or to rescind such registration, it must notify the Prime Minister of this.

If the issuer of over-the-counter traded securities that an authorized association registers (limited to share certificates or the instruments or certificates set forth in Article 2, paragraph (1), item (xx) that indicate a right connected with share certificates (hereinafter referred to as "share certificates, etc." in this Article and in Article 125)) issues share certificates, etc. that the authorized association has not registered pursuant to the provisions of Article 67-11, paragraph (1), and the Prime Minister finds it to be necessary and appropriate in the public interest or for the protection of investors for the authorized association to register those share certificates, etc. pursuant to that paragraph, the Prime Minister may order the authorized association to register those share certificates, etc. pursuant to the provisions of that paragraph.

If an authorized association violates the rules provided for in Article 67-12 as they pertain to item (i) of that Article in seeking to make or having made a registration of securities under the provisions of Article 67-11, paragraph (1), or in seeking to rescind or having rescinded such a registration, the Prime Minister may order the authorized association to rescind the registration of those securities or to re-register securities whose registration has been rescinded, or to otherwise take the necessary measures to rectify the violation. In such a case, irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, the Prime Minister must conduct a hearing.

With regard to the application of the provisions of Chapter III, Section 2 of the Administrative Procedure Act if the notice referred to in Article 15, paragraph (1) of that Act is given at the hearing for a disposition under the provisions of the preceding paragraph, the issuer of the relevant securities is deemed to be the person that receives the notice referred to in Article 15, paragraph (1) of that Act.

If an authorized association suspends or cancels the suspension of purchase and sales on the over-the-counter securities market of over-the-counter traded securities that it has registered, it must notify the Prime Minister of this without delay.

If an issuer of over-the-counter traded securities violates this Act, an order given based on this Act, or the rules of the authorized association that has registered the relevant over-the-counter traded securities, and 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 the authorized association to suspend purchase and sales of, or to rescind the registration of, the over-the-counter traded securities on the over-the-counter securities market that it operates. In such a case, irrespective of the category of proceeding for hearing statements of opinion under Article 13, paragraph (1) of the Administrative Procedure Act, the Prime Minister must conduct a hearing.

With regard to the application of the provisions of Chapter III, Section 2 of the Administrative Procedure Act if the notice referred to in Article 15, paragraph (1) of that Act is given at the hearing for a disposition under the provisions of the preceding paragraph, the issuer referred to in the preceding paragraph is deemed to be the person that receives the notice referred to in Article 15, paragraph (1) of that Act.

In a case set forth in any of the following items, an association member (in a case set forth in items (i) through (iii), this is limited to the association member of an Authorized Association that operates an over-the-counter securities market) must report the particulars specified in that item to the authorized association to which it belongs, pursuant to the provisions of Cabinet Office Order:

if a purchase and sale of over-the-counter traded securities is made on the association member's own account, or a purchase and sale of over-the-counter traded securities is made and the association member provides intermediation, brokerage, or agency for it:the class, issue, price, volume, and other particulars specified by Cabinet Office Order, with regard to the securities subject to the purchase and sale;

if the association member makes an offer to sell or purchase over-the-counter traded securities on its own account:the class, issue, price, and other particulars specified by Cabinet Office Order, with regard to the securities subject to the offer to sell or purchase;

if the association member is entrusted, etc. with the purchase and sale of over-the-counter traded securities:the class, issues, price, volume, and other particulars specified by Cabinet Office Order, with regard to the securities subject to the entrustment, etc.;

if a purchase and sale of tradable securities (meaning share certificates, corporate bond certificates with share options, or any other securities specified by Cabinet Office Order, with regard to which the authorized association does not prohibit solicitation for purchase and sales and other transactions in its rules (excluding securities listed on a financial instruments exchange, over-the-counter traded securities, and those specified by the Prime Minister as securities of which transferability is found to be restricted under the relevant rules); the same applies hereinafter) is made on the association member's own account, or a purchase and sale of tradable securities is made and the association member provides intermediation, brokerage, or agency for it:the class, issue, price, volume, and other particulars specified by Cabinet Office Order, with regard to the securities subject to the purchase and sale;

if the association member makes an offer to sell or purchase tradable securities on its own account:the class, issue, price, and other particulars specified by Cabinet Office Order, with regard to the securities subject to the offer to sell or purchase;

if the association member is entrusted, etc. with the purchase and sale of tradable securities:the class, issue, price, volume, and other particulars specified by Cabinet Office Order, with regard to the securities subject to the entrustment, etc.;

