UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F‘

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2017
OR
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromtoOR
‘ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number: 1-15270

Nomura Horudingusu Kabushiki Kaisha(Exact name of registrant as specified in its charter)

Nomura Holdings, Inc.
(Translation of registrant’s name into English)

9-1, Nihonbashi 1-chome
Chuo-ku, Tokyo 103-8645
Japan

Japan
(Jurisdiction of incorporation or organization)(Address of principal executive offices)

Takumi Kitamura, 81-3-5255-1000, 81-3-6746-7850(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class

Name of Each Exchange On Which Registered

Common Stock*

New York Stock Exchange* Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share of Common Stock.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by theannual report.
As of March 31, 2017, 3,528,429,451 shares of Common Stock were outstanding, including 25,767,342 shares represented by 25,767,342 American
Depositary Shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. È Yes ‘ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. ‘ Yes È No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer È
Accelerated filer ‘
Non-accelerated filer ‘
Emerging growth company ‘
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the
Exchange Act. ‘† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP È
International Financial Reporting Standards as issued
Other ‘by the International Accounting Standards Board ‘
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. ‘ Item 17 ‘ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). ‘ Yes È No

TABLE OF CONTENTS
PagePART I
Item 1.

Identity of Directors, Senior Management and Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2Item 2.

Offer Statistics and Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2Item 3.

Key Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2Item 4.

Information on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18

Item 4A.

Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38

Item 5.

Operating and Financial Review and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38

Item 6.

Directors, Senior Management and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77

Item 7.

Major Shareholders and Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

97

Item 8.

Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

98

Item 9.

The Offer and Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99

Item 10.

Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100

Item 11.

Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117

Item 12.

Description of Securities Other Than Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

132

PART II
Item 13.

Defaults, Dividend Arrearages and Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

134

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds . . . . . . . . . . . . . .

134

Item 15.

Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

134

Item 16A. Audit Committee Financial Expert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

134

Item 16B. Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

134

Item 16C. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

135

Item 16D. Exemptions from the Listing Standards for Audit Committees . . . . . . . . . . . . . . . . . . . . . . . . . . .

136

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers . . . . . . . . . . . . . . . . . . . .

136

Item 16F. Change in Registrant’s Certifying Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

137

Item 16G. Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

137

Item 16H. Mine Safety Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

138

PART III
Item 17.

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

139

Item 18.

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

139

Item 19.

Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

140

Index to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-1

1

As used in this annual report, references to the “Company”, “Nomura”, the “Nomura Group”, “we”, “us”
and “our” are to Nomura Holdings, Inc. and, except as the context otherwise requires, its consolidated
subsidiaries. As part of certain line items in Nomura’s financial statements and information included in thisannual report, references to “NHI” are to Nomura Holdings, Inc.
As used in this annual report, “yen” or “¥” means the lawful currency of Japan, “dollar” or “$” means thelawful currency of the United States of America (“U.S.”), and “EUR” means the lawful currency of the member
states of the European Monetary Union.
As used in this annual report, “ADS” means an American Depositary Share, currently representing one
share of the Company’s common stock, and “ADR” means an American Depositary Receipt evidencing one ormore ADSs. See “Rights of ADR Holders” under Item 10.B of this annual report.
As used in this annual report, except as the context otherwise requires, the “Companies Act” means theCompanies Act of Japan and the “FSA” means the Financial Services Agency of Japan.
Amounts shown in this annual report have been rounded to the nearest indicated digit unless otherwise
specified. In tables and graphs with rounded figures, sums may not add up due to rounding.

PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
A. Selected Financial Data
The following table presents selected financial information as of and for the years ended March 31, 2013,2014, 2015, 2016 and 2017 which is derived from our consolidated financial statements. The consolidatedbalance sheets for the years ended March 31, 2016 and 2017, the consolidated statements of income,comprehensive income, changes in equity and cash flows for each of the years ended March 31, 2015, 2016 and2017, and notes thereto appear elsewhere in this annual report. These financial statements are prepared inaccordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). Certain reclassifications ofpreviously reported amounts have been made to conform to the current period presentation.

2

The selected consolidated financial information set forth below should be read in conjunction with Item 5.
“Operating and Financial Review and Prospects” in this annual report and our consolidated financial statements
and notes thereto included in this annual report.
Millions of yen, except per share data and percentages
Year ended March 31
2013
2014
2015
2016
2017

Statement of income data:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 2,079,943 ¥ 1,831,844 ¥ 1,930,588 ¥ 1,723,096 ¥ 1,715,516
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
266,312274,774
326,412
327,415
312,319
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,813,631
1,557,070
1,604,176
1,395,681
1,403,197
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . .
1,575,901
1,195,456
1,257,417
1,230,523
1,080,402
Income before income taxes . . . . . . . . . . . . . . . . . . .
237,730
361,614346,759
165,158
322,795
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . .
132,039
145,165
120,780
22,59680,229Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 105,691 ¥ 216,449 ¥ 225,979 ¥ 142,562 ¥ 242,566
Less: Net income (loss) attributable tononcontrolling interests . . . . . . . . . . . . . . . . . . . . .
(1,543)2,858
1,194
11,012
2,949
Net income attributable to Nomura Holdings, Inc.
(“NHI”) shareholders . . . . . . . . . . . . . . . . . . . . . . . ¥ 107,234 ¥ 213,591 ¥ 224,785 ¥ 131,550 ¥ 239,617
Balance sheet data (period end):
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥37,942,439 ¥43,520,314 ¥41,783,236 ¥41,090,167 ¥42,852,078
Total NHI shareholders’ equity . . . . . . . . . . . . . . . . .
2,294,371
2,513,680
2,707,774
2,700,239
2,789,916
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,318,983
2,553,213
2,744,946
2,743,015
2,843,791
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
594,493594,493594,493594,493594,493
Per share data:
Net income attributable to NHI
shareholders—basic . . . . . . . . . . . . . . . . . . . . . . . . ¥29.04 ¥
57.57 ¥
61.66 ¥
36.53 ¥
67.29
Net income attributable to NHI shareholders—
diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28.37
55.81
60.03
35.52
65.65
618.27676.15752.40748.32790.70Total NHI shareholders’ equity(1) . . . . . . . . . . . . . . .
8.00
17.00
19.00
13.00
20.00
Cash dividends(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.08 $
0.17 $
0.16 $
0.12 $
0.18
Cash dividends in USD(2) . . . . . . . . . . . . . . . . . . . . . . $Weighted average number of shares outstanding (inthousands)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,692,796
3,709,831
3,645,515
3,600,701
3,560,776
Return on equity(4): . . . . . . . . . . . . . . . . . . . . . . . . .

4.9%

8.9%

8.6%

4.9%

8.7%

Notes:(1) Calculated using the number of shares outstanding at year end.
(2) Calculated using the Japanese Yen—U.S. Dollar exchange rate as of the respective fiscal year end date, the noon buying
rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York.
(3) The number shown is used to calculate basic earnings per share.
(4) Calculated as net income attributable to NHI shareholders divided by total NHI shareholders’ equity.

3Foreign Exchange
Fluctuations in exchange rates between the Japanese Yen and U.S. Dollar will affect the U.S. Dollar
equivalent of the Japanese Yen price of our common stocks and ADSs and the U.S. Dollar amounts received onconversion of cash dividends. The following table provides the noon buying rates for Japanese Yen in New York
City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York, expressed inJapanese Yen per $1.00.
Year ended March 31

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calendar year 2017

January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June (through June 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

High

Low

Average(1)Year end¥ 96.16105.25
121.50125.58118.32¥ 77.4192.96
101.26111.30100.07¥ 83.26
100.46110.78120.13108.31¥ 94.16102.98119.96112.42111.41High

Low¥117.68
114.34115.02111.52114.19111.24¥112.72111.74110.48108.40110.68109.16(1) Average rate represents the average of rates available on the last business day of each month during theyear.
The noon buying rate for Japanese Yen on June 16, 2017 was $1.00 = ¥110.84
B. Capitalization and Indebtedness.
Not applicable.
C. Reasons for the Offer and Use of Proceeds.
Not applicable.

4

D. Risk Factors.
Risk Factors
You should carefully consider the risks described below before making an investment decision. If any of therisks described below actually occurs, our business, financial condition, results of operations or cash flows could
be adversely affected. In that event, the trading prices of our shares could decline, and you may lose all or part ofyour investment. In addition to the risks listed below, risks not currently known to us or that we now deem
immaterial may also harm us and affect your investment.
Our business may be materially affected by financial markets, economic conditions and market
fluctuations in Japan and elsewhere around the world
Our business and revenues may be affected by any adverse changes in the Japanese and global economic
environments and financial markets. In addition, not only purely economic factors but also future wars, acts ofterrorism, economic or political sanctions, pandemics, forecasts of geopolitical risks and geopolitical events
which have actually occurred, natural disasters or other similar events could have an effect on the financial
markets and economies of each country. If any adverse events including those discussed above were to occur, amarket or economic downturn may last for a long period of time, which could adversely affect our business andcan result in us incurring substantial losses. Even in the absence of a prolonged market or economic downturn,changes in market volatility and other changes in the environment may adversely affect our business, financial
condition and results of operations. The following are certain risks related to the financial markets and economic
conditions for our specific businesses.
Governmental fiscal and monetary policy changes in Japan, or in any other country or region where we
conduct business may affect our business, financial condition and results of operations
We engage in our business globally through domestic and international offices. Governmental fiscal,monetary and other policy changes in Japan, or in any other country or region where we conduct business may
affect our business, financial condition and results of operations. For example, in June 2016, the people of theUnited Kingdom voted to leave the European Union. Withdrawal from the European Union may affect ourbusiness because London office serves as our EMEA headquarters. This event may also result in additional costs
when we review structure of business operations and personnel distribution. In addition, in recent years, the Bankof Japan and central banks in many major economies have been pursuing an expansionary monetary policy,
including in some cases the introduction of negative interest rates. The prolonged implementation of a negativeinterest rate policy or the further lowering of negative interest rates in one or more countries as well as further
decreases in yields of financial assets in the financial markets may negatively affect our ability to provide asset
management products to our clients as well as our trading and investment activities.
Our brokerage and asset management revenues may decline
A market downturn could result in a decline in the revenues generated by our brokerage business because ofa decline in the volume and value of securities that we broker for our clients. Also, within our asset managementbusiness, in most cases, we charge fees and commissions for managing our clients’ portfolios that are based on
the market value of their portfolios. A market downturn that reduces the market value of our clients’ portfolios
may increase the amount of withdrawals or reduce the amount of new investments in these portfolios, and would
reduce the revenue we receive from our asset management business.
Our investment banking revenues may decline
Changes in financial or economic conditions would likely affect the number and size of transactions forwhich we provide securities underwriting, financial advisory and other investment banking services. Ourinvestment banking revenues, which include fees from these services, are directly related to the number and size5

of the transactions in which we participate and would therefore decrease if there are financial and market changes
unfavorable to our investment banking business and our clients. For example, due in part to the continued
slowdown in financing activities resulting primarily from the worsened and prolonged impact of the European
sovereign debt crisis in 2011, our Investment Banking net revenue for the years ended March 31, 2012 andMarch 31, 2013 decreased by 15.9% and 15.0% from the previous years, respectively.
Our electronic trading business revenues may decline
Electronic trading is essential for our business in order to execute trades faster with fewer resources.
Utilizing these systems allows us to provide an efficient execution platform and on-line content and tools to ourclients via exchanges or other automated trading facilities. Revenue from our electronic trading, which includes
trading commissions and bid-offer spreads from these services, are directly correlated with the number and sizeof the transactions in which we participate and would therefore decrease if there are financial market or
economic changes that would cause our clients to trade less frequently or in a smaller amounts. In addition, theuse of electronic trading has increased across capital markets products and has put pressure on trading
commissions and bid-offer spreads in our industry due to the increased competition of our electronic tradingbusiness. Although trade volumes may increase due to the availability of electronic trading, this may not be
sufficient to offset margin erosion in our execution business, leading to a potential decline in revenue generated
from this business. We continue to invest in developing technologies to provide an efficient trading platform;
however, we may fail to maximize returns on these investments due to this increased pressure on lowering
margins.
We may incur significant losses from our trading and investment activities
We maintain large trading and investment positions in fixed income, equity and other markets, both forproprietary purposes and for the purpose of facilitating our clients’ trades. Our positions consist of various typesof assets, including securities, derivatives transactions with equity, interest rate, currency, credit and other
underlyings, as well as loans, reverse repurchase agreements and real estate. Fluctuations in the markets wherethese assets are traded can adversely affect the value of these assets. To the extent that we own assets, or havelong positions, a market downturn could result in losses if the value of these long positions decreases.
Furthermore, to the extent that we have sold assets that we do not own, or have short positions, an upturn inprices of the assets could expose us to potentially significant losses. Although we seek to mitigate these position
risks with a variety of hedging techniques, these market movements could result in us incurring losses. We may
also incur losses if the financial system is overly stressed and the markets move in a way we have not anticipated.
Our businesses have been, and may continue to be, affected by changes in market volatility levels. Certainof our trading businesses such as those engaged in trading and arbitrage opportunities depend on market volatility
to generate revenues. Lower volatility may lead to a decrease in business opportunities which may affect theresults of operations of these businesses. On the other hand, higher volatility, while it can increase trading
volumes and spreads, also increases risk as measured by Value-at-Risk (“VaR”) and may expose us to higher
risks in connection with our market-making and proprietary businesses. Higher volatility can also cause us toreduce the outstanding positions or size of these businesses in order to avoid increasing our VaR.
Furthermore, we commit capital to take relatively large positions for underwriting or warehousing assets tofacilitate certain capital market transactions. We also structure and take positions in pilot funds for developing
financial investment products and invest seed money to set up and support financial investment products. We
may incur significant losses from these positions in the event of significant market fluctuations.
In addition, if we are the party providing collateral in a transaction, significant declines in the value of thecollateral or a requirement to provide additional collateral due to a decline in our creditworthiness (by way of alowered credit rating or otherwise) can increase our costs and reduce our profitability. On the other hand, if weare the party receiving collateral from our clients and counterparties, such declines may also affect our
6profitability due to decrease in client transactions. Assuming a one-notch and two-notch downgrade of our credit
ratings on March 31, 2017, absent other changes, we estimate that the aggregate fair value of assets that will be
required to post as additional collateral in connection with our derivative contracts would have been
approximately ¥20.2 billion and ¥47.5 billion, respectively.
Holding large and concentrated positions of securities and other assets may expose us to large losses
Holding large and concentrated positions of certain securities can expose us to large losses in our businesses
such as market-making, block trading, underwriting, asset securitization, acquiring newly-issued convertible debt
securities through third-party allotment or providing business solutions to meet clients’ needs. We have committed
substantial amounts of capital to these businesses. This often requires us to take large positions in the securities of aparticular issuer or issuers in a particular industry, country or region. We generally have higher exposure to thoseissuers engaged in financial services businesses, including commercial banks, broker-dealers, clearing houses,
exchanges and investment companies. There may also be cases where we hold relatively large amounts of securities
by issuers in particular countries or regions due to the business we conduct with our clients or our counterparties. In
addition, we may incur substantial losses due to market fluctuations on asset-backed securities such as residential
mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”).
Extended market declines and decreases in market participants can reduce liquidity and lead to material
lossesExtended market declines can reduce the level of market activity and the liquidity of the assets traded inthose markets in which we operate. Market liquidity may also be affected by decreases in market participants that
could occur, for example, if financial institutions scale back market-related businesses due to increasing
regulation or other reasons. As a result, it may be difficult for us to sell, hedge or value such assets which we
hold. Also, in the event that a market fails in pricing such assets, it will be difficult to estimate their value. If wecannot properly close out or hedge our associated positions in a timely manner or in full, particularly with respect
to Over-The-Counter (“OTC”) derivatives, we may incur substantial losses. Further, if the liquidity of a market
significantly decreases and the market may become unable to price financial instruments held by us, this could
lead to unanticipated losses.
Our hedging strategies may not prevent losses
We use a variety of financial instruments and strategies to hedge our exposure to various types of risk. If ourhedging strategies are not effective, we may incur losses. We base many of our hedging strategies on historical
trading patterns and correlations. For example, if we hold an asset, we may hedge this position by taking a
position in another asset which has, historically, moved in a direction that would offset a change in value of theformer asset. However, historical trading patterns and correlations may not continue, as seen in the case of pastfinancial crises, and these hedging strategies may not be fully effective in mitigating our risk exposure because
we are exposed to all types of risk in a variety of market environments.
Our risk management policies and procedures may not be fully effective in managing market risk
Our policies and procedures to identify, monitor and manage risks may not be fully effective. Althoughsome of our methods of managing risk are based upon observed historical behavior of market data, the movementof each data in future financial market may not be the same as was observed in the past. As a result, we may
suffer large losses through unexpected future risk exposures. Other risk management methods that we use also
rely on our evaluation of information regarding markets, clients or other matters, which is publicly available orotherwise accessible by us. This information may not be accurate, complete, up-to-date or properly evaluated,
and we may be unable to properly assess our risks, and thereby suffer large losses. Furthermore, certain factors,
such as market volatility, may render our risk evaluation model unsuitable for a new market environment. In such
event, we may become unable to evaluate or otherwise manage our risks adequately.
7

Market risk may increase other risks that we face
In addition to the potentially adverse effects on our businesses described above, market risk could
exacerbate other risks that we face. For example, the risks inherent in financial instruments developed throughfinancial engineering and innovation may be increased by market risk.
Also, if we incur substantial trading losses caused by our exposure to market risk, our need for liquidity
could rise sharply while our access to cash may be impaired as a result of market perception of our credit risk.
Furthermore, in a market downturn, our clients and counterparties could incur substantial losses of theirown, thereby weakening their financial condition and, as a result, increasing our credit risk exposure to them.
We may have to recognize impairment charges with regard to the amount of goodwill, tangible andintangible assets recognized on our consolidated balance sheets
We have purchased all or a part of the equity interests in, or operations from, certain other companies inorder to pursue our business expansion, and expect to continue to do so when and as we deem appropriate. We
account for certain of those and similar purchases and acquisitions as a business combination under U.S. GAAP
by allocating our acquisition costs to the assets acquired and liabilities assumed and recognizing the remaining
amount as goodwill. We also possess tangible and intangible assets other than those stated above.
We may have to recognize impairment charges, as well as other losses associated with subsequenttransactions, with regard to the amount of goodwill, tangible and intangible assets and if recognized, suchchanges may adversely affect our financial condition and results of operations. For example, during the years
ended March 31, 2014 and March 31, 2015 we recognized goodwill impairment charges of ¥2,840 million and¥3,188 million, respectively.
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition
Liquidity, or having ready access to cash, is essential to our business. We define liquidity risk as the risk ofloss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding thannormal levels due to deterioration of our creditworthiness or deterioration in market conditions. In addition tomaintaining a readily available cash position, we seek to secure ample liquidity through repurchase agreements
and securities lending transactions, long-term borrowings and the issuance of long-term debt securities,
diversification of our short-term funding sources such as commercial paper, and by holding a portfolio of highly
liquid assets. We bear the risk that we may lose liquidity under certain circumstances, including the following:
We may be unable to access unsecured or secured funding
We continuously access unsecured funding from issuance of securities in the short-term credit markets anddebt capital markets as well as bank borrowings to finance our day-to-day operations, including refinancing. We
also enter into repurchase agreements and securities lending transactions to raise secured funding for our tradingbusinesses. An inability to access unsecured or secured funding or funding at significantly higher cost thannormal levels could have a substantial negative effect on our liquidity. For example, lenders could refuse toextend the credit necessary for us to conduct our business based on their assessment of our long-term or shortterm financial prospects if:•

we incur large trading losses,•

the level of our business activity decreases due to a market downturn,•regulatory authorities take significant action against us, or•

our credit rating is downgraded.
8In addition to the above, our ability to borrow in the debt capital markets could also be adversely impacted
by factors that are not specific to us, such as reductions in banks’ lending capacity, a severe disruption of thefinancial and credit markets, negative views about the general prospects for the investment banking, brokerage or
financial services industries, or negative market perceptions of Japan’s financial soundness.
We may be unable to sell assets
If we are unable to raise funds or if our liquidity declines significantly, we will need to liquidate assets or
take other actions in order to meet our maturing liabilities. In volatile or uncertain market environments, overallmarket liquidity may decline. In a time of reduced market liquidity, we may be unable to sell some of our assets,
or we may have to sell at depressed prices, which could adversely affect our results of operations and financial
condition. Our ability to sell assets may also be adversely impacted by other market participants seeking to sellsimilar assets into the market at the same time.
Lowering of our credit ratings could impact our funding
Our funding depends significantly on our credit ratings. Rating agencies may reduce or withdraw theirratings or place us on “credit watch” with negative implications. Future downgrades could increase our funding
costs and limit our funding. This, in turn, could adversely affect our result of operations and our financial
condition. In addition, other factors which are not specific to us may impact our funding, such as negative market
perceptions of Japan’s financial soundness.
Event risk may cause losses in our trading and investment assets as well as market and liquidity risk
Event risk refers to potential losses we may suffer through unpredictable events that cause large unexpectedmarket price movements such as natural or man-made disasters, epidemics, acts of terrorism, armed conflicts orpolitical instability, as well as adverse events specifically affecting our business activities or counterparties.
These events include not only significant events such as the terrorist attacks in the U.S. on September 11, 2001,
U.S. subprime issues since 2007, the global financial and credit crisis in the autumn of 2008, the Great East Japan
Earthquake in March 2011, fiscal problems in the U.S. and European countries which became apparent starting
the same year, the political crisis in Ukraine which began in late 2013, the terrorist attacks in Paris in November
2015, the terrorist attacks in Brussels in March 2016 and the terrorist attacks in London in June 2017, but also
more specifically the following types of events that could cause losses in our trading and investment assets:• sudden and significant reductions in credit ratings with regard to financial instruments held by our trading
and investment businesses by major rating agencies,• sudden changes in trading, tax, accounting, regulatory requirements, laws and other related rules which
may make our trading strategy obsolete, less competitive or no longer viable, or• an unexpected failure in a corporate transaction in which we participate resulting in our not receiving theconsideration we should have received, as well as bankruptcy, deliberate acts of fraud, and administrative
penalty with respect to the issuers of our trading and investment assets.
We may be exposed to losses when third parties that are indebted to us do not perform their obligations
Our counterparties are from time to time indebted to us as a result of transactions or contracts, includingloans, commitments to lend, other contingent liabilities and derivative transactions. We may incur material losses
when our counterparties default or fail to perform on their obligations to us due to their filing for bankruptcy, adeterioration in their creditworthiness, lack of liquidity, operational failure, an economic or political event,
repudiation of the transaction or for other reasons.

9Credit risk may also arise from:• holding securities issued by third parties, or• the execution of securities, futures, currency or derivative transactions that fail to settle at the required
time due to nondelivery by the counterparty, such as monoline insurers (financial guarantors) which arecounterparties to credit default swaps or systems failure by clearing agents, exchanges, clearing houses orother financial infrastructure.
Issues related to third party credit risk may include the following:
Defaults by a large financial institution could adversely affect the financial markets generally and us
specifically
The commercial soundness of many financial institutions is closely interrelated as a result of credit, trading,clearing or other relationships among the institutions. As a result, concern about the creditworthiness of or adefault by, a certain financial institution could lead to significant liquidity problems or losses in, or defaults by,other financial institutions. This may adversely affect financial intermediaries, such as clearing agencies, clearing
houses, banks, securities firms and exchanges, with which we interact on a daily basis. Actual defaults, increases
in perceived default risk and other similar events could arise in the future and could have an adverse effect on thefinancial markets and on us. Our funding operations may be adversely affected if major financial institutions,Japanese or otherwise, fail or experience severe liquidity or solvency problems.
There can be no assurance as to the accuracy of the information about, or the sufficiency of the collateral weuse in managing, our credit risk
We regularly review our credit exposure to specific clients or counterparties and to specific countries andregions that we believe may present credit concerns. Default risk, however, may arise from events orcircumstances that are difficult to detect, such as account-rigging and fraud. We may also fail to receive full
information with respect to the risks of a counterparty. In addition, in cases where we have extended credit
against collateral, we may fall into a deficiency in value in the collateral if sudden declines in market values
reduce the value of our collateral.
Our clients and counterparties may be unable to perform their obligations to us as a result of political or
economic conditions
Country, regional and political risks are components of credit risk, as well as market risk. Political or
economic pressures in a country or region, including those arising from local market disruptions or currency
crises, may adversely affect the ability of clients or counterparties located in that country or region to obtain
credit or foreign exchange, and therefore to perform their obligations owed to us.
The financial services industry faces intense competition
Our businesses are intensely competitive, and are expected to remain so. We compete on the basis of anumber of factors, including transaction execution capability, our products and services, innovation, reputationand price. We have experienced intense price competition, particularly in brokerage, investment banking andother businesses.
Competition with commercial banks, commercial bank-owned securities subsidiaries and non-Japanese firms
in the Japanese market is increasing
Since the late 1990s, the financial services sector in Japan has undergone deregulation. In accordance withthe amendments to the Securities and Exchange Law of Japan (which has been renamed as the Financial
10Instruments and Exchange Act of Japan (“FIEA”) since September 30, 2007), effective from December 1, 2004,
banks and certain other financial institutions became able to enter into the securities brokerage business. In
addition, in accordance with the amendments to the FIEA effective from June 1, 2009, firewalls between
commercial banks and securities firms were deregulated. Therefore, as our competitors will be able to cooperate
more closely with their affiliated commercial banks, banks and other types of financial services firms cancompete with us to a greater degree than they could before deregulation in the areas of financing and investment
trusts. Among others, securities subsidiaries of commercial banks and non-Japanese firms have been affecting
our market shares in the sales and trading, investment banking and retail businesses.
Increased consolidation, business alliance and cooperation in the financial services groups industry mean
increased competition for us
There has been substantial consolidation and convergence among companies in the financial services
industry. In particular, a number of large commercial banks and other broad-based large financial services groups
have established or acquired broker-dealers or have consolidated with other financial institutions. Recently, theselarge financial services groups have been further developing business linkage within their respective groups inorder to provide comprehensive financial services to clients. These financial services groups continue to offer awide range of products, including loans, deposit-taking, insurance, brokerage, asset management and investmentbanking services within their group, which may enhance their competitive position compared with us. They also
have the ability to supplement their investment banking and brokerage businesses with commercial banking andother financial services revenues in an effort to gain market share. In addition, the financial services industry has
seen collaboration beyond the borders of businesses and industries, such as alliances between commercial banks
and securities companies outside of framework of existing corporate groups and recent alliances with
non-financial companies including emerging companies. Our competitiveness may be adversely affected if ourcompetitors are able to expand their businesses and improve their profitability through such business alliances.
Our global business strategies may not result in the anticipated outcome due to competition with otherfinancial services firms in international markets and the failure to realize the full benefit of management
resource reallocation
We continue to believe there are significant opportunities in the international markets, but there is alsosignificant competition associated with such opportunities. In order to take advantage of these opportunities, wewill have to compete successfully with financial services firms based in important non-Japanese markets,
including the U.S., Europe and Asia. Under such competitive environment, as a means to bolster our international
operations, we acquired certain Lehman Brothers operations in Europe, the Middle East and Asia in 2008 and wehave invested significant management resources to maintain and develop our operations in these regions and the
U.S. After the acquisition, however, market structures have changed drastically due to the scaling back ofmarket-related businesses by European financial institutions and the monetary easing policies by central banks ofeach country, resulting in decline in whole market liquidity. In light of this challenging business environment, wehave endeavored to reallocate our management resources to optimize our global operations and thereby improve
our profitability. For example, we made strategic changes to our Wholesale businesses in EMEA and theAmericas in 2016 in order to reallocate resources towards our areas of expertise and most profitable businesslines. However, failure to realize the full benefits of these efforts may adversely affect our global businesses,
financial condition and results of operations.
Our business is subject to various operational risks
We classify and define operational risk as the risk of loss resulting from inadequate or failed internal
processes, personnel, and systems or from external events. It excludes strategic risk (the risk of loss as a result ofpoor strategic business decisions), but includes the risk of breach of legal and regulatory requirements, and therisk of damage to our reputation if caused by an operational risk.

