Financial Instruments and Exchange Act

If a financial instruments business operator, etc. or its officer or employee does two or more types of business (meaning types of business provided for in Article 29-2, paragraph (1), item (v)), the operator, etc., officer, or employee must not perform any of the following acts:

soliciting a customer to entrust, etc. it (meaning to request it to provide intermediation, brokerage, or agency; the same applies hereinafter) with a purchase and sale or other transaction of securities, using information about a purchase and sale or other transaction of securities conducted by a customer that has received advice in connection with investment advisory business or using information about a purchase and sale or other transaction of securities conducted by such a customer as an investment in connection with investment management business;

giving advice in connection with the investment advisory business it conducts, involving a transaction that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions to be conducted, or making an investment in connection with the investment management business it conducts, involving a transaction that is unnecessary in light of the investment policy, the amount of investment property, or the market conditions to be conducted, for the purpose of benefitting from business other than investment advisory business and investment management business; and

any act other than what is set forth in the preceding two items, which is specified by Cabinet Office Order as resulting in insufficient investor protection, harming the fairness of transactions, or causing a loss of confidence in the financial instruments business.

If a financial instruments business operator, etc. or its officer or employee does business other than the financial instruments business and business incidental to that business (hereinafter referred to as "business other than those of a financial instruments business operator" in items (ii) and (iii)), the operator, etc., officer, or employee must not perform any of the following acts:

giving advice in connection with the investment advisory business it conducts, involving a transaction that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions to be conducted, or making an investment in connection with the investment management business it conducts, that involves a transaction being conducted that is unnecessary in light of the investment policy, the amount of investment property, or the market conditions, with the aim of benefitting from business other than those of a financial instruments business operator; and

any act other than what is set forth in the preceding two items, which is set forth in the items of Article 2, paragraph (8), which is performed in connection with business other than those of a financial instruments business operator, and which is specified by Cabinet Office Order as resulting in insufficient investor protection, harming the fairness of transactions, or causing a loss of confidence in the financial instruments business.

If a registered financial institution or its officer or employee does business other than engaging in the services of a registered financial institution (referred to as "business other than those of a registered financial institution" in item (ii) and item (iii) below), the institution, officer, or employee must not perform any of the following acts:

entrusting, etc. the purchase and sale of securities, conditional on it lending money or otherwise granting credit to a person (excluding acts specified by Cabinet Office Order as acts that are found to have little likelihood of resulting in insufficient investor protection);

giving advice in connection with the investment advisory business it conducts, involving a transaction that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions to be conducted, or making an investment in connection with the investment management business it conducts, involving a transaction that is unnecessary in light of the investment policy, the amount of investment property, or the market conditions to be conducted, for the purpose of benefitting from business other than those of a registered financial institution; and

beyond what is set forth in the preceding two items, an act that is performed in connection with business other than those of a registered financial institution, which is specified by Cabinet Office Order as resulting in insufficient investor protection, harming the fairness of transactions, or causing the financial instruments business to lose credibility.

It is prohibited for a financial instruments business operator, etc. or its officer or employee to perform any of the following acts; provided, however, that this does not apply if the approval of the Prime Minister is obtained for the relevant act as one that is found not to compromise the public interest or the protection of investors:

concluding a contract with a customer for any of the acts set forth in the items of Article 2, paragraph (8), knowing that the parent corporation, etc. or subsidiary corporation, etc. of the financial instruments business operator, etc. has granted credit to the customer on the condition that the contract be concluded with the financial instruments business operator, etc.;

giving advice in connection with the investment advisory business it conducts, involving a transaction that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions to be conducted, or making an investment in connection with the investment management business it conducts, involving a transaction that is unnecessary in light of the investment policy, the amount of investment property, or the market conditions to be conducted, for the purpose of benefitting the parent corporation, etc. or subsidiary corporation, etc. of the financial instruments business operator, etc.; and

any act other than what is set forth in the preceding three items, which involves the parent corporation, etc. or subsidiary corporation, etc. of the financial instruments business operator, etc. and which is specified by Cabinet Office Order as being likely to compromise the protection of investors, harm the fairness of transactions, or cause a loss of confidence in the financial instruments business.

It is prohibited for a registered financial institution or its officer or employee to perform any of the following acts; provided, however, that this does not apply if the approval of the Prime Minster is obtained for the relevant act as one that is found not to compromise the public interest or the protection of investors:

conducting a purchase and sale or other transaction of securities or an over-the-counter derivatives transaction with the parent corporation, etc. or subsidiary corporation, etc. of the registered financial institution, under terms and conditions that are different from ordinary terms and conditions and that are likely to be detrimental to the fairness of transactions;

performing the act specified in Article 33, paragraph (2), item (iv), (b) with a customer, while granting credit to the customer on the condition that a contract for any of the acts set forth in the items of Article 2, paragraph (8) be concluded with the parent corporation, etc. or subsidiary corporation, etc. of the registered financial institution;

giving advice in connection with the investment advisory business it conducts, involving a transaction that is unnecessary in light of the transaction policy, the amount of the transaction, or the market conditions to be conducted, or making an investment in connection with the investment management business it conducts, involving a transaction that is unnecessary in light of the investment policy, the amount of investment property, or the market conditions to be conducted, for the purpose of benefitting the parent corporation, etc. or subsidiary corporation, etc. of the registered financial institution; and

beyond what is set forth in the preceding three items, an act in which the parent corporation, etc. or subsidiary corporation, etc. of the registered financial institution is involved, which is specified by Cabinet Office Order as being likely to compromise the protection of investors, harm the fairness of transactions, or cause the business of the registered financial institution to lose credibility.

If a financial instruments business operator that has become an underwriter of securities sells those securities (in the case of a financial instruments business operator that conducts the act specified in Article 2, paragraph (6), item (iii), the securities acquired by exercising share options prescribed in that item), it must not lend money or otherwise grant credit for the purchase price to the purchaser of the securities until six months have elapsed since the day on which the financial instruments business operator became an underwriter.

The provisions set forth in each of the following items do not apply if the person specified in the relevant item is a professional investor; provided, however, that this does not apply to the cases specified by Cabinet Office Order as those in which the public interest or the protection of professional investors could be compromised:

the provisions of Article 37; Article 38, items (iv) through (vi); and Article 40, item (i):the other party that the financial instruments business operator, etc. solicits to conclude a financial instruments transaction contract;

the provisions of Articles 37-2 to 37-6; Article 40-2, paragraph (4); and Article 43-4:the other party to a financial instruments transaction contract for which a financial instruments business operator, etc. has received an offer or which a financial instruments business operator, etc. has concluded;

the provisions of Article 41-4 and Article 41-5:the other party to an investment advisory contract concluded by a financial instruments business operator, etc.; and

the provisions of Articles 42-5 through 42-7:the other party to a discretionary investment contract concluded by a financial instruments business operator, etc.