if a purchase and sale of listed share certificates, etc. (meaning share certificates, corporate bond certificates with share options, or any other securities specified by Cabinet Office Order, which are listed on a financial instruments exchange; hereinafter the same applies in this Article to Article 78-5) is made outside of a financial instruments exchange market and on the association member's own account; or a purchase and sale of listed share certificates, etc. is made outside of a financial instruments exchange market, and the association member provides intermediation, brokerage, or agency for it:the class, issue, price, volume, and other particulars specified by Cabinet Office Order, with regard to the listed share certificates, etc. subject to the purchase and sale; or

if the association member makes an offer to sell or purchase listed share certificates, etc. to a large number of persons simultaneously outside of a financial instruments exchange market, or in any other case specified by Cabinet Office Order:the class, issue, price, and other particulars specified by Cabinet Office Order, with regard to the securities subject to the offer to sell or purchase.

Pursuant to the provisions of Cabinet Office Order and based on the reports under the provisions of the preceding Article, an authorized association must notify its association members of, and disclose to the public, the daily trading volume and the highest price, lowest price, closing price, and other particulars, for each day and for each issue, in respect of purchase and sales of over-the-counter traded securities, purchase and sales of tradable securities, and purchase and sales of listed share certificates, etc. outside a financial instruments exchange market, on the over-the-counter securities market that it operates (limited to those which the association members make on their own accounts and those for which the association members provide intermediation, brokerage, or agency; hereinafter the same applies in the following Article).

Pursuant to the provisions of Cabinet Office Order, an authorized association must report the daily trading volume and the highest price, lowest price, closing price, and other particulars, for each day and for each issue, in respect of purchase and sales of over-the-counter traded securities, purchase and sales of tradable securities, and purchase and sales of listed share certificates, etc. outside of a financial instruments exchange market, on the over-the-counter securities market that it operates, to the Prime Minister.

Membership in an authorized association is limited to financial instruments business operators.

Except in a case set forth in paragraph (5), an authorized association must stipulate in its articles of incorporation that any financial instruments business operator may join as an association member; provided, however, that this does not apply if membership is restricted by reason of a condition as to the geographic location or business type of the financial instruments business operator.

An authorized association must stipulate in its articles of incorporation that it will endeavor to prevent fraudulent acts, market manipulation, the collection of unreasonable fees and costs, and profiteering by association members and financial instruments intermediary service providers, as well as to promote the principle of good faith in their transactions.

An authorized association must stipulate in its articles of incorporation that it will endeavor to prevent acts that are in violation of laws and regulations or the authorized association's articles of incorporation and other rules, and to ensure confidence of investors, by having internal rules and control systems established so that its association members and the financial instruments intermediary service providers that have those association members as entrusting financial instruments business operators, etc. comply with laws and regulations and with the authorized association's articles of incorporation and other rules.

An authorized association may stipulate in its articles of incorporation that it may refuse admission as an association member if an applicant has been ordered to suspend purchase and sales and other transactions of securities or to suspend derivatives transactions, etc.; or has been expelled from the membership of, or had its trading license rescinded by, an authorized association or a financial instruments exchange, on account of having violated a law or regulation, a disposition by a government agency which is based on a law or regulation, or the articles of incorporation or other rules of the authorized association or financial instrument exchange, or on account of having engaged in an act that is contrary to the principle of good faith in transactions.

An authorized association must make a list of association members available for public inspection.

An authorized association must stipulate in its articles of incorporation that, if an association member or a financial instruments intermediary service provider whose entrusting financial instruments business operator, etc. is an association member violates a law or regulation, a disposition by a government agency which is based on a law or regulation, or the authorized association's articles of incorporation or other rules, or if it violates the principle of good faith in transactions, the authorized association will impose an administrative monetary penalty on the association member, order the suspension or restriction of its rights as an association member as provided in the articles of incorporation, or expel it from the authorized association.

An authorized association has one president, two or more board members, and two or more inspectors as its officers.

A president represents an authorized association and presides over its affairs.

A board member, pursuant to the provisions of the articles of incorporation, represents an authorized association, assists the president in administering the affairs of the authorized association, acts as a proxy in handling the duties of the president if the president is unable to attend to them, and performs the duties of the president if the position is vacant.

An inspector examines the affairs of an authorized association.

An officer loses the position of officer upon coming to fall under any of the cases in Article 67-4, paragraph (2), item (ii), (a) or (b).

If the Prime Minister discovers that a person has become the officer of an authorized association by wrongful means, or if the officer of an authorized association violates a law or regulation, a disposition by a government agency which is based on a law or regulation, or the articles of incorporation, the Prime Minister may order the authorized association to dismiss that officer.