11

Operational risk is inherent in all our products, activities, processes and systems which therefore canpotentially have a direct financial impact on us or an indirect financial impact through a disruption to ourbusiness, regulatory sanctions, loss of clients, reputational damage or damage to the health and safety of ourmanagement and employees. While we have established a robust framework to manage and mitigate the impactof operational risks within us, prevention of the following key specific types of key operational risks occurring
remains challenging:
Event Category

Definition

Internal Fraud

Intentional breach of laws, rules, regulations or internal policies andprocedures.

Mis-selling

Offering of products and services which are not commensurate withthe client’s knowledge, experience, asset status and investment
purpose as well as his/her ability to make judgment regarding risk
management, or failure to provide sufficient information about therisks associated with the products and services offered.

Regulatory non- Compliance

Violation of financial and other applicable laws, rules or regulations
and internal rules governing the firm’s business activities andpersonnel.

Information Management Failure

Activity which may lead to leakage or damage of the firm’s data
including client and sensitive information, or failure to maintain asufficient control environment to prevent such events.

Cyber Attack

Unauthorized intrusion, theft, modification and destruction of data,
failure or malfunction of information systems and execution of illegal
computer programs, committed via the Internet through malicious useof information communication networks and information systems.

System Outages

Significant system defects, including system outages or malfunction.

Business
FailureContinuity

Management

Failure to maintain effective business continuity due to insufficientmeasures and preparations against major natural or man-madedisaster.

Misconduct or fraud by an employee, director or officer, or any third party, could occur, and our
reputation in the market and our relationships with clients could be harmed
We face the risk that our employees, directors or officers, or any third party, could engage in misconductthat may adversely affect our business. Misconduct by an employee, director or officer includes conduct such asentering into transactions in excess of authorized limits, acceptance of risks that exceed our limits, orconcealment of unauthorized or unsuccessful activities. The misconduct could also involve the improper use or
disclosure of our or our clients’ non-public information, such as insider trading and the recommendation of trades
based on such information, as well as other crimes, which could result in regulatory sanctions, legal liability andserious reputational or financial damage to us.
In August 2012, Nomura Securities Co., Ltd. (“NSC”), a subsidiary of the Company, received a business
improvement order from the FSA with respect to flaws recognized in connection with the management of entityrelated information for public stock offerings. In response to the order, NSC implemented and completed a seriesof improvement measures as of December 2012.
Although we have precautions in place to detect and prevent such misconduct in the future, the measures wehave implemented or may implement may not be effective in all cases, and we may not always be able to detector deter misconduct by an employee, director or officer. If any administrative or judicial sanction is issued
12against us as a result of such misconduct, we may lose business opportunities for a period of time, even after the
sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us fortheir financial transactions.
Third parties may also engage in fraudulent activities, including devising a fraudulent scheme to induce ourinvestment, loans, guarantee or any other form of financial commitment, both direct and indirect. Because of thebroad range of businesses that we engage in and the large number of third parties with whom we deal in our
day-to-day business operations, such fraud or any other misconduct may be difficult to prevent or detect.
We may not be able to recover the financial losses caused by such activities and our reputation may also bedamaged by such activities.
A failure to identify and appropriately address conflicts of interest could adversely affect our businessWe are a global financial institution that provides a wide range of products and services to a diverse groupof clients, including individuals, corporations, other financial institutions and governmental institutions. As such,
we face potential conflicts of interest in the ordinary course of our business. Conflicts of interests can arise when
our services to a particular client conflict or compete, or are perceived to conflict or compete, with our own
interests. In addition, where non-public information is not appropriately restricted or shared within the firm,
conflicts of interest can also arise where a transaction within the Nomura Group and/or a transaction with anotherclient conflict or compete, or is perceived to conflict or compete, with a transaction with a particular client.
While we have extensive internal procedures and controls designed to identify and address conflicts of interest, afailure, or a perceived failure, to identify, disclose and appropriately address such conflicts could adversely affectour reputation and the willingness of current or potential clients to do business with us. In addition, conflicts ofinterest could give rise to regulatory actions or litigation.
Our business is subject to substantial legal, regulatory and reputational risks
Substantial legal liability or a significant regulatory action against us could have a material financial effecton us or cause reputational harm to us, which in turn could adversely affect our business prospects, financial
condition and results of operations. Also, material changes in regulations applicable to us or to the markets inwhich we operate could adversely affect our business.
Our exposure to legal liability is significant
We face significant legal risks in our businesses. These risks include liability under securities or other laws
in connection with securities underwriting and offering transactions, liability arising from the purchase or sale ofany securities or other financial products, disputes over the terms and conditions of complex tradingarrangements or the validity of contracts for our transactions, disputes with our business alliance partners andlegal claims concerning our other businesses.
During a prolonged market downturn or upon the occurrence of an event that adversely affects the market,
we would expect claims against us to increase. We may also face significant litigation. The cost of defending
such litigation may be substantial and our involvement in litigation may damage our reputation. In addition, evenlegal transactions might be subject to adverse public reaction according to the particular details of suchtransactions. These risks may be difficult to assess or quantify and their existence and magnitude may remain
unknown for substantial periods of time. See Note 20 “Commitments, contingencies and guarantees” in ourconsolidated financial statements included in this annual report for further information regarding the significant
investigations, lawsuits and other legal proceedings that we are currently facing.

13Extensive regulation of our businesses limits our activities and may subject us to significant penalties andlosses
The financial services industry is subject to extensive regulation. We are subject to increasing regulation by
governmental and self-regulatory organizations in Japan and in virtually all other jurisdictions in which we
operate, and such governmental and regulatory scrutiny may increase as our operations expand or as lawschange. In addition, while regulatory complexities increase, possibilities of extra-territorial application of aregulation in one jurisdiction to business activities outside of such jurisdiction may also increase. These
regulations are broadly designed to ensure the stability of financial systems and the integrity of the financial
markets and financial institutions, and to protect clients and other third parties who deal with us, and often limit
our activities and/or affect our profitability, through net capital, client protection and market conduct
requirements. In addition, on top of traditional finance-related legislation, the scope of laws and regulations
applying to, and/or impacting on, our operations may become wider depending on the situation of the wider
international political and economic environment or policy approaches taken by governmental authorities inrespect of regulatory application or law enforcement. In particular, the number of investigations and proceedings
against the financial services industry by governmental and self-regulatory organizations has increased
substantially and the consequences of such investigations and proceedings have become more severe in recent
years, and we are subject to face the risk of such investigations and proceedings. Although we have policies inplace to prevent violations of such laws and regulations, we may not always be able to prevent violations, and we
could be fined, prohibited from engaging in some of our business activities, ordered to improve our internal
governance procedures or be subject to revocation of our license to conduct business. Our reputation could also
suffer from the adverse publicity that any administrative or judicial sanction against us may create, which may
negatively affect our business opportunities and ability to secure human resources. As a result of any suchsanction, we may lose business opportunities for a period of time, even after the sanction is lifted, if and to theextent that our clients, especially public institutions, decide not to engage us for their financial transactions. In
addition, certain market participants may refrain from investing in or entering into transactions with us if weengage in business activities in regions subject to international sanctions, even if our activities do not constituteviolations of sanctions laws and regulations.
Tightening of regulations applicable to the financial system and financial industry could adversely affect ourbusiness, financial condition and results of operations
If regulations that apply to our businesses are introduced, modified or removed, we could be adversely
affected directly or through resulting changes in market conditions. The impact of such developments could
make it economically unreasonable for us to continue to conduct all or certain of our businesses, or could cause
us to incur significant costs to adjust to such changes.
In particular, various reforms to financial regulatory frameworks, including the Dodd-Frank Wall Street
Reform and Consumer Protection Act (“Dodd-Frank Act”) in the U.S. and various proposals to strengthen
financial regulation in the European Union and the United Kingdom (“U.K.”), have been put in place. The exact
details of the implementation of these proposals and its impact on us will depend on the final regulations as they
become ultimately adopted by various governmental agencies and oversight boards. See Item 4.B “Business
Overview—Regulation” in this annual report for more information about such regulations.
New regulations or revisions to existing regulations relating to accounting standards, regulatory capital
adequacy ratios, liquidity ratios and leverage ratios applicable to us could also have a material adverse effect on
our business, financial condition and results of operations. Such new regulations or revisions to existing
regulations include the so-called Basel III package formulated by the Basel Committee on Banking Supervision(“Basel Committee”), some rules of which are still to be finalized and/or implemented. These changes inregulations may require us to liquidate financial instruments and other assets, raise additional capital or otherwise
restrict our business activities in a manner that could increase our funding costs or could otherwise adversely
affect our operating or financing activities or the interests of our shareholders. Furthermore, the Financial
Stability Board (“FSB”) and the Basel Committee annually update the list of global systemically important banks
14

(“G-SIBs”) identified by financial regulators and additional regulatory capital requirements imposed on those
G-SIBs. Additionally, G-20 Finance Ministers and Central Bank Governors requested the FSB and the BaselCommittee to expand the G-SIB framework to domestic systemically important banks (“D-SIBs”), and in
October 2012, the Basel Committee developed and published a set of principles on the assessment methodology
and higher loss absorbency requirements for D-SIBs. In December 2015, the FSA identified us as a D-SIB and
imposed a surcharge of 0.5% on our required capital ratio after March 2016 over a 3-year transitional period.
This may result in additional costs and impact on us as described above.
Deferred tax assets may be impacted due to a change in business condition or in laws and regulations,
resulting in an adverse effect on our operating results and financial condition
We recognize deferred tax assets in our consolidated balance sheets as a possible benefit of tax relief in the
future. If we experience or forecast future operating losses, if tax laws or enacted tax rates in the relevant tax
jurisdictions in which we operate change, or if there is a change in accounting standards in the future, we may
reduce the deferred tax assets recognized in our consolidated balance sheets. As a result, it could adversely affectour financial condition and results of operations. See Note 15 “Income taxes” in our consolidated financial
statements included in this annual report for further information regarding the deferred tax assets that wecurrently recognize.
Unauthorized disclosure of personal information held by us may adversely affect our businessWe keep and manage personal information obtained from clients in connection with our business. In recent
years, there have been many reported cases of personal information and records in the possession of corporations
and institutions being improperly accessed or disclosed.
Although we exercise care to protect the confidentiality of personal information and take steps to safeguard
such information in compliance with applicable laws, rules and regulations, were any material unauthorized
disclosure of personal information to occur, our business could be adversely affected. For example, we could be
subject to complaints and lawsuits for damages from clients if they are adversely affected due to the unauthorized
disclosure of their personal information (including leakage of such information by an external service provider).
In addition, we could incur additional expenses associated with changing our security systems, either voluntarily
or in response to administrative guidance or other regulatory initiatives. Any damage to our reputation caused bysuch unauthorized disclosure could lead to a decline in new clients and/or a loss of existing clients, as well as toincreased costs and expenses incurred for public relations campaigns designed to prevent or mitigate damage to
our corporate or brand image or reputation.
System failure and the information leakage could adversely affect our businessOur businesses rely on secure processing, storage, transmission and reception of personal, confidential andproprietary information on our systems. We may become the target of attempted unauthorized access, computerviruses or malware, and other cyber-attacks designed to access and obtain information on our systems or to
disrupt and cause other damage to our services. Although these threats may originate from human error or
technological failure, they may also originate from the malice or fraud of internal parties, such as employees, or
third parties, including foreign non-state actors and extremist parties. Additionally, we could also be adversely
impacted if any of the third-party vendors, exchanges, clearing houses or other financial institutions to whom weare interconnected are subject to cyber-attacks or other informational security breaches. Such events could causeinterruptions to our systems, reputational damage, client dissatisfaction, legal liability, enforcement actions oradditional costs, any and all of which could adversely affect our financial condition and operations.
While we continue to devote significant resources to monitor and update our systems and implement
information security measures to protect our systems, there can be no assurance that any controls and procedures
we have in place will be sufficient to protect us from future security breaches. As cyber threats are continually
evolving, our controls and procedures may become inadequate and we may be required to devote additional
resources to modify or enhance our systems in the future.
15

Natural disaster, terrorism, military dispute and infectious disease could adversely affect our businessWe have developed a contingency plan for addressing unexpected situations. However, disaster, terrorism,
military dispute or infectious disease afflicting our management and employees could exceed the assumptions ofour plan, and could adversely affect our business.
The Company is a holding company and depends on payments from subsidiaries
The Company heavily depends on dividends, distributions and other payments from subsidiaries to makepayments on the Company’s obligations. Regulatory and other legal restrictions, such as those under theCompanies Act, may limit the Company’s ability to transfer funds freely, either to or from the Company’s
subsidiaries. In particular, many of the Company’s subsidiaries, including the Company’s broker-dealer
subsidiaries, are subject to laws and regulations, including regulatory capital requirements, that authorize
regulatory bodies to block or reduce the flow of funds to the parent holding company, or that prohibit suchtransfers altogether in certain circumstances. For example, NSC, Nomura Securities International, Inc., Nomura
International plc and Nomura International (Hong Kong) Limited, our main broker-dealer subsidiaries, aresubject to regulatory capital requirements that could limit the transfer of funds to the Company. These laws andregulations may hinder the Company’s ability to access funds needed to make payments on the Company’s
obligations.
We may not be able to realize gains we expect, and may even suffer losses, on our investments in equity
securities and non-trading debt securities
We hold substantial investments in equity securities and non-trading debt securities. Under U.S. GAAP,
depending on market conditions, we may recognize significant unrealized gains or losses on our investments inequity securities and debt securities, which could have an adverse impact on our financial condition and results ofoperations. Depending on the market conditions, we may also not be able to dispose of these equity securities anddebt securities when we would like to do so, as quickly as we may wish or at the desired price.
Equity investments in affiliates and other investees accounted for under the equity method in ourconsolidated financial statements may decline significantly over a period of time and result in us incurring
impairment losses
We have affiliates and investees accounted for under the equity method in our consolidated financial
statements and whose shares are publicly traded. Under U.S. GAAP, if there is a decline in the fair value, i.e., themarket price, of the shares we hold in such affiliates over a period of time, and we determine that the decline isother-than-temporary, then we recognize an impairment loss for the applicable fiscal period which may have an
adverse effect on our financial condition and results of operations.
We may face an outflow of clients’ assets due to losses of cash reserve funds or debt securities we offer
We offer many types of products to meet various needs of our clients with different risk profiles.
Cash reserve funds, such as money market funds and money reserve funds are categorized as low risk
financial products. As a result of a sudden rise in interest rates, such cash reserve funds may fall below par value
due to losses resulting from price decreases of debt securities in the portfolio, defaults of debt securities in theportfolio or charges of negative interest. If we determine that a stable return cannot be achieved from theinvestment performance of cash reserve funds, we may accelerate the redemption of, or impose a deposit limit
on, such cash reserve funds. For example, Nomura Asset Management Co., Ltd., the Company’s subsidiary,
ended its operation of money market funds in late August 2016 and executed an accelerated redemption of suchfunds in September 2016.
In addition, debt securities that we offer may default or experience delays in the payment of interest and/or
principal.
16

Such losses, early redemption or deposit limit for the products we offer may result in the loss of client
confidence and lead to an outflow of client assets from our custody or preclude us from increasing such client
assets.
Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell
your shares of the Company’s common stock at a particular price on any particular trading day, or at all
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between
bids and offers. These exchanges are order-driven markets without specialists or market makers to guide priceformation. For the purpose of protecting investors from excessive volatility, these exchanges set daily upwardand downward price fluctuation limits for each stock, based on the previous day’s closing price. Althoughtransactions may continue at the upward or downward limit price if the limit price is reached on a particular
trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a
price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular
trading day, or at all.
Under Japan’s unit share system, holders of the Company’s shares constituting less than one unit are
subject to transfer, voting and other restrictions
The Company’s Articles of Incorporation, as permitted under the Companies Act, provide that 100 shares of
the Company’s stock constitute one “unit.” The Companies Act imposes significant restrictions and limitations on
holdings of shares that constitute less than a whole unit. Holders of shares constituting less than one unit do not havethe right to vote or any other rights relating to voting. Under the unit share system, any holders of sharesconstituting less than a unit may at any time request the Company to purchase their shares. Also, holders of sharesconstituting less than a unit may request the Company to sell them such number of shares that the Company may
have as may be necessary to raise such holder’s share ownership to a whole unit. Shares constituting less than a unit
are transferable under the Companies Act, but may not be traded on any Japanese stock exchange.
As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act throughthe depositary to exercise these rights
The rights of shareholders under Japanese law to take actions including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining the company’s accounting books and records
and exercising appraisal rights are available only to holders of record. Because the depositary, through its
custodian agent, is the record holder of the shares underlying the ADSs, only the depositary can exercise thoserights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying
your ADSs as instructed by you and will pay you the dividends and distributions collected from the Company.
However, in your capacity as an ADS holder, you will not be able to bring a derivative action, examine theCompany’s accounting books or records or exercise appraisal rights except through the depositary.
Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions
The Companies Act and the Company’s Articles of Incorporation and Regulations of the Board of Directors
govern the Company’s corporate affairs. Legal principles relating to such matters as the validity of corporate
procedures, directors’ and executive officers’ fiduciary duties and shareholders’ rights may be different fromthose that would apply to a non-Japanese company. Shareholders’ rights under Japanese law may not be as
extensive as shareholders’ rights under the laws of other jurisdictions, including jurisdictions within the U.S. You
may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of acorporation organized in another jurisdiction.
The Company’s shareholders of record on a record date may not receive the dividend they anticipate
The customary dividend payout practice of publicly listed companies in Japan may significantly differ fromthat widely followed or otherwise deemed necessary or fair in foreign markets. The Company’s dividend payout
17

practice is no exception. The Company ultimately determines whether the Company will make any dividend
payment to shareholders of record as of a record date and such determination is made only after such record date.
For the foregoing reasons, the Company’s shareholders of record as of a record date may not receive thedividends they anticipate. Furthermore, the Company does not announce any dividend forecasts.
It may not be possible for investors to secure personal jurisdiction within the U.S. over the Company or
the Company’s directors or executive officers, or to enforce against the Company or those persons
judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities
laws of the U.S.
The Company is a limited liability, joint-stock corporation incorporated under the laws of Japan. Most of theCompany’s directors and executive officers reside in Japan. Many of the Company’s assets and the assets ofthese persons are located in Japan and elsewhere outside the U.S. It may not be possible, therefore, for U.S.
investors to obtain personal jurisdiction over the Company or these persons within the U.S. or to enforce against
the Company or these persons judgments obtained in U.S. courts predicated upon the civil liability provisions of
the federal securities laws of the U.S. The Company believes that there is doubt as to the enforceability in Japan,
in original actions or in actions for enforcement of U.S. court judgments, of liabilities predicated solely upon thefederal securities laws of the U.S.
Special Note Regarding Forward-looking Statements
This annual report contains forward-looking statements that are based on our current expectations,assumptions, estimates and projections about our business, our industry and capital markets around the world. These
forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking
statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”,“anticipate”, “estimate”, “plan” or similar words. These statements discuss future expectations, identify strategies,
contain projections of our results of operations or financial condition, or state other forward-looking information.
Known and unknown risks, uncertainties and other factors may cause our actual results, performance,
achievements or financial position to differ materially from any future results, performance, achievements orfinancial position expressed or implied by any forward-looking statement contained in this annual report. Suchrisks, uncertainties and other factors are set forth in this Item 3.D and elsewhere in this annual report.
Item 4. Information on the Company
A. History and Development of the Company.
The Company (previously known as The Nomura Securities Co., Ltd.) was incorporated in Japan on
December 25, 1925 under the Commercial Code of Japan when the securities division of The Osaka Nomura
Bank, Ltd. became a separate entity specializing in the trading and distribution of debt securities in Japan. The
Company was the first Japanese securities company to develop its business internationally with the opening in
1927 of a representative office in New York. In Japan, we broadened the scope of our business when we began
trading in equity securities in 1938 and when we organized the first investment trust in Japan in 1941.
Since the end of World War II, we have played a leading role in most major developments in the Japanese
securities market. These developments include the resumption of the investment trust business in the 1950s, theintroduction of public stock offerings by Japanese companies in the 1960s, the development of theover-the-counter bond market in the 1970s, the introduction of new types of investment trusts such as themedium-term Japanese government bond investment trust in the 1980s, and the growth of the corporate bond andinitial public offering markets in the 1990s.
Our expansion overseas accelerated in 1967, when the Company acquired a controlling interest in Nomura
International (Hong Kong) Limited for the purpose of conducting broker-dealer activities in the Hong Kong
capital markets. Subsequently, we established a number of other overseas subsidiaries, including Nomura
18

Securities International, Inc. in the U.S. in 1969 as a broker-dealer and Nomura International Limited, now
Nomura International plc, in the U.K. in 1981, which acts as an underwriter and a broker, as well as otheroverseas affiliates, branches and representative offices.
On October 1, 2001, we adopted a holding company structure. In connection with this reorganization, theCompany changed its name from “The Nomura Securities Co., Ltd.” to “Nomura Holdings, Inc.” The Company
continues to be listed on the Tokyo Stock Exchange and other stock exchanges on which it was previously listed.
A wholly-owned subsidiary of the Company assumed the Company’s securities businesses and was named“Nomura Securities Co., Ltd.”The Company has proactively engaged in establishing a governance framework to ensure transparency in
the Company’s management. Among other endeavors, when the Company adopted a holding company structure
and was listed on the New York Stock Exchange (“NYSE”) in 2001, the Company installed Outside Directors. In
addition, in June 2003, the Company further strengthened and increased the transparency of the Company’s
oversight functions by adopting the Company with Three Board Committees (previously known as theCommittee System), a system in which management oversight and business execution functions are clearly
separated.
In 2008, to pave the way for future growth, the Company acquired and integrated the operations of Lehman
Brothers in Asia Pacific, Europe and the Middle East.
The address of the Company’s registered office is 9-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8645,
Japan, telephone number: +81-3-5255-1000.
B. Business Overview.
Overview
We are one of the leading financial services groups in Japan and we operate offices in countries and regions
worldwide including Japan, the U.S., the U.K., Singapore and Hong Kong Special Administrative Region (“HongKong”) through our subsidiaries.
Our clients include individuals, corporations, financial institutions, governments and governmental
agencies.
Our business consists of our Retail, Asset Management and Wholesale divisions which are described infurther detail below. See also Note 21 “Segment and geographic information” in our consolidated financial
statements included in this annual report.
Corporate Goals and Principles
The Nomura Group’s management vision is to enhance its corporate value by deepening society’s trust in
the firm and increasing satisfaction of stakeholders, including that of our shareholders and clients.
As “Asia’s global investment bank,” Nomura will provide high value-added solutions to clients globally,
and recognizing its wider social responsibility, Nomura will continue to contribute to the economic growth anddevelopment of society.
To enhance its corporate value, Nomura places significance on earnings per share (“EPS”) and will seek tomaintain sustained improvement of management’s target.
Our Business Divisions
RetailIn Retail, we conduct business activities by delivering a wide range of financial products and high quality
investment services mainly for individuals and corporations in Japan primarily through a network of nationwide
19

branches of Nomura Securities Co., Ltd. (“NSC”). The total number of local branches, including our head office,was 158 as of the end of March 2017. We offer investment consultation services to meet the medium- to longterm needs of our clients. We discuss retail client assets in “Retail Client Assets” under Item 5.A of this annual
report.
We continue to focus on delivering top-quality solutions including our broad range of products and services
through face-to-face meetings, online and call center channels, so that Nomura Group can sustainably be atrusted partner to our clients.
Asset Management
We conduct our asset management business, which consists of the development and management ofinvestment trusts and investment advisory services, primarily through Nomura Asset Management Co., Ltd(“NAM”). NAM is the largest asset management company in Japan in terms of assets under management ininvestment trusts as of March 31, 2017. In Japan, our challenge is to shift individual financial assets from saving
products into investment products to create business opportunities. In order to make these opportunities available,
NAM manages various investment trusts, ranging from low risk/low return products to high risk/high return
products, and develops new products to respond to various investor needs. Investment trusts are distributed toinvestors through NSC as well as through financial institutions such as securities companies (including thoseoutside our group), banks and Japan Post Bank Co., Ltd. Investment trusts are also held in defined contribution
pension plans. We also provide investment advisory services to public pension funds, private pension funds,
governments and their agencies, central banks and institutional investors globally.
Wholesale
Our Wholesale Division consists of Global Markets and Investment Banking, providing our corporate andinstitutional clients with timely, high value-added products and services tailored to their needs.
Global Markets
Global Markets provides research, sales, trading, and market-making of fixed income and equity-related
products.
Our global fixed income offerings include, among other products, government securities, interest rate
derivatives, investment-grade and high-yield corporate debt securities, credit derivatives, G-10 and emerging
markets foreign exchange, asset-backed securities and mortgage-related products, in over-the-counter (“OTC”)
and listed markets. We are also primary dealers in the Japanese government securities market as well as in the
Asian, European and U.S. markets. These product offerings are underpinned by our global structuring function
which tailors ideas and trading strategies for our institutional and corporate client base.
Our global equity-related products include equity securities, Exchange Traded Funds (“ETFs”), convertible
securities, listed and OTC equity derivatives, and prime services. In addition, we offer execution services basedon cutting-edge electronic trading technology to help clients navigate through the complex market structure andachieve best execution. We are also a member of various exchanges around the world, with leading positions on
Tokyo stock exchanges.
These product offerings are underpinned by our global structuring function which provides tailored ideas
and trading strategies for our institutional and corporate clients as well as our retail franchise.
Investment Banking
We offer a broad range of investment banking services to a diverse range of corporations, financial
institutions, sovereigns, financial sponsors and others. We aim to develop and fortify solid relationships withthese clients on a long-term basis by providing them with our extensive resources for each bespoke solution.
20

