Financial Instruments and Exchange Act

Notwithstanding the provisions of Article 29 and Article 58-2, with the permission of the Prime Minister, a foreign securities services provider may engage in the purchase and sale of securities and market derivatives transactions on a financial instruments exchange (including if that foreign securities services provider conducts these transactions on behalf of a person that provides brokerage for clearing of securities, etc. (limited to brokerage to which Article 2, paragraph (27), item (i) pertains; hereinafter the same applies in this paragraph) as an entruster of brokerage for clearing of securities, etc.; such a transaction is hereinafter collectively referred to as an "on-exchange transaction") on a regular basis (hereinafter referred to as the "on-exchange transaction services")

The Prime Minister may attach conditions to the permission referred to in the preceding paragraph.

The conditions referred to in the preceding paragraph must constitute the minimum level of conditions that are necessary in the public interest and for the protection of investors.

If the Prime Minister decides to attach the conditions referred to in the provisions of paragraph (2), the Prime Minister must notify the applicant for permission of this in writing.

A person seeking to obtain the permission referred to in paragraph (1) of the preceding Article must designate a domestic representative and submit a written application for permission to the Prime Minister, in which the person states the following particulars:

its trade name and the location of its head office;

the amount of stated capital;

the title and name of the officer (including a representative person in the state where the business offices or offices for on-exchange transaction services are located (excluding the state where its head office is located) (hereinafter referred to as the "on-exchange transaction office"; such a representative is hereinafter referred to as the "representative in the state where the on-exchange transaction office is located" in paragraph (1), item (i), (j) of the following Article));

the following particulars concerning high-speed trading:

if the person conducts high-speed trading as on-exchange transaction services, an indication of this; and

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

the name of the on-exchange transaction office and the state and place where it is located;

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

the trade name or name of the foreign financial instruments trading market operator of which the head office and the on-exchange transaction office are members (meaning the person that operates a foreign financial instruments market; hereinafter the same applies in paragraph (1), item (i), (d) and item (iii) of the following Article);

the location of its domestic offices and other facilities, if any;

the name and domestic address of the domestic representative;

the trade name or name of the financial instruments exchange in which the applicant would become a trading participant; and

other particulars specified by Cabinet Office Order.

The calculation of the amount of stated capital provided for in item (ii) of the preceding paragraph is specified by Cabinet Order.

The following documents must accompany the written application for permission referred to in paragraph (1):

a document pledging that the applicant does not fall under the purview of paragraph (1), item (i), (a) through (h), or (j) of the following Article;

a document stating the things specified by Cabinet Office Order as constituting the business outline and business methods for on-exchange transaction services at the on-exchange transaction office;

the articles of incorporation and the certificate of registered information of the applicant for permission (including any document equivalent to these), and a document giving its business outline and stating its business methods;

the certificate of registered information in Japan of the applicant for permission;

the balance sheets and profit and loss statements for each business year ending during the latest three years; and

other documents specified by Cabinet Office Order.

The Prime Minister must refuse permission if the application for permission referred to in the provisions of paragraph (1) of the preceding Article falls under any of the following items:

the applicant for permission falls under any of the following:

it is not a corporation of the same type as a company with board of directors;

it has not obtained registration, etc. in the state where its head office is located or in any state in which its on-exchange transaction offices are located;

it has not continuously conducted business that involves the same type of transactions as the on-exchange transaction in any of its on-exchange transaction offices, for at least the period specified by Cabinet Order (unless this falls under a case specified by Cabinet Order);

none of its on-exchange transaction offices is the member of a foreign financial instruments trading market operator (limited one that has obtained the same kind of license as the license referred to in Article 80, paragraph (1), or a permission or other administrative disposition similar to this, in the relevant state; hereinafter the same applies in item (iii)) in a state where those on-exchange transaction offices are located;

it is a corporation whose stated capital as provided for in paragraph (1), item (ii) of the preceding Article is less than the amount that is specified by Cabinet Order as being necessary and appropriate in the public interest or for the protection of investors;

it is a corporation whose net assets are less than the amount prescribed in (e);

