Financial Instruments and Exchange Act

With regard to the application of the provisions of Article 33, paragraphs (1) and (2), Article 33-2, Article 33-3, paragraph (1), Article 33-4, paragraph (1), item (i), Article 33-5, paragraph (1), item (iii), (a), Article 33-6, paragraph (1), Article 52-2, paragraph (1), item (iv), and Article 194-6, paragraph (2), if a bank or cooperative financial institution, or any other financial institution specified by Cabinet Order, is a financial institution that has obtained the authorization referred to in Article 1, paragraph (1) of the Act on Engagement in Trust Business by Financial Institutions, in Article 33, paragraph (1), the phrase "securities services, investment management business, or cryptoasset trading business" is deemed to be replaced with "securities services or cryptoasset trading business"; in the proviso to that paragraph, the phrase "provided, however, that with regard to securities services or cryptoasset trading business," is deemed to be replaced with "provided, however, that"; in paragraph (2) of that Article, the phrase "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" is deemed to be replaced with "transactions conducted based on its solicitation of a customer for such an order"; in Article 33-2, the phrase "investment advisory and agency business or securities, etc. management" is deemed to be replaced with "investment advisory and agency business, investment management business (excluding the business of performing the acts set forth in Article 2, paragraph (8), item (xiv) or (xv) (limited to acts performed by holding the money or other property referred to in these provisions as trust property); the same applies hereinafter in this Chapter), or securities, etc. management"; in Article 33-3, paragraph (1), the phrase "the following particulars" is deemed to be replaced with "the following particulars and, in the case where investment management-related services are entrusted, an indication of this, the trade name, name, or personal name of the entrustee, the details of the investment management-related services to be entrusted to that entrustee, and other particulars specified by Cabinet Office Order"; in Article 33-4, paragraph (1), item (i), the phrase "set forth in the items of paragraph (1) of the preceding Article" is deemed to be replaced with "prescribed in paragraph (1) of the preceding Article"; in Article 33-5, paragraph (1), item (iii), (a), the phrase "a person found not to have secured, for each registered financial institution business, officers or employees who have sufficient knowledge and experience necessary for its execution" is deemed to be replaced with "a person found not to have secured, for each registered financial institution business, officers or employees who have sufficient knowledge and experience necessary for its execution; provided, however, that with regard to investment management-related services, in the case where the applicant for registration entrusts those investment management-related services to an investment management-related services contractor (limited to a person that has obtained the registration referred to in Article 66-71 or the registration of a change referred to in Article 66-75, paragraph (4) for performing those investment management-related services), it is to be sufficient if the applicant has secured officers or employees with the ability to appropriately supervise that business"; in Article 33-6, paragraph (1), the phrase "set forth in the items of Article 33-3, paragraph (1)" is deemed to be replaced with "prescribed in Article 33-3, paragraph (1)"; in Article 52-2, paragraph (1), item (iv), the phrase "investment advisory and agency business" is deemed to be replaced with "investment advisory and agency business or investment management business"; and in Article 194-6, paragraph (2), the phrase "set forth" is deemed to be replaced with "prescribed".

The provisions of Article 29 do not apply if a person set forth in any of the following items acts as the agent for a registered financial institution in providing the services prescribed in the relevant item (hereinafter referred to as "specified financial instruments business" in this Article) pursuant to the provisions of Cabinet Order. In this case, the person that provides specified financial instruments business is deemed to be an employee of the registered financial institution that the person acts as the agent for, and the provisions of this Act apply:

a person that acts as the agent for a registered financial institution and that is specified by Cabinet Order:the business of performing acts specified in Article 33, paragraph (2), item (ii) with regard to securities set forth in that item;

a person that acts as agent for a registered financial institution and that is set forth in the following: among transactions set forth in Article 2, paragraph (22), item (ii) that are connected with the financial indexes set forth in Article 2, paragraph (25), item (ii), the business of performing acts in which the registered financial institution promises to receive money from the other party to a transaction and to pay the other party the amount of money calculated based on the difference between the agreed figure and the actual figure (but only if that other party has no risk of incurring a loss exceeding the amount of money the other party has paid in advance due to the fluctuation of a financial index set forth in Article 2, paragraph (25), item (ii)):

a non-life insurance agent (meaning a non-life insurance agent as prescribed in Article 2, paragraph (21) of the Insurance Business Act; hereinafter the same applies in this item) that is an individual;

the employee of an individual non-life insurance agent, for which the notification under the provisions of Article 302 of the Insurance Business Act has been made;

the officer or employee of a corporate non-life insurance agent, for which a notification under the provisions of Article 302 of the Insurance Business Act has been made; and

an officer that holds the authority of representation for a corporate non-life insurance agent.

A registered financial institution for which a person that provides specified financial instruments business acts as an agent is liable for the damages that the person causes to a customer in connection with specified financial instruments transaction services; provided, however, that this does not apply if the registered financial institution exercises due care in appointing the person, and endeavors to prevent the damage that the person causes to a customer in connection with the specified financial instruments business that the person performs.