Underwriting. We underwrite offerings of a wide range of securities and other financial instruments, which
include various types of stocks, convertible and exchangeable securities, investment grade debt, sovereign andemerging market debt, high yield debt, structured securities and other securities in Asia, Europe, U.S. and othermajor financial markets. We also arrange private placements and engage in other capital raising activities.
Financial Advisory & Solutions Services. We provide financial advisory services on business transactions
including mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities,
leveraged buyouts and risk solutions. Our involvement in reorganizations and other corporate restructurings
related to industry consolidation enhances our opportunities to offer clients other advisory and investmentbanking services.
We capitalize on the linkages between our Retail, Asset Management and Wholesale Divisions to offer
various financial instruments such as equity securities, debt securities, investment trusts and variable annuity
insurance products, for the short, medium, and long-term, with different risk levels. We seek to provide
proprietary Nomura expertise to clients through various media such as our investment reports and internet-based
trading services.
Our Research Activities
We have an extensive network of intellectual capital with key research offices in Tokyo, Hong Kong andother major markets in the Asia-Pacific region, as well as in London and New York. Nomura is recognized as aleading content provider with an integrated global approach to providing capital markets research. Our analysts
collaborate closely across regions and disciplines to track changes and spot future trends in politics, economics,
foreign exchange, interest rates, equities, credit, as well as provide quantitative analysis.
Our Information Technology
We believe that information technology is one of the key success factors for our overall business and intend
to develop and maintain a solid technology platform to ensure that the Nomura Group is able to fulfill the various
needs of our clients. Accordingly, we will continue to invest, enhance and adapt a technology platform to ensure
it remains suitable for each division. As a financial institution, we have been promoting to implement FinTech to
improve our business operation.
In our Retail Division, we continually invest and enhance our core system and related systems to improve
efficiency on business operation. We are also continuously working on improving our internet-based andsmartphone platforms.
In our Wholesale Division, we continually invest and enhance our technology platform to provide better risk
management, improved data governance and also to increase trading capabilities through platforms allowing
direct market access and algorithmic trading. In order to ensure the support level of Wholesale operations, wewill continue to maintain utilization of our offshore service entities in India and enhance our regional support
based capabilities.
Our recent focus is cyber security. In order to prevent potential damage as well as take immediate actions incase a security threat occurs, we continue to strengthen measures in four areas, which are system implementation,
trainings and drills, organizational emergency plans and information sharing with external institutions. In March
2015, we established a global team specializing in cyber security measures called the Computer Security Incident
Response Team (“CSIRT”).
Competition
The financial services industry is intensely competitive and we expect it to continue remain so. We compete
globally with other brokers and dealers, investment banking firms, commercial banks, investment advisors and21other financial services firms. We also face competition on regional, product and niche bases from local andspecialist firms. A number of factors determine our competitive position against other firms, including:•the quality, range and prices of our products and services,•

our ability to originate and develop innovative client solutions,•

our ability to maintain and develop client relationships,•

our ability to access and commit capital resources,•

our ability to retain and attract qualified employees, and•our general reputation.

Our competitive position is also affected by the overall condition of the global financial markets, which are
influenced by factors such as:•

the monetary and fiscal policies of national governments and international economic organizations, and•economic developments both within and between Japan, the U.S., Europe and other major industrialized
and developing countries and regions.

In Japan, we compete with other Japanese and non-Japanese securities companies and other financial
institutions. Competition has become more intense due to deregulation in the Japanese financial industry since
the late 1990s and the increased presence of global securities companies and other financial institutions. In
particular, major global firms have increased their presence in securities underwriting, corporate advisory
services (particularly, mergers and acquisitions advisory) and secondary securities sales and trading.
There has also been substantial consolidation and convergence among financial institutions, both within
Japan and globally and this trend accelerated further in recent years as the credit crisis caused mergers andacquisitions and asset acquisitions in the industry. The growing presence and scale of financial groups which
encompass commercial banking, securities brokerage, investment banking and other financial services has led toincreased competition. Through their broadened offerings, these firms are able to create good client relationships
and leverage their existing client base in the brokerage and investment banking business as well.
In addition to the breadth of their products and services, these firms have the ability to pursue greater market
share in investment banking and securities products by reducing margins and relying on their commercial
banking, asset management, insurance and other financial services activities. This has resulted in pricing pressurein our investment banking and trading businesses and could result in pricing pressure in other areas of ourbusinesses. We have also competed, and expect to compete, with other financial institutions which commit
capital to businesses or transactions for market share in investment banking activities. In particular, corporateclients may seek loans or commitments in connection with investment banking mandates and other assignments.
Moreover, the trend toward consolidation and convergence has significantly increased the capital base andgeographic reach of some of our competitors, hastening the globalization of the securities and financial services
markets. To accommodate this trend, we will have to compete successfully with financial institutions that are large
and well-capitalized, and that may have a stronger local presence and longer operating history outside Japan.
Regulation
Japan
Regulation of the Securities Industry and Securities Companies. Pursuant to the FIEA, the Prime Minister ofJapan has the authority to supervise and regulate the securities industry and securities companies, and delegates
its authority to the Commissioner of the FSA. The Company, as a holding company of a securities company, as
well as subsidiaries such as NSC and Nomura Financial Products & Services, Inc. (“NFPS”), are subject to suchsupervision and regulation by the FSA. The Commissioner of the FSA delegates certain authority to the Director
General of Local Finance Bureaus to inspect local securities companies and branches. Furthermore, the Securities
22and Exchange Surveillance Commission, an external agency of the FSA which is independent from the Agency’s
other bureaus, is vested with authority to conduct day-to-day monitoring of the securities markets and toinvestigate irregular activities that hinder the fair trading of securities, including inspection of securities
companies. Securities companies are also subject to the rules and regulations of the Japanese stock exchanges
and the Japan Securities Dealers Association, a self-regulatory organization of the securities industry.
To enhance investor protection, each Japanese securities company is required to segregate client assets andto hold membership in an Investor Protection Fund approved by the government under the FIEA. The Investor
Protection Fund is funded through assessments on its securities company members. In the event of failure of asecurities company that is a member of the fund, the Investor Protection Fund provides protection of up to¥10 million per client. The Investor Protection Fund covers claims related to securities deposited by clients withthe failed securities company and certain other client claims.
Regulation of Other Financial Services. Securities companies are not permitted to conduct banking or otherfinancial services directly, except for those which are registered as money lenders and engaged in money lending
business under the Money Lending Business Act or which hold permission to act as bank agents and conduct
banking agency activities under the Banking Law. Among the subsidiaries of the Company in Japan, NSC is asecurities company that is also registered as a money lender and holds permission to act as a bank agent. Anothersubsidiary of the Company, The Nomura Trust & Banking holds a banking license and trust business license.
Financial Instruments and Exchange Act. The FIEA widely regulates financial products and services inJapan under the defined terms “financial instruments” and “financial instruments trading business”. It regulates
most aspects of securities transactions and the securities industry, including public offerings, private placements
and secondary trading of securities, on-going disclosure by securities issuers, tender offers for securities,
organization and operation of securities exchanges and self-regulatory associations, and registration of securities
companies. In addition, to enhance fairness and transparency in the financial markets and to protect investors, the
FIEA provides for, among other things, penalties for misrepresentations in disclosure documents and unfair
trading, strict reporting obligations for large shareholders and corporate information disclosure systems,
including annual and quarterly report systems, submission of confirmation certificates concerning thedescriptions in securities reports, and internal controls over financial reporting.
The FIEA also provides for corporate group regulations on securities companies the size of which exceeds
specified parameters (Tokubetsu Kinyu Shouhin Torihiki Gyosha, “Special Financial Instruments Firm”) and on
certain parent companies designated by the Prime Minister (Shitei Oyagaisha, “Designated Parent Companies”)
and their subsidiaries (together, the “Designated Parent Company Group”). The FIEA aims to regulate andstrengthen business management systems, compliance systems and risk management systems to ensure theprotection of investors. The FIEA and its related guidelines also provide reporting requirements to the FSA on
the Designated Parent Company Group’s business and capital adequacy ratios, enhanced public disclosures aswell as restrictions on compensation all of which are designed to reduce excessive risk-taking by executives andemployees of a Designated Parent Company Group. We were designated as the Designated Parent Company of
NSC in April 2011 and were designated as the Designated Parent Company of NFPS in December 2013. As the
Designated Parent Company and the final parent company within a corporate group (Saishu Shitei Oyagaisha, “aFinal Designated Parent Company”), we are subject to these requirements. A violation of the FIEA may result invarious administrative sanctions, including the revocation of registration or license, the suspension of business or
an order to discharge any director or executive officer who has failed to comply with the FIEA.
Regulatory Changes. On April 16, 2013, a bill was submitted to the Diet of Japan to amend the FIEA andthe Deposit Insurance Act and was passed on June 12, 2013. A part of the amendment includes establishing“Orderly Resolution Regime for Financial Institutions” to prevent a financial crisis that may spread acrossfinancial markets and may seriously impact the real economy. Under the Orderly Resolution Regime, theFinancial Crisis Response Council, chaired by the Prime Minister, will take measures such as providing liquidity
to ensure the performance of obligations for critical market transactions where it is considered necessary to23

prevent severe market disruption. Such measures will be funded by the financial industry, except in special cases
where the government will provide financial support. The amendment became effective on March 6, 2014.
Overseas
Our overseas offices and subsidiaries are also subject to various laws, rules and regulations applicable in the
countries where they conduct their operations, including, but not limited to those promulgated and enforced by
the U.S. Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission(“CFTC”), the U.S. Treasury, the Financial Stability Oversight Council, the New York Stock Exchange, theFinancial Industry Regulatory Authority (a private organization with quasi-governmental authority and a
regulator for all securities companies doing business in the U.S.), the National Futures Association (a selfregulatory organization for the U.S. derivatives industry) in the U.S.; and by the Prudential Regulation Authority(“U.K. PRA”), the Financial Conduct Authority (“U.K. FCA”), and the London Stock Exchange in the U.K. We
are also subject to international money laundering and related regulations in various countries. For example, theUSA PATRIOT Act of 2001 contains measures to prevent, detect and prosecute terrorism and international
money laundering by imposing significant compliance and due diligence obligations and creating crimes andpenalties. Failure to comply with such laws, rules or regulations could result in fines, suspension or expulsion,
which could materially and adversely affect us.
Regulatory Changes. In response to the financial markets crisis, governments and regulatory authorities invarious jurisdictions have made and continue to make numerous proposals to reform the regulatory framework
for, or impose a tax or levy upon, the financial services industry to enhance its resilience against future crises,
contribute to the relevant economy generally or for other purposes. In July 2010, the U.S. enacted the DoddFrank Act, which is now the subject of a multi-agency rulemaking process. The rulemakings include thefollowing: (i) create a tighter regulatory framework for OTC derivatives to promote transparency and impose
conduct rules in that marketplace; (ii) establish a process for designating nonbank financial firms as Systemically
Important Financial Institutions (“SIFIs”), subject to increased (and sometimes new) prudential oversight
including early remediation, capital standards, resolution authority and new regulatory fees; (iii) prohibit material
conflicts of interest between firms that package and sell asset-backed securities (“ABS”) and firms that invest in
ABS; (iv) establish risk retention requirements for ABS; (v) establish rules related to the orderly liquidation ofcertain broker dealers; (vi) create annual stress tests; and (vii) set forth a number of executive compensation
mandates, including rules to curtail incentive compensation that promotes excessive risk taking and listing
standards for recovery of erroneously awarded compensation. The new regulatory framework for OTC
derivatives includes mandates for clearing transactions with designated clearing organizations, exchange trading,
new capital requirements, bilateral and variation margin for non-cleared derivatives, reporting andrecordkeeping, and internal and external business conduct rules. Some U.S. derivatives and executive
compensation rules may be applied extraterritorially and therefore impact some non-U.S. Nomura entities.
Other aspects of the Dodd-Frank Act and related rulemakings include provisions that (i) prohibit deposittaking banks and their affiliates from engaging in proprietary trading and limit their ability to make investments
in hedge funds and private equity funds (the so-called “Volcker Rule”); (ii) empower regulators to liquidate
failing nonbank financial companies that are systemically important; (iii) provide for new systemic risk oversightand increased capital requirements for both bank and non-bank SIFIs; (iv) provide for a broader regulatory
oversight of hedge funds; and (v) establish new regulations regarding the role of credit rating agencies,
investment advisors and others. To facilitate the transition to the requirements of the Dodd-Frank Act, theCommodity Futures Trading Commission issued an exemptive order in July 2013 (“Exemptive Order”) that
granted market participants temporary conditional relief from certain provisions of the Commodity ExchangeAct, as amended by the Dodd-Frank Act. As the Exemptive Order expired on December 21, 2013 some U.S.
derivatives rules are now being applied extraterritorially and are now therefore impacting some non-U.S. Nomura
entities. In addition, Title VII of the Dodd-Frank Act gives the SEC regulatory authority over “security-based
swaps” which are defined under the act as swaps based on a single security or loan or a narrow-based group orindex of securities. Security-based swaps are included within the definition of “security” under the U.S.
24

Securities and Exchange Act of 1934 and the U.S. Securities Act of 1933. The SEC continues to issue final rules
and interpretive guidance addressing cross-border security-based swap activities. On June 25, 2014, the SEC
initially finalized a portion of its cross-border rules, namely key foundational definitions and registration
calculations that will become operative once the SEC sets a timeframe for the security-based swap dealer
registration process to begin. Since then, the SEC has issued a series of final rules that will apply certain DoddFrank Act requirements to security-based swaps between two non-U.S. person counterparties when the securitybased swaps are arranged, negotiated or executed using personnel or personnel of agents located in the UnitedStates. On February 10, 2016, the SEC issued final rules that require a non-U.S. person that uses personnel orpersonnel of agents located in the United States in connection with security-based swap dealing activity toinclude such security-based swaps in its security-based swap dealer registration de minimis calculation. On
April 14, 2016 the SEC issued final rules that require a non-U.S. security-based swap dealer to comply withexternal business conduct standards rules when facing a non-U.S. person counterparty if the non-U.S. securitybased swap dealer uses personnel or personnel of agents located in the United States to arrange, negotiate or
execute the security-based swap. Finally, on July 14, 2016 the SEC issued final rules that subject a security-based
swap between a non-U.S. security-based swap dealer and a non-U.S. person counterparty to public dissemination
pursuant to SEC rules if the non-U.S. swap dealer uses personnel or personnel of agents located in the UnitedStates to arrange, negotiate or execute the security-based swap. The SEC could issue additional final rules that
apply certain Dodd-Frank Act requirements to security-based swaps of two non-U.S. person counterparties when
one or both uses personnel or personnel of agents located in the United States to arrange, negotiate or execute thesecurity-based swap, but no such additional rules have been proposed. Once final and effective, these crossborder rules may impact some non-U.S. Nomura entities. The exact details of the Dodd-Frank Act
implementation and ultimate impact on Nomura’s operations will depend on the form and substance of the final
regulations adopted by various governmental agencies and oversight boards. In addition to the rulemakings
required by the Dodd-Frank Act, the SEC is considering other rulemakings that will impact Nomura’s U.S.
entities. While these rules have not been formally proposed, they have been publicly reported in the U.S. Officeof Management and Budget’s (“OMB”) “Current Regulatory Plan and Unified Agenda of Regulatory andDeregulatory Actions.” The SEC’s Division of Trading and Markets is considering recommending that the SEC
propose an amendment to its net capital rule that would prohibit a broker-dealer that carries customer accounts
from having a ratio of total assets to regulatory capital in excess of a certain level. The SEC and the CFTC are
also considering a number of changes to market structure rules.
On February 3, 2017, U.S. President Donald J. Trump signed Executive Order 13772 outlining core
principles to regulate the U.S. financial system. The order directed the Secretary of the Treasury to consult withheads of member agencies of the Financial Stability Oversight Council and report within 120 days of the date of
the order (and periodically thereafter) on the extent to which existing laws, treaties, regulations, guidance,
reporting and recordkeeping requirements and other government policies promote the core principles. U.S.
regulatory agencies may change financial regulations through administrative procedures and rulemakings,
supervisory guidance or no-action relief as the result of recommendations by the Treasury Secretary inaccordance with the core principles of the executive order. These may have a material impact on Nomura’s
business.
The core principles are as follows: (i) empower Americans to make independent financial decisions andinformed choices in the marketplace, save for retirement, and build individual wealth; (ii) prevent taxpayerfunded bailouts; (iii) foster economic growth and vibrant financial markets through more rigorous regulatory
impact analysis that addresses systemic risk and market failures, such as moral hazard and information
asymmetry; (iv) enable American companies to be competitive with foreign firms in domestic and foreign
markets; (v) advance American interests in international financial regulatory negotiations and meetings;(vi) make regulation efficient, effective, and appropriately tailored; and (vii) restore public accountability within
Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.
The Foreign Account Tax Compliance Act (“FATCA”) which was enacted in 2010, requires foreign
financial institutions (“FFIs”) to report to the U.S. Internal Revenue Service information about financial accounts
25

held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. As aresult, Nomura will be subject to certain reporting requirements consistent with a mutual agreement between
Japanese governmental authorities and the U.S. Treasury Department. In addition, the US Treasury Department
proposed new rules in April 2016 that would give the Internal Revenue Service the authority to reclassify certain
related-company debt transactions as equity and as a result could impact the Company’s tax liability.
On July 19, 2011, the Financial Stability Board published a consultative document to establish a global
framework to improve authorities’ capacity to resolve failing SIFIs without systemic disruption and exposing
taxpayers to the risk of loss. The proposed measures require Global SIFIs (“G-SIFIs”) to prepare and maintainrecovery and resolution plans (“RRPs”) by December 2012. In light of such a global framework, the U.K.
Financial Services Authority (“U.K. FSA”) (which has now been replaced by the U.K. PRA and FCA) publisheda consultation paper on August 9, 2011 containing its proposals for RRPs. The consultation paper covered arequirement for banks and large investment firms in the U.K. (including G-SIFIs) to prepare and maintain RRPs.
In a separate discussion paper, the U.K. FSA explores matters relevant to resolving financial services firms,
including the resolution of trading books, enhancing the resolution toolkit and bail-ins. In May 2012, the U.K.
FSA published a feedback statement setting out its approach to ensure firms develop appropriate recovery plans
and resolution packs and a further update was issued by the U.K. FSA in February 2013. In December 2013, theU.K. PRA published a policy statement setting out final rules which require banks, building societies and U.K.
PRA-regulated investment firms to produce recovery plans (identification of options to recover financial strength
in stress situations) and resolution packs (information to support resolution planning by the authorities).
These rules were amended in January 2015 as part of the U.K. implementation of the EU Bank Recovery
and Resolution Directive (“BRRD”), which was published on June 12, 2014. The BRRD also aims to implement
Financial Stability Board recommendations on recovery and resolution regimes for financial institutions and for
U.K. purposes it will partially supersede the existing U.K. regime. The BRRD applies to banks and investment
firms operating in EU member states, including EU branches and subsidiaries of third country firms. It includes
requirements for the preparation of RRPs by institutions and regulators. It also creates various powers for EU
regulators to intervene to resolve institutions at risk of failure, including the ability to sell or transfer all or part ofan institution (similar to existing U.K. regulatory powers) and the introduction of a debt write down or bail-in
tool. Amongst other things, relevant firms are required to include a contractual recognition of the bail-in clause ina wide range of non-EU law governed contracts governing liabilities created or materially amended afterJanuary 1, 2016 under which the creditor contractually recognizes and agrees that the liability may be subject touse of the bail-in tool. Specific provision is also made to facilitate cross-border crisis management and therecognition of third country recovery and resolution action in relation to third country banking and investmentgroups. As part of the bail-in rules, firms will be required to maintain capital resources sufficient to meet the
stipulated minimum requirement for eligible liabilities (“MREL”). The MREL requirement overlaps with theglobal capital standards on total loss absorbing capacity (“TLAC”) for G-SIBs issued by the Financial Stability
Board on November 9, 2015. The TLAC standard defines a minimum requirement for the instruments andliabilities that should be readily available for bail-in within resolution at G-SIBs, but does not limit authorities’
powers under the applicable resolution law to expose other liabilities to loss through bail-in or the application ofother resolution tools. G-SIBs will be required to meet the TLAC requirement alongside the minimum regulatory
requirements set out in the Basel III framework.
On August 18, 2016 the FSB published final guidance on resolution planning arrangements designed tosupport operational continuity in resolution (“FSB Guidance”) in order to assist authorities and firms subject toresolution planning requirements assess whether such firms have appropriate arrangements in place. On April 28,
2017, the U.K. PRA issued a policy statement to introduce rules implementing the FSB Guidance (“U.K. PRA
Rules”). The U.K.PRA Rules will apply from January 1, 2019 to designated investment firms, certain U.K. banks
and building societies. The U.K.PRA Rules largely reflect the FSB Guidance, but go beyond the FSB Guidancein some respects.
There are a number of regulatory developments that impact capital requirements for U.K. regulated entities.
Most significant of these is the Basel III framework, as adopted into EU law through the fourth Capital
26