it is a person who has had the registration referred to in Article 29 or Article 33-2 rescinded pursuant to the provisions of Article 52, paragraph (1) or Article 52-2, paragraph (1); has had the permission referred to in Article 60, paragraph (1) rescinded pursuant to the provisions of Article 60-8, paragraph (1); has had the permission under Article 60-14, paragraph (1) rescinded under the provisions of Article 60-8, paragraph (1) as applied mutatis mutandis pursuant to Article 60-14, paragraph (2); has had the registration referred to in Article 66 rescinded pursuant to the provisions of Article 66-20, paragraph (1); has had the registration referred to in Article 66-27 rescinded pursuant to the provisions of Article 66-42, paragraph (1); has had the registration referred to in Article 66-50 rescinded pursuant to the provisions of Article 66-63, paragraph (1); or has had the registration referred to in Article 66-71 rescinded pursuant to the provisions of Article 66-85, paragraph (1); or has had the registration referred to in Article 12 of the Act on the Provision of Financial Services and the Development of the Accessible Environment Thereto (limited to the registration related to the type of securities, etc. intermediary business operations; the same applies in (g)) rescinded pursuant to the provisions of Article 38, paragraph (1) of that Act (excluding items (ii), (iii), and (v)); or a person who has had a registration of the same kind as the registration referred to in Article 29, Article 66, Article 66-27, Article 66-50, or Article 66-71 or the registration referred to in Article 12 of the Act on the Provision of Financial Services and the Development of the Accessible Environment Thereto obtained in the country where its head office or an on-exchange transaction office is located (including permission or any other administrative disposition similar to the registration) rescinded pursuant to a foreign law or regulation that is equivalent to this Act or the Act on the Provision of Financial Services and the Development of the Accessible Environment Thereto; for whom five years have not passed since the date of rescission;

it is a person who has been sentenced to a fine (including an equivalent sentence under foreign laws and regulations) for violating the provisions of any of the Acts prescribed in Article 59-4, paragraph (1), item (ii) or for violating the provisions of a foreign law or regulation that is equivalent to any of those laws, and five years have not passed since the day on which the person finished serving the sentence or ceased to be subject to its enforcement;

its other business is found to be contrary to the public interest;

it is a corporation whose officer, representative in the country where the on-exchange transaction office is located, or domestic representative falls under any of Article 29-4, paragraph (1), item (ii), (a) through (i); or

it does not have the sufficient personnel structure to perform on-exchange transaction services in an appropriate manner;

the foreign regulatory authority for financial instruments provided for in Article 189, paragraph (1), in the state where the head office or any of the on-exchange transaction offices of the applicant for permission is located has not given the assurance prescribed in Article 189, paragraph (2), item (i);

the foreign financial instruments trading market operator of which the on-exchange transaction office of the applicant for permission is a member and the financial instruments exchange in which the applicant for permission would become a trading participant have not concluded any agreement concerning the provision of information, and no other measures are in place for the financial instruments exchange to exercise the authority accorded to it under this Act, an order issued based on this Act, or its articles of incorporation or other rules; or

the written application for permission or an accompanying document includes a false statement or lacks a statement of material fact.

Before seeking to refuse the permission referred to in Article 60, paragraph (1), the Prime Minister must notify the applicant for permission and have the relevant officials conduct a hearing regarding the applicant for permission.

Upon deciding to grant or not to grant the permission referred to in Article 60, paragraph (1), the Prime Minister must notify the applicant for permission of this in writing.

If there is a vacant position for the domestic representative of a foreign securities services provider that has obtained the permission referred to in Article 60, paragraph (1) (hereinafter referred to as an "authorized firm for on-exchange transactions"), and the Prime Minister finds it to be necessary, the Prime Minister may appoint a person to temporarily perform the duties of the domestic representative (referred to as the "acting representative" in the following paragraph). In such a case, the authorized firm for on-exchange transactions must register that person in connection with the domicile of the domestic representative from before the position of domestic representative became vacant.

If the Prime Minister appoints an acting representative pursuant to the provisions of the preceding paragraph, the Prime Minister may order the authorized firm for on-exchange transactions to pay a reasonable amount of remuneration to the acting representative.

If any particular set forth in the items of Article 60-2, paragraph (1) changes, the authorized firm for on-exchange transactions must notify the Prime Minister of this within two weeks from the day of the change.

If the business outline or business methods for on-exchange transaction services which an authorized firm for on-exchange transactions has stated in a document set forth in Article 60-2, paragraph (3), item (ii) change, or in any other case specified by Cabinet Office Order, the authorized firm for on-exchange transactions must notify the Prime Minister of this without delay, pursuant to the provisions of Cabinet Office Order.

If an authorized firm for on-exchange transactions is dissolved, or if on-exchange transaction services are discontinued, the permission under Article 60, paragraph (1) ceases to be effective. In such a case, the domestic representative or the former domestic representative must notify the Prime Minister of this within 30 days from the day in question.