If a financial instruments business operator, etc. (meaning a financial instruments business operator or registered financial institution; the same applies hereinafter) receives an offer from a professional investor (limited to one set forth in Article 2, paragraph (31), item (iv)) for a contract for the financial instruments business operator, etc. to perform an act that constitutes a financial instruments transaction (meaning an act as set forth in the items of Article 2, paragraph (8); the same applies hereinafter) with the customer as the other party or on behalf of the customer (hereinafter the contract is referred to as a "financial instruments transaction contract"), and has never in the past concluded a financial instruments transaction contract with that professional investor of a type specified by Cabinet Office Order as constituting the same contract type as the financial instruments transaction contract to which the offer concerns (hereinafter referred to as a "contract type" in this Subsection), the financial instruments business operator, etc., before concluding the financial instruments transaction contract to which the offer concerns, must notify that professional investor that the professional investor may make a request under the provisions of paragraph (1) of the following Article.

For each contract type, a professional investor (limited to one as set forth in Article 2, paragraph (31), item (iv)) may request a financial instruments business operator, etc. to treat the professional investor as a customer other than a professional investor with regard to financial instruments transaction contracts that are of the same contract type.

Upon receiving a request under the provisions of the preceding paragraph, a financial instruments business operator, etc. must approve that request by the time it solicits the conclusion of the first financial instruments transaction contract thereafter that is of the same contract type as that to which the request pertains (hereinafter referred to as a "subject contract" in this Article) or by the time it concludes such a contract.

Before a financial instruments business operator, etc. approves a request pursuant to the provisions of the preceding paragraph, it must deliver a document stating the following particulars to the professional investor that submitted the request under paragraph (1) (hereinafter referred to as an "applicant" in this Article):

the day on which the request is approved pursuant to the provisions of the preceding paragraph (hereinafter referred to as the "approval date" in this Article);

the contract type to which the subject contract belongs;

an indication that it will treat the applicant as a customer other than a professional investor if it solicits the applicant to conclude a subject contract or concludes a subject contract with the applicant on or after the approval date; and

other particulars specified by Cabinet Office Order.

With the consent of the applicant and pursuant to the provisions of Cabinet Order, in lieu of delivering the document under the provisions of the preceding paragraph, a financial instruments business operator, etc. may provide the applicant with the particulars that are required to be stated in that document by means of using an electronic data processing system or by any other means using information and communications technology that Cabinet Office Order specifies. In such a case, the financial instruments business operator, etc. is deemed to have delivered the document.

With regard to the application of the provisions of this Act (excluding Article 29-5, paragraph (3) and this Subsection) if a financial instruments business operator, etc. gives the approval under the provisions of paragraph (2) or delivers the document under the provisions of paragraph (3), and the applicant is a person set forth in any of the following items, the applicant is deemed to be a customer other than a professional investor:

the other party to the financial instruments business operator's, etc. solicitation to conclude a subject contract on or after the approval date; or

the other party with which the financial instruments business operator, etc. concludes a subject contract on or after the approval date.

If the preceding paragraph applies to an applicant with regard to the conclusion of a subject contract (limited to one that entails the financial instruments business operator, etc. acting as an agent as provided in Article 2, paragraph (8), items (ii) through (iv), (x), (xiii) and (xix); hereinafter referred to as a "specified subject contract" in this paragraph and paragraph (8)), before the financial instruments business operator, etc. concludes a financial instruments transaction contract on behalf of the applicant based on the specified subject contract, the financial instruments business operator, etc. must notify the other financial instruments business operator, etc. with which the financial instruments transaction contract is to be concluded (hereinafter referred to as the "counterparty financial instruments business operator, etc." in the following paragraph and paragraph (8)) that the applicant is deemed to be a customer other than a professional investor in connection with the financial instruments transaction contract.

If a financial instruments business operator, etc. gives a notification under the preceding paragraph, the provisions of the preceding Article do not apply to the counterparty financial instruments business operator, etc.

If a financial instruments business operator, etc. that has concluded a specified subject contract gives a notification under the provisions of paragraph (6), the applicant is deemed to be a customer other than a professional investor with regard to any financial instruments transaction contract that the financial instruments business operator, etc. concludes with the counterparty financial instruments business operator, etc. on behalf of the applicant based on the specified subject contract, and the provisions of this Act (excluding Article 29-5, paragraph (3) and this Subsection) apply.

If an applicant newly becomes a qualified institutional investor on or after the approval date, the provisions of paragraphs (5) through (8) do not apply to the applicant on or after the day on which the applicant becomes a qualified institutional investor.

An applicant may request a financial instruments business operator, etc. to treat the applicant as a professional investor again with regard to subject contracts, at any time on or after the approval date.

Before approving a request under the preceding paragraph, a financial instruments business operator, etc. must obtain the written consent of the person making that request (such person is referred to as the "person requesting reinstatement" in the following paragraph), on a document that states the day on which the request has the approval under this paragraph and any other particulars specified by Cabinet Office Order.

With the agreement of the person requesting reinstatement and pursuant to the provisions of Cabinet Order, in lieu of obtaining the written consent under the preceding paragraph, a financial instruments business operator, etc. may obtain written consent by means of using an electronic data processing system or by any other means using information and communications technology that Cabinet Office Order specifies. In such a case, the financial instruments business operator, etc. is deemed to have obtained the written consent.

If a financial instruments business operator, etc. gives the approval under paragraph (11), the provisions of paragraphs (5), (6), and (8) do not apply during the period from the day on which it gives the approval under paragraph (11) until the day immediately preceding the day on which it gives the new approval pursuant to paragraph (2).