Requirements Directive and Capital Requirements Regulation (together, “CRD IV”), which became effective on
January 1, 2014. The aim of CRD IV is to strengthen the resilience of the EU banking sector so it is better placed
to absorb economic shocks while ensuring that banks continue to finance economic activity and growth. CRD IV
sets out requirements for minimum capital requirements for banks and investment firms and also introduced newcapital and liquidity buffers.
The framework also modifies treatment of financial institution exposures to central counterparties, resulting
in increased capital charges, as well as qualifying conditions that must be met by central counterparties before
institutions may benefit from preferential treatment. CRD IV introduces the concept of the leverage ratio and thenet stable funding ratio (“NSFR”). The directive introduces corporate governance requirements with a more
rigorous supervision of risks by directors as well as management or supervisory boards. The rules concern thecomposition of boards, their functioning and their role in risk oversight and strategy in order to improve theeffectiveness of risk oversight by boards. The regulation requires financial institutions to make increased Pillar 3
disclosures about their corporate governance arrangements. CRD IV also sets out requirements in relation to
remuneration policies imposing a 1:1 ratio on the basic salary relative to bonus for certain staff.
On November 23, 2016, the European Commission published the fifth Capital Requirements Directive(“CRD V”). CRD V is a legislative dossier implementing the remaining parts of Basel III in the EU as well as
addressing issues identified in the prudential requirements of CRD IV. The European Commission also
introduced amendments to existing legislation in the form of the CRD V Capital Requirements Regulation(“CRR II”), Bank Recovery and Resolution Directive (“BRRD II”) and Single Resolution Mechanism Regulation(“SRMR”). As dossiers will need to pass through the EU legislative process, which usually takes about
18 months, the rules will enter into force in 2019 at the earliest.
On October 20, 2011, the European Commission published draft legislation for the Directive on markets infinancial instruments repealing Directive 2004/39/EC of the European Parliament and of the Council. The
legislation has been split into two parts: the Markets in Financial Instruments Directive (“MiFID”) and theMarkets in Financial Instruments Regulation (“MiFIR”). On May 13, 2014, the Council of the European Union
announced that it had adopted MiFID II (the revised MiFID) and MiFIR. MiFID II was published in the EU
Official Journal on June 12, 2014 and entered into force on July 3, 2014. The majority of the new rules under
MiFID II and MiFIR will take effect from January 3, 2018, with Member States required to implement MiFID II
through national legislation by July 3, 2017. The legislation seeks to introduce wide-reaching changes to markets,
including the extension of market transparency rules into non-equities and potentially reducing the size of the
OTC derivative market by mandating the clearing of standardized OTC transactions through central clearing
counterparties and their trading through regulated trading venues. The new framework introduces a market
structure which seeks to close certain loopholes and ensures that trading, wherever appropriate, takes place on
regulated platforms. It introduces rules on high frequency trading and aims to improve the transparency andoversight of financial markets. The revised MiFID also aims to strengthen the protection of investors byintroducing more robust organizational and conduct requirements and by strengthening the role of management
bodies. The new framework also increases the role and supervisory powers of regulators and establishes powers
to prohibit or restrict the marketing and distribution of certain products in well-defined circumstances. A
harmonized regime for granting firms from third countries access to EU professional markets, based on an
equivalence assessment of third-country jurisdictions by the Commission, will also be introduced.
Following a range of consultations and technical advice published by the European Securities and Markets
Authority (“ESMA”), in April 2016 the European Commission adopted a MiFID Delegated Directive(“Directive”). The Directive contains provisions on investor protection, notably on safeguarding of clients’ funds
and financial instruments, product governance and monetary/non-monetary compensation. The Commission also
adopted a delegated regulation supplementing MiFID II. This regulation aims at specifying, in particular, therules relating to exemptions, the organizational requirements for investment firms, and conduct of businessobligations in the provision of investment services. In May 2016, the Commission adopted a further delegatedregulation supplementing MiFIR. This regulation aims at specifying, in particular, the rules relating todetermining liquidity for equity instruments, the rules on the provision of market data on a reasonable27

commercial basis, the rules on publication, order execution and transparency obligations for systematicinternalisers, and the rules on supervisory measures on product intervention by the ESMA, the European Banking
Authority and national authorities, as well as on position management powers by the ESMA. The Commission
also has adopted the majority of final technical standards. There is still ongoing work on the technical guidelines.
In the U.K., the U.K. FCA has also published various consultations on MiFID II, including a Discussion
Paper in March 2015, which discussed the FCA’s approach to those areas of MiFID II for which the U.K. has
discretion in relation to implementation. In March 2015, U.K. HM Treasury published a consultation on theTransposition of the MiFID II. The U.K. FCA published its first consultation paper on MiFID II implementationin December 2015. The paper focused on markets issues. The U.K. FCA published a second consultation in July
2016 on commodities, supervision and senior management issues and a third consultation in September 2016 on
a range of business conduct issues including investment research and product governance. In December 2016, theU.K. FCA published a fourth consultation on specialist regimes, tied agents, market data and other miscellaneouschanges to the FCA Handbook. In March 2017, the first of two policy statements was published, setting out the
U.K. FCA’s near-final rules on most of the topics which were addressed in the first and second consultation
papers. In February 2017, U.K. HM Treasury published responses to the feedback they received on their March
2015 paper.
The European Market Infrastructure Regulation (“EMIR”) became effective on August 16, 2012, andapplies to any entity established in the European Union that is a legal counterparty to a derivative contract, evenwhen trading with non-EU firms. Although the majority of EMIR regulations have already been implemented,
there were several important developments during the course of 2016 and 2017. On June 6, 2016, The ESMA andthe CFTC established a memorandum of understanding (“MoU”) under EMIR which established the cooperationagreements regarding central clearing counterparties (“CCPs”) that are established in the U.S. and authorized orrecognized by the CFTC and which have applied for EU recognition under EMIR.
On June 14, 2016, the ESMA updated its list of recognized third-country CCPs to include the Chicago
Mercantile Exchange Inc. (“CME”), and in September 2016 the ESMA updated its list to also include ICE Clear
Europe.
On July 1, 2016, the European Commission published an Implementing Decision in the EU Official Journal
which granted equivalence to certain designated contract markets (“DCMs”) in the U.S. that operate under the
regulatory oversight of the CFTC. The decision came into force on July 22, 2016. This equivalence decision wasparticularly relevant to EMIR, as products traded on equivalent third-country markets (in this case DCMs subject
to CFTC regulatory oversight) no longer fall under the definition of an OTC derivative and are therefore nolonger subject to the EMIR obligations relevant to OTC derivatives (such as inclusion within the calculation of
the clearing threshold for non-financial counterparties).
On January 12, 2016, the Securities Financing Transactions Regulation (“SFTR”), which forms part of the
EU’s package of legislation targeted at reforming shadow banking and aims to improve transparency in the
securities financing transactions (“SFTs”) market, came into force subject to a range of transitional provisions
over a number of years. On March 31, 2017, the ESMA published their final technical standards under SFTR to
the European Commission which has three months to decide whether to endorse them. The SFTR implementing
measures are expected to enter into force by end of 2017.
On July 3, 2016, the EU Market Abuse Regulation (“MAR”) came into force in all EU member states. The
new rules on market abuse update and strengthen the existing framework to ensure greater market integrity andinvestor protection, replacing the existing Market Abuse Directive. The MAR strengthens the existing U.K.
market abuse framework by extending its scope to new markets, new platforms and new behaviors. It contains
prohibitions of insider dealing and market manipulation, as well as provisions designed to prevent and detect
these behaviors, including the obligation to report suspicious orders and transactions. The MAR also introduced
Investment Recommendations as a type of client communication requiring disclosures and tracking akin to
investment research.
28

In June 2015, the European Parliament and Council to the EU members issued the final version of the
Fourth Money Laundering Directive (“MLD4”). All EU member states, including the U.K., have two years inwhich to transpose the requirements of the directive into national law which will, where necessary, amend or
replace the existing regulations or legislation. In February 2016, the EU Commission, in an effort to bolster thefight against terrorist financing, proposed amendment to the MLD4 that would enable the tracing of terrorists
through financial movements and disrupt the sources of revenue for terrorist organizations by targeting theircapacity to raise funds. These proposed amendments must still be agreed upon among all 28 Member States, butwere included in a final version of the MLD4 issued by the EU Parliament in July 2016. In September 2017,
additional legislation was implemented in the U.K. designed to combat financial crime including the Criminal
Finances Act. The Act functions as an enhancement and extension of the Proceeds of Crime Act 2002 and, in
addition to increasing the powers of authorities in investigating tax evasion, is also designed to make failure by acommercial organization to prevent the facilitation of tax evasion a punishable offence.
The Alternative Investment Fund Managers Directive (“AIFMD”) became effective on July 21, 2011. The
AIFMD was required to be implemented by Member States by July 22, 2013 (subject to a one-year transitional
period). The AIFMD and its related implementing legislation establish a detailed framework for the management
and marketing of alternative investment funds (or “AIFs”) within the EEA. As the concept of an “AIF” is broadly
defined, the AIFMD captures the majority of non-UCITs funds, including hedge funds, private equity, debt andreal estate funds.
Under the AIFMD regime, fund managers operating within the EEA are subject to extensive organizational
requirements, including mandatory authorization by an EEA regulator, substantial ongoing compliance, conductof business and disclosure requirements and the obligation to appoint an independent depositary withresponsibility for an AIF’s assets. A separate regulatory regime applies to depositaries, which must also be
authorized for this purpose. Additional restrictions and disclosure obligations apply to managers of private equity
firms which acquire material holdings in EEA companies. Non-EEA fund managers seeking to target EEA
investors are also subject, at a minimum, to a sub-set of the compliance requirements for EEA managers,
focusing mainly on disclosure. It is open to each Member State to introduce additional restrictions forthird-country managers and some jurisdictions remain very restrictive in this respect. The possibility of apassporting regime for third-country managers is, however, provided for in the AIFMD and is still underconsideration at the EU level, following positive feedback from the ESMA on a number of jurisdictions such as
Canada, Guernsey, Japan, Jersey and Switzerland (further legislation would be required to introduce such a thirdcountry passport). The AIFMD has material impact for Nomura insofar as certain group entities manage and/or
market investment funds within the EEA (which attracts an enhanced compliance burden). Nomura also acts as
depositary or “depo lite” to AIFs and is accordingly subject to separate compliance requirements and liability
provisions in this capacity.
On March 7, 2017, the Senior Managers and Certification Regime (“SMCR”) reached its one-year
implementation anniversary, and. additional rules regarding regulatory references and broadening the applicationof conduct rules to all staff also came into force on the same day. On May 12, 2017, the U.K. PRA and U.K. FCA
announced the final amendments to the SMCR which will come into force on July 3, 2017. Amongst the key
changes announced was a new power for U.K Regulators (the U.K. FCA and the U.K. PRA) to apply individual
rules of conduct to all non-executive directors, irrespective of whether they perform a senior manager role oranother controlled function, and clarification that this rule applies to a director (whether executive or nonexecutive) when they are acting as a member of the board, of the board’s committees or other governing body. In
addition, a further rule, the ‘Duty of Responsibility’ for senior managers, came into force on May 3, 2017. Under
this ‘Duty of Responsibility,’ the U.K. FCA and U.K. PRA will now be able to take enforcement action against
senior managers if they are responsible for the management of any activities within their firm where their firm
contravenes a regulatory requirement and the senior managers do not take ‘reasonably expected steps’ to avoid
such a contravention from ‘occurring or continuing.’

29

Over the past two to three years, the U.K. FCA has worked towards introducing a number of changes to the
U.K. regulatory regime for the protection of client assets (“CASS”). These requirements are relevant to
Nomura’s U.K. entities that hold client money and other assets on behalf of their clients (other than in the courseof deposit-taking activity). The reforms made to the CASS regime have been driven in large part by concerns of
the U.K. FCA regarding the shortcomings of the previous rules that were highlighted in the U.K. case law
surrounding the collapse of Lehman Brothers International (Europe). The U.K. FCA commenced its review of
the CASS regime in 2012 and published final rules in 2014, the last of which came into force on June 1, 2015.
The reforms aim to improve the speed and efficiency with which client assets may be distributed following theinsolvency of the holding firm and to minimize negative market impact. This has resulted in extensive changes tothe rules, designed to strengthen the legal and operational requirements of holding firms for effective segregationof client money and to enhance controls over institutions with which client money is deposited and third parties
to whom client money is transferred. The conditions attached to exclusions from the client money rules have also
been clarified and enhanced. In addition, various changes have also been made to the rules to give effect to EMIR
requirements regarding client money held in the course of derivatives clearing activity. The net effect of thesevarious changes is generally to increase the operational and compliance burden on firms that hold client money
and assets.
On July 29, 2016, the U.K. FCA released Consultation Paper 16/19: Markets in Financial Instruments
Directive II Implementation (“CP 16/19”). CP16/19 provides for incremental changes to CASS. Many of thechanges introduced by MiFID II are already part of the U.K. FCA rules. Although CASS will implement
MiFID II using language closely mirroring that of MiFID II, such language will be adapted where appropriate toconform with U.K. law and practice.. On November 9, 2015, the Financial Reporting Council published its
Standard for audit firms on Providing Assurance on Client Assets to the U.K. FCA. The Reasonable AssuranceStandard was implemented on January 1, 2016, and has helped to ensure that the strengthened CASS regime isunderpinned by sound assurances.
Since 2012, the European Commission has been working on the EU Data Protection Reform to establish amodern and harmonized data protection framework across the EU to replace the existing Directive. On May 4,
2016, the official texts of the new Regulation were published in the EU Official Journal in all the official
languages and it came into force on May 25, 2016. However, the Regulation will not be effective across the EU
member states until May 25, 2018. The Regulation includes a number of important changes to existing dataprotection legislation including new obligations on data processors, restrictions on the transfer of personal data
outside the EEA and the introduction of new concepts such as “accountability” (and related record-keeping), the“right to be forgotten” and a requirement for data breach notifications to the relevant Regulators. Enforcement of
the Regulation will be carried out by both national regulators (for the U.K., the Information Commissioner) andthe Commission, and the regulators will also now have the new power to impose greater fines for any breaches ofthe data protection requirements of up to 4% of a firm’s global turnover.
The EU Benchmark Regulation entered into force on June 30, 2016 and will apply in the U.K. fromJanuary 1, 2018. Global regulators have imposed fines on firms following attempted manipulation of the LIBOR,
gold and foreign exchange benchmarks, and have taken action against individuals for misconduct related tobenchmarks. The objectives of the EU Benchmark Regulation include, but are not limited: (i) improving
governance and controls over the benchmarking process to ensure that administrators avoid/manage conflicts ofinterest, (ii) improving the quality of input data and methodologies used by benchmark administrators,(iii) ensuring that contributors to benchmarks and the data they provide are subject to adequate controls, and(iv) protecting consumers and investors through greater transparency and adequate rights of redress.
In the U.K., as a follow up to the Fair and Effective Markets Review (established by the Chancellor of the
Exchequer), the Fixed Income, Currencies and Commodities (“FICC”) Markets Standards Board (“FMSB”) wasestablished in 2015 as a private sector response to the conduct problems revealed in global wholesale FICC
markets after the financial crisis. The function of the FMSB is to help raise standards of conduct in global
wholesale markets by producing voluntary Standards and other guidance in areas of uncertainty that are30

developed by the membership and designed to illustrate best practices to all market participants. These Standards
are intended to reduce the continuing uncertainty about acceptable practices in opaque and unregulated areas,
which is a hazard for FMSB members, as well as other market participants. The Standards published to datecover the new issue process, binary options for the commodities markets and reference price transactions for the
fixed income markets. The published Standards do not have legal or regulatory force and do not replace existinglegislation; rather, they are intended to supplement the rules already in place. The Standards are implemented by
way of FMSB member firms making an adherence statement on an annual basis.
Following the Brexit referendum held in June 2016, in which 51.9% of votes were cast in favor of leaving
the EU, the U.K. Prime Minister triggered Article 50 of the Treaty of the Functioning of the European Union tostart the formal exit process on March 29, 2017, meaning that the U.K. is on a course to leave the EU by the endof March 2019. The terms of withdrawal and agreements outlining any new relationships between the U.K. andthe EU will be negotiated during this two year period. In the meantime, the U.K. remains a full member of theEU, although its influence over rule-making is significantly reduced. Furthermore, the triggering of Article 50
means that the U.K. will leave the EU after two years even if no deal is reached, but this period can be extended
with the unanimous agreement of all parties. The U.K. financial services sector currently relies on access to theEU single market to conduct business across borders within the EU. However the U.K. government has said that
it will not seek to remain part of the single market after Brexit. It is not yet clear whether an agreement can bereached through other means in order to maintain a similar level access for U.K.-based firms and so the precise
impact of Brexit on financial services cannot yet be judged. Firms such as Nomura are currently working on theircontingency plans in order to ensure that they are able to provide continued service to clients both regionally andglobally.
Regulatory Capital Rules
Japan
The FIEA requires that all Financial Instruments Firms (Category I) (“Financial Instruments Firms I”), a
category that includes NSC and NFPS, ensure that their capital adequacy ratios do not fall below 120% on a
non-consolidated basis. The FIEA also requires Financial Instruments Firms I to file monthly reports regarding
their capital adequacy ratios with the Commissioner of the FSA or the Director-General of the appropriate Local
Finance Bureau, and also to disclose their capital adequacy ratios to the public on a quarterly basis. In addition, if
the capital adequacy ratio of a Financial Instruments Firm I falls below 140%, it must file a daily report with theauthorities. The FIEA provides for actions which the Prime Minister, through the Commissioner of the FSA or
the Director-General of the appropriate Local Finance Bureau, may take if any Financial Instruments Firm I fails
to meet the capital adequacy requirement. More specifically, if the capital adequacy ratio of any Financial
Instruments Firms I falls below 120%, the Commissioner of the FSA or the Director-General of the appropriate
Local Finance Bureau may order the Financial Instruments Firm I to change its business conduct, to deposit its
property in trust, or may issue any other supervisory order that such authorities deem necessary and appropriate
to protect the interests of the general public or investors. If the capital adequacy ratio of a Financial Instruments
Firm I falls below 100%, the authorities may take further action, including the issuance of orders to temporarilysuspend its business and the revocation of its registration as a Financial Instruments Firm I under the FIEA.
Under the FIEA and regulations thereunder, the “capital adequacy ratio” means the ratio of adjusted capital
to a quantified total of business risks. Adjusted capital is defined as net worth less illiquid assets. Net worth
mainly consists of stated capital, additional paid-in capital, retained earnings, reserves for securities transactions,certain allowances for doubtful current accounts, net unrealized gains/losses in the market value of investment
securities, and subordinated debt. Illiquid assets generally include non-current assets, certain deposits andadvances and prepaid expenses. Business risks are divided into three categories: (i) market risks (i.e., risks ofasset value changes due to decline in market values and other reasons), (ii) counterparty risks (i.e., risks ofdelinquency of counterparties and other reasons) and (iii) basic risks (i.e., risks in carrying out daily businessactivities, such as administrative problems with securities transactions and clerical mistakes), each quantified in
the manner specified in a rule promulgated under the FIEA.
31

The FSA reviewed the FIEA and regulations thereunder in line with Basel 2.5 framework and the revised
regulations for Basel 2.5 were implemented at the end of December 2011. Market risks increased significantly asa result of the Basel 2.5 rule implementation.
We closely monitor the capital adequacy ratio of NSC and NFPS on a continuous basis. Since theintroduction of the capital adequacy requirement in Japan in 1989, we have at all times been in compliance withall appropriate requirements. We believe that we will continue to be in compliance with all applicable capital
adequacy requirements for the foreseeable future.
As discussed above, the FSA amended the FIEA and introduced new rules on consolidated regulation andsupervision of securities companies on a consolidated basis on April 1, 2011 to improve the stability andtransparency of Japan’s financial system and ensure the protection of investors. Following introduction of theserules, NSC was designated as a Special Financial Instruments Firm, following which we have been designated asa Final Designated Parent Company. As such, we are required to calculate consolidated regulatory capital
adequacy ratio according to the FSA’s “Establishment of standards on sufficiency of capital stock of a final
designated parent company and its subsidiary entities, etc. compared to the assets held thereby” (2010 FSARegulatory Notice No. 130; “Capital Adequacy Notice on Final Designated Parent Company”). Accordingly,
since our designation as a Final Designated Parent Company in April 2011, we now calculate our Basel rulebased consolidated regulatory capital adequacy ratio according to the Capital Adequacy Notice on Final
Designated Parent Company.
The FSA also amended the FIEA to include reporting on consolidated regulatory capital for the Final
Designated Parent Companies, effective April 1, 2011. We are subject to this reporting requirements as well as
the capital adequacy requirements described above.
The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel
2.5 and Basel III, and we have calculated a Basel III-based consolidated capital adequacy ratio since the end of
March 2013. Basel 2.5 includes significant changes in the method of calculating market risk and Basel III
includes redefinition of capital items for the purpose of requiring higher levels of capital and expansion of thescope of credit risk-weighted assets calculation.
If our capital ratios fall to the minimum level required by the FSA, our business activities may be impacted.
However, these ratios are currently at well capitalized levels. We have met all capital adequacy requirements towhich we are subject and have consistently operated in excess of the FSA’s capital adequacy requirements.
Subject to future developments in regulatory capital regulations and standards, there has been no significant
change in our capital ratios which management believes would have material impact on our operations.
The Basel Committee has issued a series of announcements regarding a broader program to strengthen theregulatory capital framework in light of weaknesses revealed by the financial crises, as described in“Consolidated Regulatory Capital Requirements” under Item 5.B of this annual report. The Capital Adequacy
Notice on Final Designated Parent Company is expected to incorporate the series of rules and standards in linewith the schedule proposed by the Basel Committee.
At the G-20 summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committeeannounced the list of global systemically important banks (“G-SIBs”) and the additional requirements to the
G-SIBs including the recovery and resolution plan. The FSB also announced the group of G-SIBs will be updated
annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIB. On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs to domestic systemically important banks (“D-SIBs”) and the Basel Committee developed and publisheda set of principles on the assessment methodology and the higher loss absorbency requirement for D-SIBs. In
December 2015, the FSA identified us as a D-SIB and required additional capital charge of 0.5% after March
2016, with 3-year transitional arrangement.
32

Overseas
In the U.S., Nomura Securities International, Inc. (“NSI”) is registered as a broker-dealer under the
Securities Exchange Act of 1934 and as a futures commission merchant with the Commodity Futures Trading
Commission (“CFTC”). NSI is also regulated by self-regulatory organizations, such as the Financial Industry
Regulatory Authority (“FINRA”) and the Chicago Mercantile Exchange Group. NSI is subject to the SEC’s
Uniform Net Capital Rule (“Rule 15c3-1”) and other related rules, which require net capital, as defined under thealternative method, of not less than the greater of $1,000,000 or 2% of aggregate debit items arising from clienttransactions. NSI is also subject to CFTC Regulation 1.17 which requires the maintenance of net capital of 8% of
the total risk margin requirement, as defined, for all positions carried in client accounts and nonclient accounts or$1,000,000, whichever is greater. NSI is required to maintain net capital in accordance with the SEC, CFTC, orother various exchange requirements, whichever is greater. Another U.S. subsidiary, Nomura Global Financial
Products Inc. (“NGFP”) is registered as an OTC Derivatives Dealer under the Securities Exchange Act of 1934.
NGFP is subject to Rule 15c3-1 and applies Appendix F. NGFP is required to maintain net capital of$20,000,000 in accordance with the SEC. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer
registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the
CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule15c3-1 which requires the maintenance of minimum net capital, as defined under the alternative method, equal to
the greater of $1,000,000, 2% of aggregate debit items arising from client transactions, or the CFTC minimum
requirement. Under CFTC rules, ILLC is subject to the greater of the following when determining its minimum
net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the amount ofadjusted net capital required by a futures association of which it is a member; and the amount of net capitalrequired by Rule 15c3-1(a). As of March 31, 2016 and 2017, NSI, NGFP and ILLC were in compliance with
relevant regulatory capital related requirements.
In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the
Prudential Regulation Authority (“U.K. PRA”). The regulatory consolidation is produced in accordance with therequirements established under the Capital Requirements Directive and the Capital Requirements Regulation
which came into effect on January 1, 2014. Nomura International plc (“NIP”), the most significant of NEHS’
subsidiaries, acts as a securities brokerage and dealing business. NIP is regulated by the U.K. PRA and has
minimum capital adequacy requirements imposed on it on a standalone basis. In addition, Nomura BankInternational plc (“NBI”), another subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone basis.
As of March 31, 2016 and 2017, NEHS, NIP and NBI were in compliance with relevant regulatory capital related
requirements.
In Asia, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Singapore Ltd (“NSL”) areregulated by their local respective regulatory authorities. NIHK is licensed by the Securities and Futures
Commission in Hong Kong to carry out regulated activities including dealing and clearing in securities andfutures contracts, advising on securities, futures contracts and corporate finance and wealth finance management.
Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial
Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid
capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital iscalculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules.
NSL is a merchant bank with an Asian Currency Unit (“ACU”) license governed by the Monetary Authority ofSingapore (“MAS”). NSL carries out its ACU regulated activities including, among others, securities brokerageand dealing business. NSL is regulated and has minimum capital adequacy requirements imposed on it on astandalone basis by the MAS in Singapore. As of March 31, 2016 and 2017, NIHK and NSL were in compliancewith relevant regulatory capital related requirements.
In addition, certain of our other subsidiaries are subject to various securities and banking regulations, andthe capital adequacy requirements established by the regulatory and exchange authorities of the countries inwhich those subsidiaries operate. We believe that each such subsidiary is, and will in the foreseeable future be, incompliance with these requirements in all material respects.
33Management Challenges and Strategies
The Nomura Group’s management vision is to enhance its corporate value by deepening society’s trust in
the firm and increasing the satisfaction of stakeholders, including shareholders and clients. As “Asia’s global
investment bank,” Nomura will provide high value-added solutions to clients globally, and recognizing its widersocial responsibility, Nomura will continue to contribute to economic growth and development of society. In
order to enhance its corporate value, Nomura responds flexibly to various changes in the business environment,
and emphasizes earnings per share (“EPS”) as a management index to achieve stable profit growth, and will seek
to maintain sustained improvement in this index.
In order to achieve our management objectives, we are primarily focusing on ensuring that profits arerecorded by all divisions and regions. We are committed to continuing business model transformation in Japan aswell as aiming to improve profitability of our international operations under Vision C&C slogan, so that we will
be able to build a solid foundation to generate profits even in severe market environments.
We will ensure a flexible and robust response to changes in the global operating environment related tointernational financial regulations and progress in various innovations; and make efforts to monitor international
political situation which is changing rapidly, so that we will be able to maintain robust financial position and touse management resources effectively by improving capital efficiency among others.
The challenges and strategies in each division are as follows:•

Retail Division
In Retail Division, we have been working to transform our business model in order to “expand ourbusiness by increasing clients’ trust and improving clients’ satisfaction” and to “become financial
institution a lot of people need.” We are aiming to improve clients’ satisfaction and expand ourbusiness by responding to clients’ diversifying needs. We also focus on providing a broad range ofclients with value-added solutions through face-to-face consulting services, seminars, online and callcenter channels, so that we will win greater trust from account holders as well as new clients.

•

Asset Management Division
We intend to increase assets under management and expand our client base in (i) our investment trust
business, by providing clients with a diverse range of investment opportunities to meet investors’various needs, and (ii) our investment advisory business, by providing value-added investment services
to our clients on a global basis. As a distinctive investment manager based in Asia with the ability toprovide a broad range of products and services, we aim to gain the strong trust of investors worldwide
by making continuous efforts to improve investment performance and to meet clients’ various needs.

•

Wholesale Division
Global Markets has been focusing on delivering differentiated and competitive products and solutions
to our clients by leveraging our global capabilities in trading, research, and global distribution. We aim
to provide uninterrupted liquidity to our clients across asset classes and markets, and strive to offer
best-in-class market access and execution services.
In Investment Banking, we continue to enhance our structure to further provide cross-border M&A, as
well as to support our clients with financing in both domestic and overseas markets amid theglobalization of our clients’ business activities. We also continue to provide solution business services
including interest and currency hedging associated with our M&A and financing services.
In our Wholesale Division, in order to provide quality services to meet the needs of our clients, wedeploy the firm’s resources to areas of competitive advantage. We continue to reinforce theconnectivity between Global Markets, Investment Banking, as well as among divisions and regions, toholistically meet capital markets needs of our clients. We will strive to continuously improve our34

products and services, as well as to make use of our competitive advantage in the Asia-Pacific region,
so that we can meet the evolving needs of our clients along with the changes in macroeconomic and themarket environment.
Risk Management and Compliance, etc.
Nomura Group has established its risk appetite which articulates the risks that the firm is willing to assume
in pursuit of its corporate vision, strategic objectives and business plan. We will continue to develop a risk
management framework which ensures financial soundness, enhances corporate value, and is strategicallyaligned to the business plan and incorporated in decision making by senior management.
With regard to compliance, we will continue to focus on improving the management structure to comply
with local laws and regulations in the countries where we operate. In addition to complying with laws andregulations, we will continuously review and improve our internal compliance system and rules for the purposeof promoting an environment of high ethical standards among all of our executive management and employees.
In this way, we will meet the expectations of society and clients toward the Nomura Group and contribute to thefurther development of financial and capital markets.
Nomura Group established the Nomura Founding Principles and Corporate Ethics Day in 2015, based on
our experiences including the business improvement order in connection with public stock offerings in 2012
against our subsidiary, Nomura Securities Co. Ltd. Commemorated annually, this day aims to remind all of our
executive officers and employees of the lessons learned from the incident and to renew our determination toprevent similar incidents from recurring in the future and further improve public trust through various measures.
We will strive to maintain a sound corporate culture through these initiatives. We will also further enhance andreinforce our internal control framework, which includes measures to prevent insider trading and solicitation of
unfair dealing, by ensuring that all of our executive officers and employees continually maintain the highest levelof business ethics expected from professionals engaged in the capital markets.
Through the efforts described above, we are strengthening the earnings power of the entire Nomura Groupand working to achieve our management targets and to maximize corporate value. We will advance collaboration
across regions and among our three Divisions, and devote our efforts to the stability of financial and capital
markets and to our further expansion and development as “Asia’s global investment bank”.
Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934
Under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added
Section 13(r) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if an issuer that isrequired to file an annual or quarterly report under the Exchange Act or its affiliates knowingly engaged incertain activities during the period covered by any such report with the Government of Iran, entities controlled by
the Government of Iran or persons sanctioned by the U.S. government under programs relating to terrorism or
proliferation of weapons of mass destruction, or knowingly engaged in certain other Iran-related activities during
the period covered by any such report, the issuer is required to disclose certain information related to suchactivity in the applicable periodic report. Disclosure is generally required even for activities not prohibited byapplicable law.
During the fiscal year ended March 31, 2017, certain non-U.S. affiliates of the Company engaged in thefollowing activities with entities that are or may be owned or controlled by the Government of Iran:•

Nomura Research Institute, Ltd. (“NRI”), an affiliate in which we hold, directly and indirectly, 37.2% of
the outstanding share capital, has engaged in meetings and discussions on potential businessdevelopment with entities that are or may be owned or controlled by the Government of Iran. There
were no revenues or profits arising directly from these meetings and discussions.
35

In addition, NRI entered into several contracts with an investment and development company, which isowned or controlled by the Government of Iran, pursuant to which NRI agreed to perform benchmark
investigations, conduct comparative analyses and provide other consulting services to facilitate development
projects. Performance under these contracts is ongoing. During the period covered by this report, these contracts
and related activities generated gross revenues of $1,743,500 and estimated net profits of $261,525. Further, NRI
entered into a contract with another entity pursuant to which NRI receives certain services related to the workthat NRI is performing for the aforementioned investment and development company, and performance under
this contract is also ongoing. This contract did not, on its own, generate any revenues or profits for NRI. Afterconsultation with NRI and on the basis of information publicly available to us, we believe that this other entity isa private entity that is not owned or controlled by the Government of Iran.
NRI also entered into a contract with an entity pursuant to which NRI receives certain services related to the
exploration of business opportunities in Iran in the cardiovascular treatment field, and performance under thiscontract is ongoing. After consultation with NRI and on the basis of information publicly available to us, we
believe that this entity is a private entity that is not owned or controlled by the Government of Iran. There wereno revenues or profits arising directly from this contract.
•

Nomura International plc, our indirect wholly-owned subsidiary, has engaged in meetings anddiscussions on potential business development with officials of entities that are owned or controlled by
the Government of Iran and representatives of certain Iranian brokerage firms. There were no revenues
or profits arising directly from these meetings and discussions.

•Certain non-U.S. affiliates of the Company made payments to the Government of Iran to obtain entry
visas to travel to Iran in connection with the activities described above.

Sanctions relief regarding Iran was implemented in 2016 in accordance with the Joint Comprehensive Planof Action (“JCPOA”) reached by the permanent members of the United Nations Security Council (China, France,
Russia, the United Kingdom and the United States), Germany, the EU, and Iran to ensure that Iran’s nuclear
program is used for peaceful purposes. Despite the JCPOA, certain activities, including transactions involving
targeted Iran-related persons and entities and transactions that implicate U.S. jurisdiction, remain subject tosanctions.
To the extent permitted under applicable law, regulations, and sanctions relief (such as the JPOA-related
sanctions relief), we intend to continue to engage in the activities described above and may engage in similar
activities in future periods.

36

C. Organizational Structure.
The following table lists the Company and its significant subsidiaries and their respective countries ofincorporation. Indentation indicates the principal parent of each subsidiary. Proportions of ownership interest
include indirect ownership.
Name

Country

Ownership
Interest

Nomura Holdings, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Securities Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Asset Management Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Nomura Trust & Banking Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Babcock & Brown Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Capital Investment Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Investor Relations Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Financial Partners Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Funds Research and Technologies Co., Ltd. . . . . . . . . . . . . . . . . . . . .
Nomura Research & Advisory Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Business Services Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Facilities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Institute of Capital Markets Research . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Healthcare Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Agri Planning & Advisory Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Land and Building Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Asahi Fire & Marine Insurance Co., Ltd. . . . . . . . . . . . . . . . . . . . . . .
Nomura Financial Products & Services, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Institute of Estate Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Asia Pacific Holdings Co., Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Holding America Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Securities International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Corporate Research and Asset Management Inc. . . . . . . . . . . . .
Nomura Derivative Products Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura America Mortgage Finance, LLC . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Global Financial Products, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .
NHI Acquisition Holding, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Instinet Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Europe Holdings plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura International plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Bank International plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banque Nomura France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Bank (Luxembourg) S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Bank (Switzerland) Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Europe Finance N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Capital Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura European Investment Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Asia Holding N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura International (Hong Kong) Limited . . . . . . . . . . . . . . . . . . . . . .
Nomura Singapore Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Australia Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
P.T. Nomura Sekuritas Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Asia Investment (India Powai) Pte. Ltd. . . . . . . . . . . . . . . . . . . . . . . .
Nomura Services India Private Limited . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Financial Advisory and Securities (India) Private Limited . . . . . . . . .
Nomura Asia Investment (Fixed Income) Pte. Ltd. . . . . . . . . . . . . . . . . . . . . .
Nomura Asia Investment (Singapore) Pte. Ltd. . . . . . . . . . . . . . . . . . . . . . . . .
Capital Nomura Securities Public Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . .

Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.K.
U.K.
U.K.
FranceLuxemburg
Switzerland
The Netherlands
U.K.
U.K.
The Netherlands
Hong Kong
Singapore
Australia
Indonesia
Singapore
India
India
Singapore
Singapore
Thailand

—
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
54
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
100
100
100
100
100
86

(%)

37

D. Property, Plants and Equipment.
Our Properties
As of March 31, 2017, our principal head office is located in Tokyo, Japan and occupies 967,689 square feetof office space. Our other major offices in Japan are our Osaka branch office, which occupies 125,184 square
feet, our Nagoya branch office, which occupies 82,914 square feet, and the head office of NAM in Tokyo, which
occupies 176,098 square feet.
As of March 31, 2017, our major offices outside Japan are the head offices of NIP located in London, which
occupies 456,564 square feet, the New York head office of Nomura Securities International, Inc., which occupies
158,468 square feet, and the offices of Nomura International (Hong Kong) Limited located in Hong Kong which
occupies 146,389 square feet. We lease most of our overseas office space.
As of March 31, 2017, the major office of Nomura Services India Private Limited, our specialized service
company in India, occupies 413,517 square feet.
As of March 31, 2017, the aggregate book value of the land and buildings we owned was ¥173 billion, andthe aggregate book value of equipment we owned, including communications and data processing facilities, was¥39 billion.
Item 4A. Unresolved Staff Comments
We are a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934. There
are no written comments which have been provided by the staff of the Securities and Exchange Commission
regarding our periodic reports under that Act not less than 180 days before the end of the fiscal year ended
March 31, 2017 and which remain unresolved as of the date of the filing of this annual report with theCommission.
Item 5. Operating and Financial Review and Prospects
A. Operating Results.
You should read the following discussion of our operating and financial review and prospects together with
Item 3.A “Selected Financial Data” of this annual report and our consolidated financial statements included
elsewhere in this annual report.
This discussion and analysis contains forward-looking statements that involve risks, uncertainties andassumptions. Our actual results may differ materially from those anticipated in these forward-looking statements
as a result of factors, including, but not limited to, those under Item 3.D “Risk Factors” and elsewhere in thisannual report.
Business EnvironmentJapan
The Japanese economy expanded at a modest pace. Japan’s real gross domestic product (“GDP”) grew
relatively rapidly in January-March 2016, at a quarter-on-quarter annualized rate of 1.9%, and continued to growthereafter, by 2.2% in April-June, 1.2% in July-September, and 1.2% in October-December. We see the easing ofconcerns about price hikes for food and other items as one of the reasons why consumer spending carried on
rising. Exports from Japan also embarked on a clear upward trend in July-September 2016 as global
manufacturing activity picked up. Capital expenditure improved too, and the Bank of Japan’s March 2017 ShortTerm Economic Survey of Enterprises in Japan (“Tankan”) indicated that Japanese companies’ capital
expenditure plans for fiscal 2017 were bullish. However, the Japanese government implemented an economic
38

stimulus package totaling around ¥28.1trn in August 2016 in response to both considerable ongoing uncertainty
about the economic outlook in January-June 2016 and concerns about the impact of the decision taken by theUnited Kingdom (“UK”) in a referendum held in June 2016 to leave the European Union (“EU”). In addition,
Donald Trump was inaugurated as U.S. President in January 2017, but it is still not clear what the newadministration’s policies are on Japan. However, at summit talks between leaders of the two countries in
February 2017 the Japanese deputy prime minister and the U.S. vice president agreed to work on creating a new
economic dialogue. In September 2016 the Bank of Japan published a “comprehensive assessment” of its
monetary policy since 2013, in which it said that its monetary easing policies to date had helped to put an end todeflation and noted the possibility that excessively low interest rates might have unwanted side-effects. The Bankof Japan then introduced its policy of “quantitative and qualitative easing with yield curve control”, switching thetarget of its monetary policy to interest rates while still mentioning “quantity”, and making clear its intention toachieve its 2% price stability target over the long term.
The yen was stronger versus the U.S. dollar in the fiscal year ended March 31, 2017 than in the fiscal year
ended March 31, 2016, and this caused corporate earnings to struggle in some sectors, particularly exporting
sectors. However, profits grew in sectors benefiting from the rebound in international commodity prices,
including crude oil prices, and in some domestic demand-related sectors. This appears to have been the first timein two years that Japanese corporate profits rose overall. Major contributions to this profit growth came fromsectors such as trading companies and chemicals, housing & real estate, and telecommunications. The trading
companies and chemicals sectors saw profits rebound, after deteriorating in the previous fiscal year, partly inresponse to the recovery in international commodity prices; the housing & real estate sector saw a gradual
recovery in demand in response to low interest rates; and in the telecommunications sector cost reductions andthe expansion of non-telecommunications businesses supported earnings. Meanwhile, the autos, utilities,
machinery, and transportation sectors all made substantial negative contributions to overall profit growth. The
autos sector was hit hard because the yen was stronger versus the U.S. dollar than in the fiscal year ended
March 31, 2016; the utilities sector was affected by delays in restarting nuclear power stations and by electricity
rate cuts triggered by the full deregulation of the electricity retail market; the machinery sector was hit byproduction cutbacks and delays in reducing costs in commercial aircraft business, and also by additional costs atship & offshore structure businesses; and in the transportation sector the marine transport subsector looks likely
to swing to losses as containership rates deteriorate further in response to excess supply. As of April 7, 2017, weestimate that recurring profits at major Japanese companies (those in the Russell/Nomura Large Cap Index) rose
1% year-on-year in the fiscal year ended March 31, 2017, thus improving from the 1% decline recorded in thefiscal year ended March 31, 2016.
On the Japanese stock market, the view that monetary tightening in the U.S. looked likely to be slower thanmarket participants had been expecting led to growing concerns that a strengthening of the yen versus the U.S.
dollar would lead to a slowdown in corporate earnings. In addition, when those in favor of the UK leaving the
EU won a majority in the referendum held in the UK in June 2016, this fueled concerns about the economic
outlook in Europe. In response, the Nikkei Stock Average fell sharply, dipping temporarily below 15,000.
However, Japanese equities were firm after expectations of economic stimulus measures in Japan rose to thesurface following victory by the ruling coalition in the Japanese Upper House election in July 2016, the Bank ofJapan raised the value of its annual ETF (exchange-traded fund) purchases to around ¥6 trillion, and a growing
number of U.S. economic indicators pointed to U.S. economic strength. Republican Party candidate Donald
Trump won the U.S. presidential election in November 2016. Immediately after the outcome of the election
became clear, Japanese equity prices saw a sharp temporary fall on concerns about the U.S. political outlook.
However, equity markets rose around the world, particularly in the U.S., on high hopes regarding President
Trump’s economic policies, and specifically the prospect of an increase in infrastructure investment and otherforms of government spending. On the foreign exchange markets the yen weakened to more than ¥118 versus the
U.S. dollar at one point, and Japanese equities similarly turned upward and subsequently remained firm, with the
Nikkei Stock Average rising to around the 19,500 level by mid-December 2016. From the beginning of 2017, theweakening of the yen versus the U.S. dollar came to a halt, reflecting the view that market participants would
take a wait-and-see stance on policies of the new U.S. administration, and Japanese equity prices saw limited
39

upside, although the Bank of Japan supported equity prices by buying ETFs. The key Tokyo Stock Price Index(the “TOPIX”) rose 12.3% over the fiscal year, from 1,347.20 at the end of March 2016 to 1,512.60 at the end of
March 2017. Meanwhile, the Nikkei Stock Average rose 12.8% over the fiscal year, from 16,758.67 at the end of
March 2016 to 18,909.26 at the end of March 2017.
Yields on Japanese government debt securities followed a downward trend through July 31, 2016 and an
upward trend thereafter. The yield on newly issued 10-year Japanese government debt securities, which fell
sharply after the Bank of Japan introduced a negative interest rate policy in January 2016, was in negative
territory from the middle of February and fell further into negative territory in June 2016 after the UK voted in areferendum to leave the EU, briefly touching -0.3% in July. However, the yield on newly issued Japanese
government debt securities then rose above -0.1% as expectations grew that the Bank of Japan would revise
excessive easing policies after its announcement at the conclusion of the BOJ policy board meeting at the end of
July that it would carry out a comprehensive assessment of the effects of its policies to date. As previously
discussed, the BOJ released the results of its comprehensive assessment in September 2016 and simultaneously
launched its policy of “quantitative and qualitative easing with yield curve control”, under which it buys longterm Japanese government debt securities to ensure that the yield on 10-year Japanese government debt securities
is around zero. The yield on newly issued Japanese government debt securities was 0.065% at the end of March
2017, and was mostly within the 0.0-0.1% range in January-March 2017, after returning to positive territory intandem with the sharp rise in U.S. long-term interest rates stoked by expectations for large-scale fiscal policies
after Mr. Trump was elected in the U.S. presidential election in November, counter to most projections.
In foreign exchange markets, the dollar/yen exchange rate fluctuated sharply in both directions, strongly
influenced by political events in the UK and the U.S.. At the end of March 2016 the yen was trading at ¥112-113
versus the U.S. dollar. At the start of fiscal 2016, the dollar/yen exchange rate maintained the strong yen trend
dating back to January 2016. Investors sold dollars and bought yen as deep-rooted concerns remained over a
slowdown in the global economy, and particularly the Chinese economy, and expectations of further U.S. rate
hikes weakened, and furthermore because of wariness about political risk, such as the impending referendum in
the UK on leaving the EU in June 2016. The yen briefly strengthened to trade at less than ¥100 versus the U.S.
dollar immediately after the UK voted to leave the EU. Uncertainty about the outcome of the November U.S.
presidential election then weighed on the dollar/yen exchange rate, which traded in the range of ¥100-105 for asustained period. After the November 2016 presidential election in the U.S., optimism about the prospects for the
global economy grew, and the dollar/yen exchange rate rose to as high as ¥118-119 by mid-December as U.S.
interest rates rose. The sharp weakening in the yen was aided also by the widening of the gap between U.S. andJapanese interest rates as yields on 10-year Japanese government debt securities remained at around zero underthe yield curve control policy introduced by the Bank of Japan after its September 2016 policy board meeting.
Then, as market expectations for the new U.S. administration weakened from the beginning of 2017 andinvestors became concerned about the presidential elections in France scheduled for April-May, the yen
strengthened again versus the dollar and the dollar/yen exchange rate fell back to ¥111-112 at the end of March.
Meanwhile, the euro/yen exchange rate started fiscal 2016 at ¥128-129 but fell sharply in the wake of the Brexit
vote and traded in the ¥111-117 range in July-October. While interest rates rose around the world after the U.S.
presidential election in November 2016, Japanese interest rates were effectively fixed, so the gap between
Japanese and European interest rates widened. The euro/yen exchange rate rose to ¥122-123 by December. After
this, however, the euro weakened again versus the yen in response to concerns about the French presidential
election and other geopolitical risks, as well as in response to moves in global interest rates, and by the end of
March 2017 the euro/yen exchange rate had fallen back to ¥118-119.
Overseas
The global economy continued to see a moderate recovery in growth, although the situation varied fromregion to region. The U.S. raised interest rates in December 2016 and March 2017 in response to a solid domestic
economy and improvement in economic sentiment in China and other countries around the world. Japan andEurope continued with large-scale quantitative easing, but with economic sentiment improving and inflation40

rising in Europe, discussions about a strategy to put an end to this easing also became prominent in the markets.
China maintained stable growth on the whole, supported by increased public investment and the effect of policies
such as tax breaks on car purchases. Economic conditions remained difficult for Brazil, Russia, and some otherresource-rich/oil-producing nations, but with a bottoming in crude oil and other resource prices, currency
weakness abated and signs of economic stabilization appeared, including declines in inflation.
In the U.S., the FRB (Federal Reserve Board) was unable to raise interest rates for the second time until
December 2016, about a year after its first rate hike, after financial market volatility increased sharply in January
2016 and the UK voted in the June 2016 referendum to leave the EU. The FRB decided to raise rates for the thirdtime, in March 2017, after determining that downside risk to its economic outlook had receded in response to theimprovement in the Chinese economy, stability on commodity markets, and the rise in equity prices andimprovement in consumer sentiment following Donald Trump’s victory in the U.S. presidential election. Fiscal
policy did not change much in 2016, but with the advent of the Trump administration expectations grew for tax
reductions, an increase in public works, and higher defense spending. Real GDP growth weakened in JanuaryJune 2016 and picked up in July-December 2016, but over 2016 as a whole it slowed to +1.6% year-on-year,
from +2.6% in 2015. Corporate earnings in July-December 2016 were higher than in the previous year as the
U.S. currency stopped rising and crude oil prices rose. U.S. equity markets were flat through October 2016 but
started to rise from November on expectations that pro-business policies would be rolled out with the victory of
Donald Trump in the presidential election. The Dow Jones Industrial Average advanced 16.8% to 20,663.22 at
the end of March 2017, from 17,685.09 at the end of March 2016. The yield on 10-year U.S. Treasuries was
about 2.39% at the end of March 2017, up from about 1.77% at the end of March 2016.
In Europe, the result of the UK referendum on June 23, 2016 ran counter to expectations with the peoplechoosing to leave the EU. In response, risk-off trades took hold around the world on June 24 and equity prices
declined. The Bank of England lowered its policy interest rate to 0.25% in August 2016 and decided to carry out
quantitative easing policies through the end of January 2017, in response to concerns about downside risks to theeconomy. Meanwhile, the underlying economy in Europe, including in the UK, remained favorable. The DAX
German stock index at the end of March 2017 was 23.6% higher than at the end of March 2016, after Eurozone
real GDP grew 1.7% year-on-year in 2016 on strong domestic demand, capex rose, after being held back during
the 2012 European debt crisis, and the German government increased spending related to refugees in response to
an influx of refugees from the Middle East. The European Central Bank announced in December 2016 that itplanned to reduce monthly asset purchases under its quantitative easing program from April 2017, in a so-called
tapering, in response to the ebbing of deflationary risk. In response, the yield on German 10-year government
bonds rose to 0.3-0.4% by the end of March 2017, up from 0.1-0.2% at the end of March 2016, as market
expectations for the ECB to conduct further monetary easing faded and Eurozone inflation came in line with the
ECB target, at 2% year-on-year in February 2017.
In Asia, real GDP growth came in at 6.7% year-on-year in China in 2016. This represented a slowdown
from 7.3% growth in 2014 and 6.9% growth in 2015 but was nevertheless stable. Domestic construction activity
picked up from January-June 2016, contributing to a stable economy, as real estate prices recovered and regional
government fund raising improved. Buoyancy in industrial production was supported by a turn to inventory
accumulation in the corporate sector in July-December 2016. Earnings improved in the corporate sector, mainly
at state-owned companies, supported partly by higher raw material prices after authorities started efforts in May
to eliminate excess production capacity in the steel and coal industries. In Asia ex-China, exports picked up as
demand in the US and China recovered, and domestic demand was buoyed by economic stimulus measures. India
recovered from a temporary disruption in the economy caused by the withdrawal of high-denomination
banknotes in November 2016, and continued to restructure, including efforts to strengthen infrastructure, resolve
the nonperforming loan problem weighing on the financial sector, reform the tax system, and deregulate foreign
direct investment. Indonesia plans to expand investment in infrastructure on the back of improvement in fiscal
conditions resulting from a tax amnesty program and the scrapping of fuel subsidies. In the Philippines, we
expect the economy to benefit from robust domestic demand, a healthy fiscal situation, and a low debt-to-GDP
ratio.
41

Executive Summary
During the fiscal year ended March 31, 2017, the global economy continued to see a moderate recovery ingrowth, although the situation varied from region to region. In the US, the real Gross Domestic Product (“GDP”)
growth rate weakened in the first half of 2016 and although it picked up in the second half of the year, over 2016as a whole growth slowed compared with the previous year. However, the Federal Reserve Board (FRB) has
raised interest rates twice since December 2016, based on its view that downside risk to its economic outlook hasreceded. In Europe, including the UK, the underlying economy was favorable as a result of growth in capital
expenditure and fiscal spending. In Asia ex-China, exports picked up as demand in the US and China recovered,and domestic demand was buoyed by economic stimulus measures.
The Japanese economy meanwhile expanded at a modest pace. Exports from Japan also embarked on a clear
upward trend in July-September 2016 as global manufacturing activity picked up. Capital expenditure improved
too. Following Donald Trump’s inauguration as U.S. President in January 2017, at summit talks between the US
and Japan in February 2017 the Japanese deputy prime minister and the U.S. vice president agreed to work on
creating a new economic dialogue. The Tokyo Stock Price Index (the “TOPIX”) rose from 1,347.20 at the end of
March 2016 to 1,512.60 at the end of March 2017, and the Nikkei Stock Average rose from 16,758.67 at the endof March 2016 to 18,909.26 at the end of March 2017. At the end of March 2016 the yen was trading at ¥112-113
versus the U.S. dollar, but the dollar/yen exchange rate fluctuated sharply in both directions, strongly influenced
by political events, such as the UK referendum and the U.S. presidential election, and fell back to ¥111-112 at theend of March 2017. The yield on Japanese government debt securities followed a downward trend throughJuly 31, 2016, following the introduction of a negative interest rate policy by the Bank of Japan. Thereafter
expectations that the Bank of Japan would revise excessive easing policies coupled with the rise in U.S. longterm interest rates resulted in a return to an upward trend, and the yield on newly issued 10-year Japanese
government debt securities was 0.065% at the end of March 2017.
From a regulatory perspective, in addition to the implementations of Basel III requirements relating tocapital ratio, liquidity ratio, and leverage ratio, Nomura was identified as one of the domestic systemicallyimportant banks. As part of the global tightening of the financial regulations, wide-ranging reforms will befurther introduced. Nomura will continue to monitor these issues closely and take necessary measures in
responding to any such changes.
While our environment is changing drastically, based on our basic philosophy of “placing our clients at theheart of everything we do,” we have continued to transform our domestic business model of Retail Division.
Also, we delivered strategic changes in EMEA and the Americas and worked on improving the profitability of
our international operations. In our Retail Division, discretionary investment assets under management grewsteadily. Our asset Management Division booked ongoing inflows and assets under management climbed to arecord high. In our Wholesale Division, the cost base dropped and Fixed Income revenues grew driven by astrong performance in the Rates business.
As a result of these efforts, we generated net revenue of ¥1,403.2 billion for the year ended March 31, 2017,
a 0.5% increase from the previous fiscal year. Non-interest expenses decreased by 12.2% to ¥1,080.4 billion,
income before income taxes was ¥322.8 billion, and net income attributable to the shareholders of Nomura
Holdings, Inc. was ¥239.6 billion. Return on equity (“ROE”) was 8.7%. Diluted EPS(1) for the year ended
March 31, 2017 was ¥65.65, an increase from ¥35.52 for the year ended March 31, 2016.
We have decided to pay a dividend of ¥11 per share to shareholders of record as of March 31, 2017. As aresult, the total annual dividend was ¥20 per share.
In our Retail Division, net revenue for the year ended March 31, 2017 decreased by 14.0% from theprevious fiscal year to ¥374.4 billion. Non-interest expenses decreased by 2.7% to ¥299.6 billion. As a result,(1) Diluted net income attributable to Nomura Holdings’ shareholders per share.
42

income before income taxes decreased by 41.4% to ¥74.8 billion. Under the basic philosophy of “placing ourclients at the heart of everything we do,” we have been working to transform our business model in order to“expand our business by increasing clients’ trust and improving clients’ satisfaction” and to “become a financial
institution a lot of people need.” Although we saw slowdown in sales of stocks, investment trusts and insurance
due to uncertain market environments, we continued to provide consulting services by responding to clients’
diversifying needs and delivering ideal solutions. As a result, the discretionary investment assets undermanagement grew and we have made steady progress on revenue stabilization. The amount of clients’ assets
under management also increased from the previous fiscal year and reached a near-record level.
In our Asset Management Division, net revenue for the year ended March 31, 2017 increased by 4.2% fromthe previous fiscal year to ¥99.4 billion. Non-interest expenses decreased by 2.8% to ¥57.1 billion. As a result,income before income taxes increased by 15.5% to ¥42.3 billion. In our investment trust business, in spite of cash
outflow from money market funds, funds developed in response to regional financial institutions’ demands andETFs contributed to the increase in assets under management. In our investment advisory business, cash inflow
from domestic public pensions continued. Outside of Japan, cash inflow into high yield related products mainly
contributed to increasing assets under management. As a result, assets under management increased from the endof the previous fiscal year. In this fiscal year, dividends from the strategic partner American Century Investments
also contributed to income.
In our Wholesale Division, net revenue for the year ended March 31, 2017 increased by 2.6% from theprevious fiscal year to ¥739.3 billion. Non-interest expenses decreased by 18.0% to ¥577.8 billion, primarily due
to decreases in compensation and benefits in connection with the restructuring of our Wholesale Division
operations within EMEA and the Americas. As a result, income before income taxes increased by 948.0% to¥161.4 billion. Global Markets recognized an increase in net revenue compared with the previous fiscal year, led
by turnaround of international performance particularly in Fixed Income, offsetting the slowdown in Equites due
to low market activity. Regionally, in Americas and EMEA had a strong performance, while Japan and AEJ wereroughly flat. For Investment Banking, we ranked No.1 in the Japan Equity Capital Market league table under achallenging environment with significant decreasing equity issuance volumes in Japan. We served as joint global
coordinator and joint bookrunner for a number of financings. Outside of Japan, net revenue grew compared to theprevious fiscal year with the Americas achieving its highest revenues since the fiscal year ended March 31, 2010.
Additionally, we enhanced cross-regional and cross-divisional collaboration, which resulted in a number ofnotable M&A transactions and its related financing or Solutions deals including interest and currency hedging
across all regions.

43Results of Operations
Overview
The following table provides selected consolidated statements of income information for the years ended
March 31, 2015, 2016 and 2017.
Millions of yen, except percentages
Year ended March 31
2015
2016
2017

Non-interest revenues:
Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees from investment banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset management and portfolio service fees . . . . . . . . . . . . . . . . . .
Net gain on trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on investments in equity securities . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 453,401
95,083203,387
531,337
5,502
29,410175,702¥ 431,959 ¥
118,333
229,006
354,031
13,761(20,504)
156,460

327,129
92,580216,479
475,587
1,371
7,708
153,626

Total Non-interest revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,493,822
110,354

1,283,046
112,635

1,274,480
128,717

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,604,176
1,257,417

1,395,681
1,230,523

1,403,197
1,080,402

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

346,759
120,780

165,158
22,596

322,795
80,229Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income attributable to noncontrolling interests . . . . . . . . . . . .

¥ 225,979
1,194¥ 142,562
11,012¥ 242,566
2,949

Net income attributable to NHI shareholders . . . . . . . . . . . . . . . . . . . . . .

¥ 224,785¥ 131,550¥ 239,617

Return on equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.6%

4.9%

8.7%

Net revenue increased by 1% from ¥1,395,681 million for the year ended March 31, 2016 to¥1,403,197 million for the year ended March 31, 2017. The increase is primarily due to high performance in
Global Markets in the American and European regions. Commissions decreased by 24% from ¥431,959 million
for the year ended March 31, 2016 to ¥327,129 million for the year ended March 31, 2017 primarily due to adecrease in commissions received from the distribution of investment trusts and brokerage commissions received
from equity and equity-related products. Fees from investment banking decreased by 22% from ¥118,333 million
for the year ended March 31, 2016 to ¥92,580 million for the year ended March 31, 2017 primarily due todecrease in revenue from ECM. Asset management and portfolio service fees decreased by 5% from¥229,006 million for the year ended March 31, 2016 to ¥216,479 million for the year ended March 31, 2017
primarily due to a decrease in assets under management early in the fiscal year. Net gain on trading increased by
34% from ¥354,031 million for the year ended March 31, 2016 to ¥475,587 million for the year ended March 31,
2017, primarily driven by high performance in our Fixed Income business. Net gain on trading also included
total losses of ¥20.8 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative
liabilities primarily due to a tightening of Nomura’s credit spreads during the fiscal year. Gain on private equity
investments decreased by 90% from ¥13,761 million for the year ended March 31, 2016 to ¥1,371 million for theyear ended March 31, 2017 primarily due to lack of gains from the sale of our investment in Mitsui Life
Insurance during the previous fiscal year. Other decreased by 2% from ¥156,460 million for the year ended
March 31, 2016 to ¥153,626 million for the year ended March 31, 2017.
As a result of early adoption of Accounting Standards Update (“ASU”) 2016-01, “Recognition andmeasurement of financial assets and financial liabilities” as of April 2016, unrealized changes in the fair value offinancial liabilities elected for the fair value option due to Nomura’s own creditworthiness are now presented
44

through other comprehensive income rather than earnings. As a result, losses of ¥12,147 million which would
otherwise have been recognized through earnings were recognized through other comprehensive income during
the year ended March 31, 2017. See Note 1 “Summary of accounting policies” in our consolidated financial
statements included within this annual report for further information about the early adoption of ASU 2016-01.
Net revenue decreased by 13% from ¥1,604,176 million for the year ended March 31, 2015 to¥1,395,681 million for the year ended March 31, 2016. The decrease is primarily due to slower performance in
our Fixed Income business as a result of the challenging trading environment and the impact of settlement oflegal proceedings with Banca Monte dei Paschi di Siena SpA (“MPS”). Commissions decreased by 5% from¥453,401 million for the year ended March 31, 2015 to ¥431,959 million for the year ended March 31, 2016
primarily due to a decrease in commissions received from the distribution of investment trusts in Japan. Feesfrom investment banking increased by 24% from ¥95,083 million for the year ended March 31, 2015 to¥118,333 million for the year ended March 31, 2016 primarily due to revenue from M&A, ECM and our solution
businesses associated with fund raising. Asset management and portfolio service fees increased by 13% from
¥203,387 million for the year ended March 31, 2015 to ¥229,006 million for the year ended March 31, 2016
primarily due to an increase in assets under management driven by positive net inflows into ETFs and investment
trusts for discretionary investments. Net gain on trading decreased by 33% from ¥531,337 million for the year
ended March 31, 2015 to ¥354,031 million for the year ended March 31, 2016, primarily driven by slower
performance in our Fixed Income business and the impact of settlement of legal proceedings with MPS. Net gain
on trading also included total gains of ¥28.3 billion attributable to changes in Nomura’s own creditworthinesswith respect to derivative liabilities and financial liabilities for which the fair value option has been elected. Thisnet gain was primarily due to the widening of Nomura’s credit spreads during the period. Gain on private equity
investments increased by 150% from ¥5,502 million for the year ended March 31, 2015 to ¥13,761 million for theyear ended March 31, 2016. Other decreased by 11% from ¥175,702 million for the year ended March 31, 2015
to ¥156,460 million for the year ended March 31, 2016, primarily due to unrealized losses from our investment in
Ashikaga Holdings Co., Ltd. (“Ashikaga Holdings”) and a decrease in net income from other affiliatedcompanies.
Net interest revenue was ¥110,354 million for the year ended March 31, 2015, ¥112,635 million for the year
ended March 31, 2016 and ¥128,717 million for the year ended March 31, 2017. Net interest revenue is afunction of the level and mix of total assets and liabilities, which includes trading assets and financing andlending transactions, and the level, term structure and volatility of interest rates. Net interest revenue is an
integral component of trading activity. In assessing the profitability of our overall business and of our Global
Markets business in particular, we view net interest revenue and non-interest revenues in aggregate. For the year
ended March 31, 2017, interest revenue, including the dividend from American Century Investments, was largely
unchanged and interest expense decreased by 5% from the year ended March 31, 2016. As a result, Net interest
revenue for the year ended March 31, 2017 increased by ¥16,082 million from the year ended March 31, 2016.
For the year ended March 31, 2016, interest revenue increased by 1%, primarily due to an increase in dividend
income and interest income on reverse repurchase agreements and interest expense was largely unchanged withthe year ended March 31, 2015. As a result, Net interest revenue for the year ended March 31, 2016 increased by¥2,281 million from the year ended March 31, 2015.
Gain (loss) on investments in equity securities was ¥29,410 million for the year ended March 31, 2015,¥(20,504) million for the year ended March 31, 2016 and ¥7,708 million for the year ended March 31, 2017. This
includes both realized and unrealized gains and losses on investments in equity securities held for operating
purposes which are our investments in unaffiliated companies, which we hold on a long-term basis in order topromote existing and potential business relationships.
Non-interest expenses for the year ended March 31, 2017 decreased by 12% from ¥1,230,523 million for theyear ended March 31, 2016 to ¥1,080,402 million primarily due to a decrease in compensation and benefits inconnection with the restructuring of our Wholesale Division operations within EMEA and the Americas.
45

Non-interest expenses for the year ended March 31, 2016 decreased by 2% from ¥1,257,417 million for theyear ended March 31, 2015 to ¥1,230,523 million primarily due to a decrease in compensation and benefits andcommissions and floor brokerage expenses which were partially offset by employee termination costs recognizedin connection with the restructuring of our Wholesale Division operations within EMEA and the Americas in
March 2016.
Non-interest expenses for the year ended March 31, 2015 increased by 5% from ¥1,195,456 million for theyear ended March 31, 2014 to ¥1,257,417 million primarily due to an increase in fees paid by our AssetManagement Division as a result of an increase in assets under management, increases in other various expenses
as a result of the new Asian subsidiary acquired during the year ended March 31, 2015, and the impact of
exchange rate fluctuations, especially depreciation of the Japanese Yen, on expenses incurred by our overseas
businesses.
Income before income taxes was ¥346,759 million for the year ended March 31, 2015, ¥165,158 million forthe year ended March 31, 2016 and ¥322,795 million for the year ended March 31, 2017.
We are subject to a number of different taxes in Japan and have adopted the consolidated tax filing system
permitted under Japanese tax law. The consolidated tax filing system only imposes a national tax. Nomura’s
domestic effective statutory tax rate was approximately 36% for the fiscal year ended March 31, 2015,
approximately 33% for the fiscal year ended March 31, 2016 and approximately 31% for the fiscal year ended
March 31, 2017. Our foreign subsidiaries are subject to the income taxes of the countries in which they operate,
which are generally lower than those in Japan. The Company’s effective statutory tax rate in any one year istherefore dependent on our geographic mix of profits and losses and also on the specific tax treatment applicablein each location.
Income tax expense for the year ended March 31, 2017 was ¥80,229 million, representing an effective tax
rate of 24.9%. The significant factors causing the difference between the effective tax rate of 24.9% and theeffective statutory tax rate of 31% were changes in deferred tax valuation allowance which decreased theeffective tax rate by 10.8% but partially offset by non-deductible expenses which increased the effective tax rateby 2.9%.
Income tax expense for the year ended March 31, 2016 was ¥22,596 million, representing an effective tax
rate of 13.7%. The significant factors causing the difference between the effective tax rate of 13.7% and theeffective statutory tax rate of 33% were changes in deferred tax valuation allowance which increased theeffective tax rate by 36.1% but partially offset by Tax benefit recognized on the devaluation of investment in
subsidiaries and affiliates which decreased the effective tax rate by 54.8%.
Income tax expense for the year ended March 31, 2015 was ¥120,780 million, representing an effective tax
rate of 34.8%. The significant factors causing the difference between the effective tax rate of 34.8% and theeffective statutory tax rate of 36% were non-deductible expenses which increased the effective tax rate by 5.9%,changes in deferred tax valuation allowance which increased the effective tax rate by 5.1% but partially offset by
non-taxable revenue which decreased the effective tax rate by 4.7%.
Net income attributable to NHI shareholders was ¥224,785 million for the year ended March 31, 2015,¥131,550 million for the year ended March 31, 2016 and ¥239,617 million for the year ended March 31, 2017,
respectively. Our return on equity for the year ended March 31, 2014, 2015 and 2016 was 8.6%, 4.9% and 8.7%,
respectively.
Results by Business Segment
Our operating management and management reporting are prepared based on our Retail, Asset Management
and Wholesale Divisions and we disclose business segment information in accordance with this structure. Gainon investments in equity securities, our share of equity in the earnings (losses) of affiliates, corporate items and46

other financial adjustments are included as “Other” operating results outside of business segments in our segment
information. Unrealized gain (loss) on investments in equity securities held for operating purposes is classified asa reconciling item outside of our segment information. The following segment information should be read in
conjunction with Item 4.B “Business Overview” of this annual report and Note 21 “Segment and geographic
information” in our consolidated financial statements included in this annual report. The reconciliation of oursegment results of operations and consolidated financial statements is provided in Note 21 “Segment andgeographic information” in our consolidated financial statements included in this annual report.
RetailIn our Retail Division, our sales activities focus on providing consultation services and investment proposals
to clients for which we receive commissions and fees. Additionally, we receive fees from asset managementcompanies in connection with administration services we provide in connection with investment trust certificatesthat we distribute. We also receive agent commissions from insurance companies for the insurance products wesell as an agent.
Operating Results of Retail
Millions of yen
Year ended March 31
2015
2016
2017

Non-interest revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥471,565 ¥429,948 ¥369,503
4,940
5,686
4,931

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

476,505
314,675

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥161,830 ¥127,631 ¥ 74,792

435,634
308,003

374,434
299,642

Net revenue decreased by 14% from ¥435,634 million for the year ended March 31, 2016 to¥374,434 million for the year ended March 31, 2017, primarily due to a lack of activity by retail investors
because of market uncertainty.
Net revenue decreased by 9% from ¥476,505 million for the year ended March 31, 2015 to ¥435,634 million
for the year ended March 31, 2016, primarily due to the market turmoil from August 2015 which led to a
slowdown in sales of stocks and investment trusts.
Non-interest expenses decreased by 3% from ¥308,003 million for the year ended March 31, 2016 to¥299,642 million for the year ended March 31, 2017, primarily due to decreases in compensation and benefits.
Non-interest expenses decreased by 2% from ¥314,675 million for the year ended March 31, 2015 to¥308,003 million for the year ended March 31, 2016, primarily due to decreases in compensation and benefits
and information technology-related expenses.
Income before income taxes was ¥161,830 million for the year ended March 31, 2015, ¥127,631 million forthe year ended March 31, 2016, and ¥74,792 million for the year ended March 31, 2017.

47

The following table shows the breakdown of Retail non-interest revenues for the year ended March 31, 2016
and 2017.
Millions of yen
Year ended March 31
2016
2017

Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brokerage commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commissions for distribution of investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain on trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees from investment banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥220,266
78,87093,597
47,79986,36035,89485,3282,100¥171,834
62,79682,265
26,77385,26927,292
81,761
3,347

Non-interest revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥429,948¥369,503

Commissions decreased by 22% from ¥220,266 million for the year ended March 31, 2016 to¥171,834 million for the year ended March 31, 2017, primarily due to a slowdown in sales of stocks andinvestment trusts. Net gain on trading decreased by 1% from ¥86,360 million for the year ended March 31, 2016
to ¥85,269 million for the year ended March 31, 2017. Fees from investment banking decreased by 24% from¥35,894 million for the year ended March 31, 2016 to ¥27,292 million for the year ended March 31, 2017,
primarily due to a decrease in large capital market transactions. Asset management fees decreased by 4% from¥85,328 million for the year ended March 31, 2016 to ¥81,761 million for the year ended March 31, 2017,
primarily due to there being a lower level of client assets in first half of the fiscal year. Others increased by 59%
from ¥2,100 million for the year ended March 31, 2016 to ¥3,347 million for the year ended March 31, 2017.
Retail Client Assets
The following table presents amounts and details regarding the composition of Retail client assets as ofMarch 31, 2016 and 2017. Retail client assets consist of clients’ assets held in our custody and assets relating tovariable annuity insurance products.
Trillions of yen
Year ended March 31, 2016

Gross outflows

Marketappreciation /(depreciation)

Balance at
end of year

¥14.5
67.4
4.1
0.8
0.1
2.0

¥(14.1)(67.8)
(3.7)
(0.9)
(0.4)
(0.7)

¥ (7.4)
(0.8)
(2.1)
0.1
(0.1)
0.1

¥ 60.2
17.3
8.6
7.3
1.4
5.8

¥88.9

¥(87.6)¥(10.2)¥100.6

Balance at
beginning of year

Gross inflows

Equities . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock investment trusts . . . . . . . . . . . . .
Bond investment trusts . . . . . . . . . . . . . .
Overseas mutual funds . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 67.2
18.5
10.3
7.3
1.8
4.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥109.548

Trillions of yen
Year ended March 31, 2017

Gross outflows

Marketappreciation /(depreciation)

Balance at
end of year

¥11.7
25.9
3.4
1.4
0.1
1.4

¥(11.9)(24.9)
(3.4)
(1.3)
(0.2)
(0.6)

¥ 6.3
(0.7)
0.2
(0.1)
—
(0.2)

¥ 66.3
17.6
8.8
7.3
1.3
6.4

¥43.9

¥(42.3)¥ 5.5¥107.7

Balance at
beginning of year

Gross inflows

Equities . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock investment trusts . . . . . . . . . . . . .
Bond investment trusts . . . . . . . . . . . . .
Overseas mutual funds . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 60.2
17.3
8.6
7.3
1.4
5.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥100.6

Retail client assets increased by ¥7.1 trillion from ¥100.6 trillion as of March 31, 2016 to ¥107.7 trillion asof March 31, 2017. The balances of our clients’ equity and equity-related products increased by ¥6.1 trillion from¥60.2 trillion as of March 31, 2016 to ¥66.3 trillion as of March 31, 2017, primarily due to a turnaround within
the Japanese equity market. The balances of our clients’ investment trusts decreased by ¥0.1 trillion from
¥17.3 trillion as of March 31, 2016 to ¥17.4 trillion as of March 31, 2017.
Retail client assets decreased by ¥8.9 trillion from ¥109.5 trillion as of March 31, 2015 to ¥100.6 trillion asof March 31, 2016. The balances of our clients’ equity and equity-related products decreased by ¥7.0 trillion
from ¥67.2 trillion as of March 31, 2015 to ¥60.2 trillion as of March 31, 2016, mainly due to the deterioration in
Japanese equity markets. The balances of our clients’ investment trusts decreased by ¥2.1 trillion from
¥19.4 trillion as of March 31, 2015 to ¥17.3 trillion as of March 31, 2016, mainly due to the deterioration in
Japanese equity market.
Asset Management
Our Asset Management Division is conducted principally through NAM. We earn portfolio management
fees through the development and management of investment trusts, which are distributed by NSC, other brokers,
banks, Japan Post Bank Co., Ltd. and Japan Post Network Co., Ltd. We also provide investment advisory
services for pension funds and other institutional clients. Net revenues generally consist of asset management andportfolio service fees that are attributable to Asset Management.
Operating Results of Asset Management
Millions of yen
Year ended March 31
2015
2016
2017

Non-interest revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥88,802 ¥91,014 ¥90,025
Net interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,552
4,395
9,402
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

92,35460,256

95,40958,74399,42757,094

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥32,098¥36,666¥42,333

Net revenue increased by 4% from ¥95,409 million for the year ended March 31, 2016 to ¥99,427 million
for the year ended March 31, 2017, primarily due to an increase in assets under management and contribution
from income revenues.

49

Net revenue increased by 3% from ¥92,354 million for the year ended March 31, 2015 to ¥95,409 million
for the year ended March 31, 2016, primarily due to inflows into our investment trust business and investment
advisory business..
Non-interest expenses decreased by 3% from ¥58,743 million for the year ended March 31, 2016 to¥57,094 million for the year ended March 31, 2017, primarily due to effective management of costs.
Non-interest expenses decreased by 3% from ¥60,256 million for the year ended March 31, 2015 to¥58,743 million for the year ended March 31, 2016 due to certain non-recurring expenditures during the year
ended March 31, 2015.
Income before income taxes was ¥32,098 million for the year ended March 31, 2015, ¥36,666 million for theyear ended March 31, 2016 and ¥42,333 million for the year ended March 31, 2017.
The following table presents assets under management of each principal Nomura entity within the AssetManagement Division as of March 31, 2016 and 2017.
Billions of yen
Year ended March 31, 2016
MarketBalance atappreciation / Balance at
beginning of year Gross inflows Gross outflows (depreciation) end of year

Nomura Asset Management Co., Ltd . . . . . . . .
Nomura Funds Research and Technologies
Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Corporate Research and AssetManagement Inc. . . . . . . . . . . . . . . . . . . . . .
Nomura Private Equity Capital Co., Ltd. . . . . .

¥43,261¥37,357¥(34,435)¥(2,715)¥43,468

3,021

854

(991)

192

3,076

1,685
178

762
1

(681)
(3)

(157)
(176)

1,609
—

Combined total . . . . . . . . . . . . . . . . . . . . . . . . .
Shared across group companies . . . . . . . . . . . .

48,145(8,836)38,974(2,494)(36,110)
3,485(2,856)(228)

48,153(8,073)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥39,309¥36,480¥(32,625)¥(3,084)¥40,080

Billions of yen
Year ended March 31, 2017MarketBalance atappreciation / Balance at
beginning of year Gross inflows Gross outflows (depreciation) end of year

Nomura Asset Management Co., Ltd . . . . . . . .
Nomura Funds Research and Technologies
Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Corporate Research and AssetManagement Inc. . . . . . . . . . . . . . . . . . . . . .

¥43,468¥28,199¥(27,382)¥3,140¥47,425

3,076

518

(999)

244

2,839

1,609

973

(528)

303

2,357

Combined total . . . . . . . . . . . . . . . . . . . . . . . . .
Shared across group companies . . . . . . . . . . . .

48,153(8,073)29,690(2,020)(28,909)
2,770

3,687
(939)

52,621(8,262)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥40,080¥27,670¥(26,139)¥2,748¥44,359

Assets under management were ¥44.4 trillion as of March 31, 2017, a ¥5.1 trillion increase from March 31,
2015 (increased due to positive net inflows of ¥5.4 trillion and partially offset by market depreciation of ¥0.3
trillion) and a ¥4.3 trillion increase from March 31, 2016 (increased due to positive net inflows of ¥1.5 trillion

50and market appreciation of ¥2.7 trillion). In our investment trust business, there was a net inflow into funds
representing a wide range of investment assets including ETFs, products for discretionary investments andprivately placed funds. In our investment advisory business, there was an increase in mandates from domestic
and overseas clients.
The following table presents NAM’s share, in terms of net asset value, of the Japanese asset management
market as of March 31, 2015, 2016 and 2017.

Total of publicly offered investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bond investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

March 31
2016

2017

24%
20%
43%

25%
21%
46%

26%
23%
44%

The investment trust assets included in assets under management by NAM were ¥29.3 trillion as ofMarch 31, 2017, a ¥3.1 trillion increase from March 31, 2016. The increase is due to positive net inflows of¥1.8 trillion and market appreciation of ¥1.3 trillion. The balances of investment trusts, such as, the TOPIX ETF,
the Nikkei 225 ETF, were increased.
The investment trust assets included in assets under management by NAM were ¥26.2 trillion as ofMarch 31, 2016, similar to that of previous year ended March 31, 2015. The positive net inflows of ¥2.9 trillion
were offset by market depreciation of ¥2.9 trillion. The balances of investment trusts, such as the JapanEnterprise Value Improvement Fund, Nomura Templeton Total Return and Nomura Fund Wrap International
Bond Course increased.
Wholesale
Operating Results of Wholesale
The operating results of our Wholesale Division comprise the combined results of our Global Markets andInvestment Banking businesses.
Millions of yen
Year ended March 31
2015
2016
2017

Non-interest revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥626,228 ¥571,322 ¥564,877
Net interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
163,639
148,955
174,379
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

789,867
707,671

720,277
704,872

739,256
577,809

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 82,196¥ 15,405¥161,447

Net revenue increased by 3% from ¥720,277 million for the year ended March 31, 2016 to ¥739,256 million
for the year ended March 31, 2017. Equities and Investment Banking reported lower revenues year on year, while
Fixed Income revenue increased primarily due to strong performance in Rates and spread products.
Net revenue decreased by 9% from ¥789,867 million for the year ended March 31, 2015 to ¥720,277 million
for the year ended March 31, 2016. Our Equities business and Investment Banking recognized higher revenues
year on year, while our Fixed Income business had a challenging year in spread products, such as in our Credit
and Securitized Products businesses.
Non-interest expenses decreased by 18.0% from ¥704,872 million for the year ended March 31, 2016 to¥577,809 million for the year ended March 31, 2017, primarily due to decreases in compensation and benefits by
the restructuring of our Wholesale Division operations within EMEA and the Americas in March 2016.
51

Non-interest expenses decreased by 0.4% from ¥707,671 million for the year ended March 31, 2015 to¥704,872 million for the year ended March 31, 2016, primarily due to decreases in compensation and benefits
and commissions and floor brokerage costs partially offset by an increase of expenses in employee termination
costs recognized in connection with the restructuring of our Wholesale Division operations within EMEA and theAmericas in March 2016.
Income before income taxes was ¥82,196 million for the year ended March 31, 2015, ¥15,405 million for theyear ended March 31, 2016 and ¥161,447 million for the year ended March 31, 2017.
Global Markets
We have a proven track record in sales and trading of debt securities, equity securities, and foreignexchange, as well as derivative products based on these financial instruments, mainly to domestic and overseas
institutional investors. In response to the increasingly diverse and complex needs of our clients, we continue toenhance our trading and product origination capabilities to offer superior products not only to domestic andoverseas institutional investors, but also to our Retail and Asset Management Divisions. This cross-divisional
approach also extends to Investment Banking, where close collaboration leads to high value-added solutions forour clients. These ties enable us to identify the types of product of interest for investors and develop and deliverproducts that meet their needs. We continue to develop extensive ties with institutional investors in Japan andinternational markets, as well as wealthy investors, public-sector agencies, and regional financial institutions inJapan, and government agencies, financial institutions, and corporations around the world.
The following table shows financial data for Global Markets. These figures are non-GAAP financial
measures prepared on a management accounting basis that we believe are a useful supplement to financial
information of our Wholesale segment. We disclose these measures to show the performance of Global Markets
as an individual business line, which we believe can help enhance the understanding of underlying trends in
Global Markets. For a reconciliation of the financial data for Global Markets to the operating results of ourWholesale segment, see “Reconciliation for Global Markets and Investment Banking Financial Data” below.
Millions of yen
Year ended March 31
2015
2016
2017

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥683,399 ¥600,300 ¥643,148
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
585,850
580,253
477,182
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 97,549¥ 20,047¥165,966

Net revenue increased by 7% from ¥600,300 million for the year ended March 31, 2016 to ¥643,148 million
for the year ended March 31, 2017. In our Fixed Income businesses, net revenue increased from ¥275,162 million
for the year ended March 31, 2016 to ¥411,277 million for the year ended March 31, 2017. Revenues increased
primarily in our Rates and spread products businesses such as Credit and Securitized Products due to recovering
increased client activity as market uncertainty from political events like the EU referendum in the UK and the
U.S. presidential election cleared. In our Equities business, Net revenue decreased from ¥325,138 million for theyear ended March 31, 2016 to ¥231,871 million for the year ended March 31, 2017. Year on year revenues
decreased primarily due to the restructuring of our Equities business in EMEA and there was a nonrecurring gainon the disposal of our investment in Chi-X in the year ended March 31, 2016.
Net revenue decreased by 12% from ¥683,399 million for the year ended March 31, 2015 to¥600,300 million for the year ended March 31, 2016. In our Fixed Income business, Net revenue decreased from¥396,944 million for the year ended March 31, 2015 to ¥275,162 million for the year ended March 31, 2016. The
trading environment was impacted by rapid spread-widening, plunging liquidity and market disruption following
the introduction of negative rates policy in Japan in January 2016. Revenues decreased mainly due to the under52performance in spread products and a slowdown in our Rates business, particularly in Japan. In our Equities
business, Net revenue increased from ¥286,455 million for the year ended March 31, 2015 to ¥325,138 million
for the year ended March 31, 2016 due to a strong performance in Japan amid heightened volatility and in theAmericas because of gains recognized in connection with the partial disposal of our investment in Chi-X.
In accordance with the realignments of our Global Markets business during the year ended March 31, 2016,
comprehensive amounts for the Fixed Income and Equities for the year ended March 31, 2015 have been
reclassified.
Non-interest expenses decreased by 18% from ¥580,253 million for the year ended March 31, 2016 to¥477,182 million for the year ended March 31, 2017, primarily due to decreases in compensation and benefits
through the restructuring of our Wholesale Division operations within EMEA and the Americas in March 2016.
Non-interest expenses decreased by 1% from ¥585,850 million for the year ended March 31, 2015 to¥580,253 million for the year ended March 31, 2016, primarily due to decreases in compensation and benefits,partially offset by an increase of expenses in our overseas businesses as a result of depreciation of the Japanese
Yen.
Income before income taxes was ¥97,549 million for the year ended March 31, 2015, ¥20,047 million for theyear ended March 31, 2016 and ¥165,966 million for the year ended March 31, 2017.
Investment Banking
We provide a broad range of investment banking services, such as underwriting and advisory activities. We
underwrite offerings of debt, equity and other financial instruments in major financial markets, such as Asia,
Europe and the U.S. We have been enhancing our M&A and financial advisory expertise to secure more highprofile deals both across and within regions. We develop and forge solid relationships with clients on a long-termbasis by providing extensive resources in a seamless fashion to facilitate bespoke solutions.
The following table shows financial data for Investment Banking. These figures are non-GAAP financial
measures prepared on a management accounting basis that we believe are a useful supplement to financial
information of our Wholesale segment. We disclose these measures to show the performance of Investment
Banking as an individual business line, which we believe can help enhance the understanding of underlying
trends in Investment Banking. For a reconciliation of the financial data for Investment Banking to the operating
results of our Wholesale segment, see “Reconciliation for Global Markets and Investment Banking Financial
Data” below.
Millions of yen
Year ended March 31
2015
2016
2017

Investment Banking (gross) revenue(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation to other divisions(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥195,617 ¥205,702 ¥167,806(89,149) (85,725) (71,698)

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

106,468
121,821

Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (15,353) ¥ (4,642) ¥ (4,519)

119,977
124,619

96,108100,627(1) Investment Banking (gross) revenue represents gross revenue generated by investment banking transactionsin Investment Banking, including revenue attributable to other business lines that we allocate to Global
Markets and our other business segments.
(2) We have reclassified certain prior period amounts of Investment Banking to conform to the current period
presentation.
53

(3) Where transactions in Investment Banking involve business lines other than Investment Banking, we
allocate a portion of Investment Banking (gross) revenue to such other business lines and record it as net
revenue of Global Markets or our other business segments, as applicable.
Net revenue decreased by 20% from ¥119,977 million for the year ended March 31, 2016 to ¥96,108 million
for the year ended March 31, 2017, primarily due to decreases in large transactions of our ECM business.
Net revenue increased by 13% from ¥106,468 million for the year ended March 31, 2015 to¥119,977 million for the year ended March 31, 2016, primarily due to large transactions of our M&A and ECM
businesses and the realized gain from our investment in Mitsui Life Insurance.
Non-interest expenses decreased by 20% from ¥124,619 million for the year ended March 31, 2016 to¥100,617 million for the year ended March 31, 2017, primarily due to decreases in compensation and benefits
through the restructuring of our Wholesale Division operations within EMEA and the Americas in March 2016.
Non-interest expenses increased by 2% from ¥121,821 million for the year ended March 31, 2015 to¥124,619 million for the year ended March 31, 2016, primarily due to increased expenses incurred by ouroverseas businesses due to the depreciation of the Japanese Yen.
Loss before income taxes was ¥15,353 million for the year ended March 31, 2015, ¥4,642 million for theyear ended March 31, 2016 and ¥4,519 million for the year ended March 31, 2017.
Reconciliation for Global Markets and Investment Banking Financial Data
The following table presents a reconciliation of the Global Markets and Investment Banking financial data
presented above, which are non-GAAP financial measures, to net revenue, non-interest expenses and income(loss) before income taxes for our Wholesale segment.
Millions of yen
Year ended March 31
2015
2016
2017

Wholesale net revenue:
Global Markets net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Banking net revenue:
Investment Banking (gross) revenue(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation to other divisions(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥683,399¥600,300¥643,148

195,617(89,149)

205,702(85,725)

167,806(71,698)

Total Investment Banking net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .

106,468

119,977

96,108

Total Wholesale net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥789,867

720,277

739,256

Wholesale non-interest expenses:
Global Markets non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥585,850
Investment Banking non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121,821580,253
124,619477,182
100,627¥707,671

704,872

577,809

Wholesale income (loss) before income taxes:
Global Markets income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 97,549
Investment Banking income (loss) before income taxes . . . . . . . . . . . . . . . . . .
(15,353)

20,047(4,642)

165,966(4,519)¥ 15,405¥161,447

Total Wholesale non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Wholesale income before income taxes . . . . . . . . . . . . . . . . . . . . . .

¥ 82,196(1) Investment Banking (gross) revenue represents gross revenue generated by investment banking transactionsin Investment Banking, including revenue attributable to other business lines that we allocate to Global
Markets and our other business segments.
54

(2) We have reclassified certain prior period amounts of Investment Banking to conform to the current period
presentation.
(3) Where transactions in Investment Banking involve business lines other than Investment Banking, we
allocate a portion of Investment Banking (gross) revenue to such other business lines and record it as net
revenue of Global Markets or our other business segments, as applicable.
Other Operating Results
Other operating results include net gain (loss) related to economic hedging transactions, realized gain (loss)
on investments in equity securities held for operating purposes, equity in earnings of affiliates, corporate items,
and other financial adjustments. See Note 21 “Segment and geographic information” in our consolidated
financial statements included within this annual report.
Income before income taxes in Other operating results was ¥45,950 million for the year ended March 31,
2015, ¥6,147 million for the year ended March 31, 2016 and ¥37,607 million for the year ended March 31, 2017.
Other operating results for the year ended March 31, 2017 include the positive impact of our own
creditworthiness on derivative liabilities which resulted in losses of ¥16.6 billion and gains from changes incounterparty credit spreads of ¥8.8 billion.
As a result of early adoption of ASU 2016-01 as of April 2016, unrealized changes in the fair value offinancial liabilities elected for the fair value option due to Nomura’s own creditworthiness are now presented
through other comprehensive income rather than earnings. As a result, losses of ¥12,147 million which would
otherwise have been recognized through earnings were recognized through other comprehensive income during
the year ended March 31, 2017. See Note 1 “Summary of accounting policies” in our consolidated financial
statements included within this annual report for further information about the early adoption of ASU 2016-01.
Other operating results for the year ended March 31, 2016 include gains from changes in the fair value ofcertain financial liabilities, for which the fair value option was elected, attributable to the change in ourcreditworthiness of ¥23.1 billion, the positive impact of our own creditworthiness on derivative liabilities which
resulted in gains of ¥4.4 billion and losses from changes in counterparty credit spreads of ¥12.3 billion.
Summary of Regional Contribution
For a summary of our net revenue, income (loss) before income taxes and long-lived assets by geographic
region, see Note 21 “Segment and geographic information” in our consolidated financial statements included inthis annual report.
Regulatory Capital Requirements
Many of our business activities are subject to statutory capital requirements, including those of Japan, theU.S., the U.K. and certain other countries in which we operate. For further discussion on statutory capitalrequirements, see Note 18 “Regulatory requirements” in our consolidated financial statements included in thisannual report.
Translation Exposure
A significant portion of our business is conducted in currencies other than Japanese yen—mostsignificantly, U.S. dollars, British pounds and Euros. We prepare financial statements of each of our consolidated
subsidiaries in its functional currency, which is the currency of the primary economic environment in which theentity operates. Translation exposure is the risk arising from the effect of fluctuations in exchange rates on the
net assets of our foreign subsidiaries. Translation exposure is not recognized in our consolidated statements ofincome unless and until we dispose of, or liquidate, the relevant foreign subsidiary.
55

Critical Accounting Policies and Estimates
Use of estimates
In preparing the consolidated financial statements included in this annual report, management makes
estimates regarding certain financial instrument and investment valuations, the outcome of litigation and tax
examinations, the recovery of the carrying value of goodwill, the allowance for doubtful accounts, the realizationof deferred tax assets and other matters that affect the reported amounts of assets and liabilities as well as thedisclosures in the consolidated financial statements. Estimates, by their nature, are based on judgment andavailable information. Therefore, actual results may differ from estimates, which could have a material impact on
the consolidated financial statements, and it is possible that such adjustments could occur in the near term.

Fair value for financial instruments
A significant amount of our financial instruments are carried at fair value, with changes in fair value
recognized through the consolidated statements of income or the consolidated statements of comprehensive
income on a recurring basis. Use of fair value is either specifically required under U.S. GAAP or we make anelection to use fair value for certain eligible items under the fair value option.
Other financial assets and financial liabilities are carried at fair value on a nonrecurring basis, where theprimary measurement basis is not fair value. Fair value is only used in specific circumstances after initialrecognition, such as to measure impairment.
In accordance with Accounting Standard Codification (“ASC”) 820 “Fair Value Measurements andDisclosures”, all financial instruments measured at fair value have been categorized into a three-level hierarchy
based on the transparency of valuation inputs used to measure fair value.

Level 1:
Observable valuation inputs that reflect quoted prices (unadjusted) for identical financial instruments tradedin active markets at the measurement date.

Level 2:
Valuation inputs other than quoted prices included within Level 1 that are either directly or indirectly
observable for the financial instrument.

Level 3:
Unobservable valuation inputs which reflect Nomura assumptions and specific data.
The availability of inputs observable in the market varies by product and can be affected by a variety offactors. Significant factors include, but are not restricted to the prevalence of similar products in the market,
especially for customized products, how established the product is in the market, for example, whether it is a new
product or is relatively mature, and the reliability of information provided in the market which would depend, forexample, on the frequency and volume of current data. A period of significant change in the market may reduce
the availability of observable data. Under such circumstances, financial instruments may be reclassified into alower level in the fair value hierarchy.
56

Significant judgments used in determining the classification of financial instruments include the nature of
the market in which the product would be traded, the underlying risks, the type and liquidity of market data
inputs and the nature of observed transactions for similar instruments.
Where valuation models include the use of parameters which are less observable or unobservable in themarket, significant management judgment is used in establishing fair value. The valuations for Level 3 financial
instruments, therefore, involve a greater degree of judgment than those valuations for Level 1 or Level 2
financial instruments.
Certain criteria management use to determine whether a market is active or inactive include the number oftransactions, the frequency that pricing is updated by other market participants, the variability of price quotes
among market participants, and the amount of publicly available information.
Level 3 financial assets as a proportion of total financial assets, carried at fair value on a recurring basis
were 3% as of March 31, 2017 as listed below:

Level 1

Financial assets measured at fair value(Excluding derivative assets) . . . . . . . . . . . . . . . . . . . . . . .
Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Level 2

¥7,261 ¥ 9,616
18
23,163¥7,279 ¥32,779

Billions of yen
March 31, 2017
Counterparty
and CashCollateral
Level 3
Netting

¥462
178
¥640

¥

—
(22,322)¥(22,322)

Total¥17,339
1,037¥18,376

See Note 2 “Fair value measurements” in our consolidated financial statements included in this annual
report.
Derivative contracts
We use a variety of derivative financial instruments including futures, forwards, swaps and options, fortrading and non-trading purposes. All derivatives are carried at fair value, with changes in fair value recognizedeither through the consolidated statements of income or the consolidated statements of comprehensive income
depending on the purpose for which the derivatives are used.
Derivative assets and liabilities with the same counterparty documented under a master netting agreement
are offset in the consolidated balance sheets where the specific criteria defined by ASC 210-20 “Balance Sheet—
Offsetting” and ASC 815 “Derivatives and Hedging” are met. These criteria include requirements around thelegal enforceability of such close-out and offset rights under the master netting agreement. In addition, fair value
amounts recognized for the right to reclaim cash collateral (a receivable) and the obligation to return cash
collateral (a payable) are also offset against net derivative liabilities and net derivative assets, respectively, wherecertain additional criteria are met.

57

Derivative contracts consist of listed derivatives and OTC derivatives. The fair value of listed derivatives
are determined based on quoted market prices or valuation models. OTC derivatives are valued using valuation
models. Listed derivative and OTC derivative assets and liabilities after netting are shown below:
Billions of yen
March 31, 2016
AssetsLiabilities

Listed derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTC derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

89
1,283

¥ 123
927

¥1,372¥1,050Billions of yen
March 31, 2017
AssetsLiabilities

Listed derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTC derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

63
974

¥ 156
765

¥1,037¥ 921

The following table presents the fair value of OTC derivative assets and liabilities as of March 31, 2017 byremaining contractual maturity.

OTC derivative assets . . . . . . . . . . . .
OTC derivative liabilities . . . . . . . . .

Less than
1 yearBillions of yen
March 31, 2017
Years to Maturity
1 to 33 to 55 to 7More than
years
years
years
7 years¥2,094
1,847¥1,696
1,535¥1,3591,129¥1,054636¥5,0993,301

Cross-maturity
netting(1)Totalfair value¥(10,328)(7,683)¥974765(1) Represents the impact of netting derivative assets with derivative liabilities for the same counterparty acrossmaturity band categories. Derivative assets and derivative liabilities with the same counterparty in the same
maturity category are netted within the maturity category. This column also includes cash collateral nettingwith the same counterparty.
The fair value of derivative contracts includes adjustments for credit risk, both with regards to counterparty
credit risk on positions held and our own creditworthiness on positions issued. We realize gains or losses relating
to changes in credit risk on our derivative contracts together with the movements of trading positions, which
include derivatives, that are expected to mitigate the above mentioned impact of changes in credit risk.
Goodwill
Goodwill is recognized upon completion of a business combination as the difference between the purchaseprice and the fair value of the net assets acquired. Subsequent to initial recognition, goodwill is not amortized but
is tested for impairment at a reporting unit level during the fourth quarter of each fiscal year, or more frequently
during interim periods if events or circumstances indicate there may be impairment. Nomura’s reporting units areat one level below its business segments.
Nomura tests goodwill of each separate reporting unit by initially qualitatively assessing whether events andcircumstances indicate that it is more likely than not (i.e. greater than 50%) that a reporting unit’s fair value is lessthan its carrying amount. If such assessment indicates fair value is not less than the carrying value, the reporting unit
is deemed not to be impaired and no further analysis is required. If it is more likely than not that the fair value of thereporting unit is below its carrying value, a quantitative two-step impairment test is then performed.
58

In the first step, the current estimated fair value of the reporting unit is compared with its carrying value,
including goodwill. If the fair value is less than the carrying value, then a second step is performed. In the second
step, the implied current fair value of the reporting unit’s goodwill is determined by comparing the fair value ofthe reporting unit to the fair value of the net assets of the reporting unit, as if the reporting unit were being
acquired in a business combination. An impairment loss is recognized if the carrying value of goodwill exceeds
its implied current fair value.
For the year ended March 31, 2017, Nomura did not recognize any impairment loss on goodwill.
Assets and Liabilities Associated with Investment and Financial Services Business
Exposure to Certain Financial Instruments and Counterparties
Market conditions impact numerous products to which we have certain exposures. We also have exposures
to Special Purpose Entities (“SPEs”) and others in the normal course of business.
Leveraged Finance
We provide loans to clients in connection with leveraged buy-outs and leveraged buy-ins. As this type offinancing is usually initially provided through a commitment, we have both funded and unfunded exposures onthese transactions.
The following table sets forth our exposure to leveraged finance by geographic location of the target
company as of March 31, 2017.
Millions of yen
March 31, 2017
FundedUnfunded

Total

Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥52,590 ¥ 48,233 ¥100,823
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,453
201,503
237,956
Asia and Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—39,132
39,132
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥89,043¥288,868¥377,911

Special Purpose Entities (“SPEs”)
Our involvement with these entities includes structuring, underwriting, as well as, subject to prevailingmarket conditions, distributing and selling debt instruments and beneficial interests issued by these entities. In
the normal course of securitization and equity derivative activities business, we also act as a transferor of
financial assets to, and underwriter, distributor and seller of repackaged financial instruments issued by these
entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making, investingand structuring activities. Our other types of involvement with SPEs include guarantee agreements and derivative
contracts.
For further discussion on Nomura’s involvement with variable interest entities, see Note 6 “Securitizations
and Variable Interest Entities” in our consolidated financial statements included in this annual report.
Accounting Developments
See Note 1 “Summary of accounting policies: New accounting pronouncements adopted during the current
year” in our consolidated financial statements included in this annual report.

59

Deferred Tax Assets
Details of deferred tax assets and liabilities
The following table presents details of deferred tax assets and liabilities reported within Other assets—Other
and Other liabilities, respectively, in the consolidated balance sheets as of March 31, 2017.
Millions of yen
March 31, 2017

Deferred tax assets
Depreciation, amortization and valuation of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses and provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 17,988
100,100
65,15821,85484,268406,440
8,408

Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less—Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

704,216(519,492)

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

184,724Deferred tax liabilities
Investments in subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

125,752
46,684947
18,042
5,840

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

197,265

Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (12,541)

Calculation method of deferred tax assets
In accordance with U.S. GAAP, we recognize deferred tax assets to the extent we believe that it is more
likely than not that a benefit will be realized. A valuation allowance is provided for tax benefits available to us,which are not deemed more likely than not to be realized.
B. Liquidity and Capital Resources.
Funding and Liquidity Management
Overview
We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from asignificantly higher cost of funding than normal levels due to deterioration of the Nomura Group’s
creditworthiness or deterioration in market conditions. This risk could arise from Nomura-specific or marketwide events such as inability to access the secured or unsecured debt markets, a deterioration in our credit
ratings, a failure to manage unplanned changes in funding requirements, a failure to liquidate assets quickly andwith minimal loss in value, or changes in regulatory capital restrictions which may prevent the free flow of funds
between different group entities. Our global liquidity risk management policy is based on liquidity risk appetite
formulated by the Executive Management Board (“EMB”). Nomura’s liquidity risk management, under marketwide stress and in addition, under Nomura-specific stress, seeks to ensure enough continuous liquidity to meet all
funding requirements and unsecured debt obligations across one year and 30-day periods, respectively, without
60

raising funds through unsecured funding or through the liquidation of assets. We are required to meet regulatory
notice on the liquidity coverage ratio issued by the FSA.
We have in place a number of liquidity risk management frameworks that enable us to achieve our primaryliquidity objective. These frameworks include (1) Centralized Control of Residual Cash and Maintenance of
Liquidity Portfolio; (2) Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio; (3) Appropriate
Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets;(4) Management of Credit Lines to Nomura Group Entities; (5) Implementation of Liquidity Stress Tests; and(6) Contingency Funding Plan.
Our EMB has the authority to make decisions concerning group liquidity management. The Chief Financial
Officer (“CFO”) has the operational authority and responsibility over our liquidity management based on
decisions made by the EMB.
1.

Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio.

We centrally control residual cash held at Nomura Group entities for effective liquidity utilization purposes.
As for the usage of funds, the CFO decides the maximum amount of available funds, provided without posting
any collateral, for allocation within Nomura and the EMB allocates the funds to each business division. Global
Treasury monitors usage by businesses and reports to the EMB.
In order to enable us to transfer funds smoothly between group entities, we limit the issuance of securities
by regulated broker-dealers or banking entities within the Nomura Group and seek to raise unsecured funding
primarily through the Company or through unregulated subsidiaries. The primary benefits of this strategy include
cost minimization, wider investor name recognition and greater flexibility in providing funding to various
subsidiaries across the Nomura Group.
To meet any potential liquidity requirement, we maintain a liquidity portfolio, managed by Global Treasury
apart from other assets, in the form of cash and highly liquid, unencumbered securities that may be sold or
pledged to provide liquidity. As of March 31, 2017, our liquidity portfolio was ¥4,970.3 billion which
sufficiently met liquidity requirements under the stress scenarios.
The following table presents a breakdown of our liquidity portfolio by type of financial assets as ofMarch 31, 2016 and 2017 and averages maintained for the years ended March 31, 2016 and 2017. Yearly
averages are calculated using month-end amounts.
Average foryear ended
March 31, 2016

Billions of yen
Average forMarch 31,year ended
2016
March 31, 2017

March 31,2017

Cash, cash equivalents and time deposits(1) . . . . . . . . . . . . .
Government debt securities . . . . . . . . . . . . . . . . . . . . . . . . .
Others(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,873.0
3,821.8
230.0¥2,050.5
3,617.9278.7¥2,289.4
3,094.3
235.7¥2,317.1
2,507.0
146.2

Total liquidity portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,924.8¥5,947.1¥5,619.4¥4,970.3(1) Cash, cash equivalents, and time deposits include nostro balances and deposits with both central banks andmarket counterparties that are readily available to support the liquidity position of Nomura.
(2) Others include other liquid financial assets such as money market funds and U.S. agency securities.

61

The following table presents a breakdown of our liquidity portfolio by currency as of March 31, 2016 and2017 and averages maintained for the years ended March 31, 2016 and 2017. Yearly averages are calculatedusing month-end amounts.
Average foryear ended
March 31, 2016

Billions of yen
Average forMarch 31,year ended
2016
March 31, 2017

March 31,2017

Japanese Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
British Pound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,859.5
2,839.8
772.7
319.9
132.9

¥2,464.5
2,698.3
369.7
248.2
166.4

¥1,946.0
2,877.5
358.7
308.4
128.8

¥1,527.9
2,632.6
382.0
285.1
142.7

Total liquidity portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,924.8¥5,947.1¥5,619.4¥4,970.3(1) Includes other currencies such as the Australian dollar, the Canadian dollar and the Swiss franc.
We assess our liquidity portfolio requirements globally as well as by each major operating entity in the
Nomura Group. We primarily maintain our liquidity portfolio at Nomura Holdings, Inc. (“NHI”) and Nomura
Securities Co. Ltd. (“NSC”), our other major broker-dealer subsidiaries, our bank subsidiaries, and other group
entities. In determining the amounts and entities which hold this liquidity portfolio, we consider legal, regulatory
and tax restrictions which may impact our ability to freely transfer liquidity across different entities in the
Nomura Group. For more information regarding regulatory restrictions, see Note 18 “Regulatory requirements”
in our consolidated financial statements included within this annual report.
The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 2016 and2017.
Billions of yen
March 31, 2016 March 31, 2017

NHI and NSC(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Major broker-dealer subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank subsidiaries(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,522.5
2,958.5
1,037.1
429.0¥1,250.8
2,474.5
776.2
468.8

Total liquidity portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,947.1¥4,970.3(1) NSC, a broker-dealer located in Japan, holds an account with the Bank of Japan (“BOJ”) and has directaccess to the BOJ Lombard facility through which same day funding is available for our securities pool.
Any liquidity surplus at NHI is lent to NSC via short-term intercompany loans, which can be unwound
immediately when needed.
(2) Includes Nomura Bank International plc (“NBI”), Nomura Singapore Limited and Nomura Bank
Luxembourg S.A.

62

2.

Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio.

In addition to our liquidity portfolio, we had ¥2,048.5 billion of other unencumbered assets comprising
mainly of unpledged trading assets that can be used as an additional source of secured funding. Global Treasury
monitors other unencumbered assets and can, under a liquidity stress event when the contingency funding plan
has been invoked, monetize and utilize the cash generated as a result. The aggregate of our liquidity portfolio andother unencumbered assets as of March 31, 2017 was ¥7,018.8 billion, which represented 372.7% of our total
unsecured debt maturing within one year.
Billions of yen
March 31, 2016 March 31, 2017

Net liquidity value of other unencumbered assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquidity portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,002.7
5,947.1¥2,048.5
4,970.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥7,949.8¥7,018.8

3. Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with theComposition of Assets
We seek to maintain a surplus of long-term debt and equity above the cash capital requirements of ourassets. We also seek to achieve diversification of our funding by market, instrument type, investors, currency,
and staggered maturities in order to reduce unsecured refinancing risk.
We diversify funding by issuing various types of debt instruments—these include both structured loans andstructured notes with returns linked to interest rates, currencies, equities, commodities, or related indices. We
issue structured loans and structured notes in order to increase the diversity of our debt instruments. We typicallyhedge the returns we are obliged to pay with derivatives and/or the underlying assets to obtain funding equivalent
to our unsecured long-term debt. The proportion of our non-Japanese Yen denominated long-term debt decreased
to 38.1% of total long-term debt outstanding as of March 31, 2017 from 39.2% as of March 31, 2016.
3.1

Short-Term Unsecured Debt

Our short-term unsecured debt consists of short-term bank borrowings (including long-term bankborrowings maturing within one year), other loans, commercial paper, deposit at banking entities, certificates ofdeposit and debt securities maturing within one year. Deposits at banking entities and certificates of deposit
comprise customer deposits and certificates of deposit of our banking subsidiaries. Short-term unsecured debt
includes the current portion of long-term unsecured debt.
The following table presents an analysis of our short-term unsecured debt by type of financial liability as ofMarch 31, 2016 and 2017.
Billions of yen
March 31, 2016 March 31, 2017

Short-term bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits at banking entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities maturing within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 184.9
127.1
177.9
2,021.2
32.0
760.7¥ 206.4
177.9
2.6
909.0
16.1
571.0

Total short-term unsecured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,303.8¥1,883.0

63

3.2

Long-Term Unsecured Debt

We meet our long-term capital requirements and also achieve both cost-effective funding and an appropriate
maturity profile by routinely funding through long-term debt and diversifying across various maturities andcurrencies.
Our long-term unsecured debt includes senior and subordinated debt issued through U.S. registered shelfofferings and our U.S. registered medium-term note programs, our Euro medium-term note programs, registeredshelf offerings in Japan and various other debt programs.
As a globally competitive financial services group in Japan, we have access to multiple global markets andmajor funding centers. The Company, NSC, Nomura Europe Finance N.V., NBI, and Nomura International
Funding Pte. Ltd. are the main group entities that borrow externally, issue debt instruments and engage in otherfunding activities. By raising funds to match the currencies and liquidities of our assets or by using foreignexchange swaps as necessary, we pursue optimization of our funding structures.
We use a wide range of products and currencies to ensure that our funding is efficient and well diversified
across markets and investor types. Our unsecured senior debt is mostly issued without financial covenants, suchas covenants related to adverse changes in our credit ratings, cash flows, results of operations or financial ratios,
which could trigger an increase in our cost of financing or accelerate repayment of the debt.
The following table presents an analysis of our long-term unsecured debt by type of financial liability as ofMarch 31, 2016 and 2017.
Billions of yen
March 31, 2016 March 31, 2017

Long-term deposits at banking entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 169.8
2,732.5
143.9
3,547.4¥ 207.8
2,474.0
116.8
3,120.3

Total long-term unsecured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥6,593.6¥5,918.9(1) Excludes long-term debt securities issued by consolidated special purpose entities and similar entities thatmeet the definition of variable interest entities under ASC 810 “Consolidation” and secured financing
transactions recognized within Long-term borrowings as a result of transfers of financial assets that are
accounted for as financings rather than sales in accordance with ASC 860 “Transfer and Servicing”.
3.3

Maturity Profile

We also seek to maintain an average maturity for our plain vanilla debt securities and borrowings greaterthan or equal to three years. The average maturity for our plain vanilla debt securities and borrowings withmaturities longer than one year was 3.6 years as of March 31, 2017. A significant amount of our structured loans
and structured notes are linked to interest rates, currencies, equities, commodities, or related indices. Thesematurities are evaluated based on internal models and monitored by Global Treasury. Where there is a possibility
that these may be called prior to their scheduled maturity date, maturities are based on our internal stress option
adjusted model. The model values the embedded optionality under stress market conditions in order to determine
when the debt securities or borrowing is likely to be called. The graph below shows the distribution of maturitiesof our outstanding long-term debt securities and borrowings by the model.

64On this basis, the average maturity of our structured loans and structured notes with maturities longer than
one year was 7.3 years as of March 31, 2017. The average maturity of our entire long-term debt with maturities
longer than one year including plain vanilla debt securities and borrowings, was 5.1 years as of March 31, 2017.

3.4

Secured Funding

We typically fund our trading activities through secured borrowings, repurchase agreements and Japanese“Gensaki Repo” transactions. We believe such funding activities in the secured markets are more cost-efficient andless credit-rating sensitive than financing in the unsecured market. Our secured funding capabilities depend on thequality of the underlying collateral and market conditions. While we have shorter term secured financing for highly
liquid assets, we seek longer terms for less liquid assets. We also seek to lower the refinancing risks of secured
funding by transacting with a diverse group of global counterparties and delivering various types of securities
collateral. In addition, we reserve an appropriate level of liquidity portfolio for the refinancing risks of secured
funding maturing in the short term for less liquid assets. For more detail of secured borrowings and repurchaseagreements, see Note 4 “Collateralized transactions” in our consolidated financial statements.
4.

Management of Credit Lines to Nomura Group Entities

We maintain and expand credit lines to Nomura Group entities from other financial institutions to securestable funding. We ensure that the maturity dates of borrowing agreements are distributed evenly throughout theyear in order to prevent excessive maturities in any given period.
5.

Implementation of Liquidity Stress Tests

We maintain our liquidity portfolio and monitor the sufficiency of our liquidity based on an internal model
which simulates changes in cash outflow under specified stress scenarios to comply with our above mentioned
liquidity management policy.

65

We assess the liquidity requirements of the Nomura Group under various stress scenarios with differinglevels of severity over multiple time horizons. We evaluate these requirements under Nomura-specific and broad
market-wide events, including potential credit rating downgrades at the Company and subsidiary levels. We callthis risk analysis our Maximum Cumulative Outflow (“MCO”) framework.
The MCO framework is designed to incorporate the primary liquidity risks for Nomura and models therelevant future cash flows in the following two primary scenarios:•

Stressed scenario—To maintain adequate liquidity during a severe market-wide liquidity event without
raising funds through unsecured financing or through the liquidation of assets for a year; and•Acute stress scenario—To maintain adequate liquidity during a severe market-wide liquidity event
coupled with credit concerns regarding Nomura’s liquidity position, without raising funds throughunsecured funding or through the liquidation of assets for 30 days.

We assume that Nomura will not be able to liquidate assets or adjust its business model during the time
horizons used in each of these scenarios. The MCO framework therefore defines the amount of liquidity required
to be held in order to meet our expected liquidity needs in a stress event to a level we believe appropriate basedon our liquidity risk appetite.
As of March 31, 2017, our liquidity portfolio exceeded net cash outflows under the stress scenarios
described above.
We constantly evaluate and modify our liquidity risk assumptions based on regulatory and market changes.
The model we use in order to simulate the impact of stress scenarios includes the following assumptions:6.

•

No liquidation of assets;•

No ability to issue additional unsecured funding;•

Upcoming maturities of unsecured debt (maturities less than one year);•

Potential buybacks of our outstanding debt;•

Loss of secured funding lines particularly for less liquid assets;•

Fluctuation of funding needs under normal business circumstances;•

Cash deposits and free collateral roll-off in a stress event;•

Widening of haircuts on outstanding repo funding;•

Additional collateralization requirements of clearing banks and depositories;•

Drawdown on loan commitments;•

Loss of liquidity from market losses;•

Assuming a two-notch downgrade of our credit ratings, the aggregate fair value of assets that we would
be required to post as additional collateral in connection with our derivative contracts; and•Legal and regulatory requirements that can restrict the flow of funds between entities in the Nomura
Group.
Contingency Funding Plan

We have developed a detailed contingency funding plan to integrate liquidity risk control into ourcomprehensive risk management strategy and to enhance the quantitative aspects of our liquidity risk control
procedures. As a part of our Contingency Funding Plan (“CFP”), we have developed an approach for analyzing
66and quantifying the impact of any liquidity crisis. This allows us to estimate the likely impact of both Nomuraspecific and market-wide events; and specifies the immediate action to be taken to mitigate any risk. The CFP
lists details of key internal and external parties to be contacted and the processes by which information is to bedisseminated. This has been developed at a legal entity level in order to capture specific cash requirements at the
local level—it assumes that our parent company does not have access to cash that may be trapped at a subsidiarylevel due to regulatory, legal or tax constraints. We periodically test the effectiveness of our funding plans fordifferent Nomura-specific and market-wide events. We also have access to central banks including, but not
exclusively, the BOJ, which provide financing against various types of securities. These operations are accessedin the normal course of business and are an important tool in mitigating contingent risk from market disruptions.
Liquidity Regulatory Framework
In 2008, the Basel Committee published “Principles for Sound Liquidity Risk Management andSupervision”. To complement these principles, the Committee has further strengthened its liquidity framework
by developing two minimum standards for funding liquidity. These standards have been developed to achieve
two separate but complementary objectives.
The first objective is to promote short-term resilience of a financial institution’s liquidity risk profile byensuring that it has sufficient high-quality liquid assets to survive a significant stress scenario lasting for one
month. The Committee developed the Liquidity Coverage Ratio (“LCR”) to achieve this objective.
The second objective is to promote resilience over a longer time horizon by creating additional incentives
for financial institutions to fund their activities with more stable sources of funding on an ongoing basis. The Net
Stable Funding Ratio (“NSFR”) has a time horizon of one year and has been developed to provide a sustainablematurity structure of assets and liabilities.
These two standards are comprised mainly of specific parameters which are internationally “harmonized”
with prescribed values. Certain parameters, however, contain elements of national discretion to reflectjurisdiction-specific conditions.
In Japan, the regulatory notice on the LCR, based on the international agreement issued by the BaselCommittee with necessary national revisions, was published by Financial Services Agency (on October 31,2014). The notices have been implemented since the end of March 2015 with phased-in minimum standards.
Averages of Nomura’s month-end LCRs for the three months ended March 31, 2017 was 180.0%, and Nomura
was compliant with requirements of the above notices. As for the NSFR, it is not yet implemented in Japan.
Cash Flows
Nomura’s cash flows are primarily generated from operating activities undertaken in connection with ourclient flows and trading and from financing activities which are closely related to such activities. As a financial
institution, growth in operations tends to result in cash outflows from operating activities as well as investing
activities. For the year ended March 2016 and 2017, we recorded net cash inflows from operating activities andnet cash outflows from investing activities as discussed in the comparative analysis below.

67

The following table presents the summary information on our consolidated cash flows for the years ended
March 31, 2016 and 2017.
Billions of yen
Year Ended March 31
2016
2017

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading assets and private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities purchased under agreements to resell, net of securities sold underagreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities borrowed, net of securities loaned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in deposits received at banks, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .

¥ 1,238.4 ¥ 1,305.0
142.6
242.6
248.5
1,197.1(2,280.0)708.2
1,605.7
1,762.2(240.6)(23.7)
986.4
95.9
1,010.1(119.6)(40.2)

635.6(1,706.5)
228.2(118.1)(2,130.6)(876.7)(1,068.2)(185.7)4.2

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,160.9
1,315.4(939.4)
3,476.3

Cash and cash equivalents at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 3,476.3¥ 2,536.8

See the consolidated statements of cash flows in our consolidated financial statements included within thisannual report for more detailed information.
For the year ended March 31, 2017, our cash and cash equivalents decreased by ¥939.4 billion to¥2,536.8 billion. Net cash of ¥2,130.6 billion was used in financing activities due to net cash outflows of¥1,068.2 billion from Deposits received at banks. As part of trading activities, while there were net cash inflowsof ¥1,905.3 billion from cash inflows due to a decrease in Trading assets and Private equity investments and anincrease in Trading liabilities, they were offset by ¥1,071.0 billion of net cash outflows from repo transactions
and securities borrowed and loaned transactions such as Securities purchased under agreements to resell,
Securities sold under agreements to repurchase, and Securities borrowed, net of Securities loaned. As a result,net cash of ¥1,305.0 billion was provided by operating activities.
For the year ended March 31, 2016, our cash and cash equivalents increased by ¥2,160.9 billion to¥3,476.3 billion. Net cash of ¥986.4 billion was provided by financing activities due to net cash inflows of¥1,010.1 billion from Deposits received at banks. As part of trading activities, while there were net cash outflowsof ¥2,031.5 billion from cash inflows due to a decrease in Trading assets and Private equity investments incombination with cash outflows due to a decrease in Trading liabilities, they were offset by ¥3,367.8 billion of
net cash inflows from repo transactions and securities borrowed and loaned transactions such as Securities
purchased under agreements to resell, Securities sold under agreements to repurchase, and Securities borrowed,
net of Securities loaned. As a result, net cash of ¥1,238.4 billion was provided by operating activities.
Balance Sheet and Financial Leverage
Total assets as of March 31, 2017, were ¥42,852.1 billion, an increase of ¥1,761.9 billion compared with
¥41,090.2 billion as of March 31, 2016, reflecting primarily due to an increase in Securities purchased underagreements to resell. Total liabilities as of March 31, 2017, were ¥40,008.3 billion, an increase of¥1,661.1 billion compared with ¥38,347.2 billion as of March 31, 2016, reflecting primarily an increase in
68Securities sold under agreements to repurchase. NHI shareholders’ equity as of March 31, 2017 was¥2,789.9 billion, an increase of ¥89.7 billion compared with ¥2,700.2 billion as of March 31, 2016, primarily due
to an increase in Retained earnings.
We seek to maintain sufficient capital at all times to withstand losses due to extreme market movements.
The EMB is responsible for implementing and enforcing capital policies. This includes the determination of ourbalance sheet size and required capital levels. We continuously review our equity capital base to ensure that it
can support the economic risk inherent in our business. There are also regulatory requirements for minimum
capital of entities that operate in regulated securities or banking businesses.
As leverage ratios are commonly used by other financial institutions similar to us, we voluntarily provide aleverage ratio and adjusted leverage ratio primarily for benchmarking purposes so that users of our annual report
can compare our leverage against other financial institutions. Adjusted leverage ratio is a non-GAAP financial
measure that Nomura considers to be a useful supplemental measure of leverage.
The following table presents NHI shareholders’ equity, total assets, adjusted assets and leverage ratios as ofMarch 31, 2016 and 2017.
Billions of yen, except ratios
March 31
2016
2017

NHI shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leverage ratio(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted leverage ratio(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2,700.2
41,090.2
26,012.5
15.2 x
9.6 x¥ 2,789.9
42,852.1
24,122.3
15.4 x
8.6 x(1) Represents total assets less Securities purchased under agreements to resell and Securities borrowed.
Adjusted assets is a non-GAAP financial measure and is calculated as follows:
Billions of yen
March 312016
2017

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less:Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . .
Securities borrowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥41,090.2¥42,852.1

9,205.2
5,872.5

11,456.6
7,273.2

Adjusted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥26,012.5¥24,122.3(2) Equals total assets divided by NHI shareholders’ equity.
(3) Equals adjusted assets divided by NHI shareholders’ equity.
Total assets increased by 4.3% reflecting primarily an increase in Securities purchased under agreements toresell. Total NHI shareholders’ equity increased by 3.3% reflecting primarily an increase in Retained earnings.
As a result, our leverage ratio increased from 15.2 times as of March 31, 2016 to 15.4 times as of March 31,
2017.
Adjusted assets decreased primarily due to a decrease in Cash and cash equivalents. As a result, ouradjusted leverage ratio was 9.6 times as of March 31, 2016 and 8.6 times as of March 31, 2017.
Capital Management
Capital Management Policy
We seek to enhance shareholder value and to capture growing business opportunities by maintaining
sufficient levels of capital. We will continue to review our levels of capital as appropriate, taking into
69

consideration the economic risks inherent to operating our businesses, the regulatory requirements, andmaintaining our ratings necessary to operate businesses globally.
Dividends
We believe that raising corporate value over the long term and paying dividends is essential to rewarding
shareholders. We will strive to pay dividends using a consolidated pay-out ratio of 30 percent of each semiannual consolidated earnings as a key indicator.
Dividend payments are determined taking into account a comprehensive range of factors such as thetightening of Basel regulations and other changes to the regulatory environment as well as the Company’s
consolidated financial performance.
Dividends will in principle be paid on a semi-annual basis with record dates of September 30 and March 31.
With respect to retained earnings, in order to implement measures to adapt to regulatory changes and toincrease shareholder value, we seek to efficiently invest in business areas where high profitability and growth
may reasonably be expected, including the development and expansion of infrastructure.
We consider repurchases of treasury stock as an option in our financial strategy to respond quickly tochanges in the business environment and to increase shareholder value. We make announcements immediately
after any decision to set up a share buyback program and conduct such programs in accordance with internal
guidelines.
Dividends for the Fiscal Year
Based on our Capital Management Policy described above, we paid a dividend of ¥9 per share toshareholders of record as of September 30, 2016 and have decided to pay a dividend of ¥11 per share toshareholders of record as of March 31, 2017. As a result, the total annual dividend will be ¥20 per share.
The following table sets forth the amounts of dividends per share paid by us in respect of the periods
indicated:
Fiscal year ended or ending March 31,

2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Total

¥—
—
—
—
—
—

¥ 4.00
2.00
8.00
6.00
10.00
9.00

¥—
—
—
—
—
—

¥ 2.00
6.00
9.00
13.00
3.00
11.00

¥ 6.00
8.00
17.00
19.00
13.00
20.00

Consolidated Regulatory Capital Requirements
The FSA established the “Guideline for Financial Conglomerates Supervision” (“Financial Conglomerates
Guideline”) in June 2005 and set out the rules on consolidated regulatory capital. We started monitoring ourconsolidated capital adequacy ratio in accordance with the Financial Conglomerates Guideline from April 2005.
The Company has been assigned by the FSA as a Final Designated Parent Company who must calculate aconsolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent
Company in April 2011. Since then, we have been calculating our consolidated capital adequacy ratio according
to the Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final
Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III since then. We have70

calculated a Basel III-based consolidated capital adequacy ratio from the end of March 2013. Basel 2.5 includes
significant change in calculation method of market risk and Basel III includes redefinition of capital items for the
purpose of requiring higher quality of capital and expansion of the scope of credit risk-weighted assets
calculation.
In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, ourconsolidated capital adequacy ratio is currently calculated based on the amounts of common equity Tier 1 capital,
Tier 1 capital (sum of common equity Tier 1 capital and additional Tier 1 capital), total capital (sum of Tier 1
capital and Tier 2 capital), credit risk-weighted assets, market risk and operational risk. As of March 31, 2017,
our common equity Tier 1 capital ratio (common equity Tier 1 capital divided by risk-weighted assets) is 18.2%,
Tier 1 capital ratio (Tier 1 capital divided by risk-weighted assets) is 19.2% and consolidated capital adequacy
ratio (total capital divided by risk-weighted assets) is 20.0% and we were in compliance with the requirement foreach ratio set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. (required level
including applicable minimum consolidated capital buffers as of March 31, 2017 is 6.00% for the common equity
Tier 1 capital ratio, 7.50% for the Tier 1 capital ratio and 9.50% for the consolidated capital adequacy ratio).
The following table presents the Company’s consolidated capital adequacy ratios as of March 31, 2016 andMarch 31, 2017.
Billions of yen, except ratios
March 312016
2017

Common equity Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-Weighted Assets
Credit risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market risk equivalent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operational risk equivalent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2,469.4
2,577.5
2,900.6¥ 2,549.2
2,689.8
2,799.4

7,872.0
5,307.4
2,791.2

7,762.6
3,504.6
2,710.6

Total risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥15,970.5¥13,977.9

Consolidated Capital Adequacy Ratios
Common equity Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated capital adequacy ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15.4%
16.1%
18.1%

18.2%
19.2%
20.0%

Since the end of March, 2011, we have been calculating credit risk-weighted assets and operational risk
equivalent assets by using the foundation Internal Ratings-Based Approach and the Standardized Approach,respectively, with the approval of the FSA. Furthermore, Market risk equivalent assets are calculated by using
the Internal Models Approach for market risk.
We provide consolidated capital adequacy ratios not only to demonstrate that we are in compliance with therequirements set out in the Capital Adequacy Notice on Final Designated Parent Company but also forbenchmarking purposes so that users of this annual report can compare our capital position against those of otherfinancial groups to which Basel III is applied. Management receives and reviews these capital ratios on a regularbasis.
Consolidated Leverage Ratio Requirements
In March 2015, the FSA set out requirements for the calculation and disclosure of a consolidated leverage
ratio, through amendments to revising “Specification of items which a final designated parent company should
disclose on documents to show the status of its sound management” (2010 FSA Regulatory Notice No. 132;
“Notice on Pillar 3 Disclosure”) and the publication of “Consolidated Leverage Ratio prescribed by71

Commissioner of Financial Services Agency in accordance with Article 3, paragraph 1 of Pillar 3 Notice” (2015
FSA Regulatory Notice No. 11; “Notice on Consolidated Leverage Ratio”). We started calculating and disclosing
a consolidated leverage ratio from March 31, 2015 in accordance with the Notice on Pillar 3 Disclosure andNotice on Consolidated Leverage Ratio. Management receives and reviews this consolidated leverage ratio on aregular basis. As of March 31 2017, our consolidated leverage ratio was 4.63%.
Regulatory changes which affect us
The Basel Committee has issued a series of announcements regarding a Basel III program designed tostrengthen the regulatory capital framework in light of weaknesses revealed by the financial crises. The following
is a summary of the proposals which are most relevant to us.
On December 16, 2010, in an effort to promote a more resilient banking sector, the Basel Committee issued
Basel III, that is, “International framework for liquidity risk measurement, standards and monitoring” and “A
global regulatory framework for more resilient banks and banking systems”. They include raising the quality,
consistency and transparency of the capital base; strengthening the risk coverage of the capital framework suchas the implementation of a credit value adjustment (“CVA”) charge for OTC derivative trades; introducing aleverage ratio requirement as a supplemental measure to the risk-based framework; introducing a series ofmeasures to address concerns over the “procyclicality” of the current framework; and introducing a minimum
liquidity standard including a 30-day liquidity coverage ratio as well as a longer-term structural liquidity ratio.
These standards were implemented from 2013, which includes transitional treatment, (i.e. they are phased in
gradually from 2013). In addition, the Basel Committee has issued interim rules for the capitalization of bank
exposures to central counterparties (“CCPs”) on July 25, 2012, which came into effect in 2013 as part of BaselIII. Moreover, in addition to Basel III leverage ratio framework under which we started the calculation anddisclosure of consolidated leverage ratio as above, a series of final standards on the regulatory frameworks suchas capital requirements for banks’ equity investments in funds, the standardized approach for measuring
counterparty credit risk exposures, capital requirements for bank exposures to CCPs, supervisory framework formeasuring and controlling large exposures, Basel III: The Net Stable Funding Ratio and revisions to thesecuritization framework, and revised framework for market risk capital requirements have been published by theBasel Committee.
At the G-20 summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committeeannounced the list of global systemically important banks (“G-SIBs”) and the additional requirements to the
G-SIBs including the recovery and resolution plan. The group of G-SIBs have been updated annually andpublished by the FSB each November. Since November 2011, we have not been designated as a G-SIBs. On theother hand, the FSB and the Basel Committee were asked to work on extending the framework for G-SIBs todomestic systemically important financial institutions (“D-SIBs”) and the Basel Committee developed andpublished a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs. In December 2015, the FSA identified us as a D-SIB and required additional capital charge of 0.5% after
March 2016, with 3-year transitional arrangement.
It is likely that the FSA’s regulation and notice will be revised further to be in line with a series of rules andstandards proposed by the Basel Committee, FSB or International Organization of Securities Commissions.
Credit Ratings
The cost and availability of unsecured funding are generally dependent on credit ratings. Our long-term andshort-term debt is rated by several recognized credit rating agencies. We believe that our credit ratings include
the credit ratings agencies’ assessment of the general operating environment, our positions in the markets inwhich we operate, reputation, earnings structure, trend and volatility of our earnings, risk management
framework, liquidity and capital management. An adverse change in any of these factors could result in adowngrade of our credit ratings, and that could, in turn, increase our borrowing costs and limit our access to thecapital markets or require us to post additional collateral and permit counterparties to terminate transactions
72

pursuant to certain contractual obligations. In addition, our credit ratings can have a significant impact on certainof our trading revenues, particularly in those businesses where longer term counterparty performance is critical,
such as OTC derivative transactions.
As of May 31, 2017, the credit ratings of the Company and NSC were as follows.
Nomura Holdings, Inc.

Short-term Debt

Long-term Debt

A-2
—
F1
a-1
—

ABaa1
AA+
AA-

Short-term Debt

Long-term Debt

A-1
P-2
F1
a-1
—

A
A3
AA+
AA-

Standard & Poor’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Moody’s Investors Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fitch Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rating and Investment Information, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan Credit Rating Agency, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nomura Securities Co., Ltd.

Standard & Poor’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Moody’s Investors Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fitch Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rating and Investment Information, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan Credit Rating Agency, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Both Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd. are credit rating
agencies nationally recognized in Japan. We rely on, or utilize, credit ratings on our long-term and short-term
debt provided by these Japanese credit rating agencies, as well as Standard & Poor’s, Moody’s Investors Service,and Fitch Ratings for unsecured funding and other financing purposes and also for our trading and other businessactivities. Within the rating classification system of Rating and Investment Information, Inc., “a-1” is the highestof five categories for short-term debt and indicates “a strong degree of certainty regarding debt repayment”; and“A” is the third highest of nine categories for long-term debt and indicates “a high degree of certainty regarding
debt repayment with excellence in specific component factors”, with a plus (+) or minus (-) sign added to a ratingin that category to indicate its relative standing within that category. Within the rating classification system ofJapan Credit Rating Agency, Ltd., “AA” is the second highest of eleven categories for long-term debt andindicates “a very high level of capacity to honor the financial commitment on the obligation”, with a plus (+) or
minus (-) sign added to a rating in that category to indicate its relative standing within that category.
There has been no change to the ratings in the above table since the date indicated.
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information.
The information required by this item is set forth in Item 5.A of this annual report.
E. Off-Balance Sheet Arrangements.
Off-balance sheet entities
In the normal course of business, we engage in a variety of off-balance sheet arrangements with off-balance
sheet entities which may have an impact on Nomura’s future financial position and performance.
Off-balance sheet arrangements with off-balance sheet entities include where Nomura has:•

an obligation under a guarantee contract;•a retained or contingent interest in assets transferred to an off-balance sheet entity or similararrangement that serves to provide credit, liquidity or market risk support to such entity;73•

any obligation, including a contingent obligation, under a contract that would be accounted for as a
derivative instrument; or•

any obligation, including a contingent obligation, arising out of a variable interest in an off-balance
sheet entity that is held by, and material to, us, where such entity provides financing, liquidity, market
risk or credit risk support to, or engages in leasing, hedging or research and development services with,us.

Off-balance sheet entities may take the form of a corporation, partnership, fund, trust or other legal vehicle
which is designed to fulfill a limited, specific purpose by its sponsor. We both create or sponsor these entities andalso enter into arrangements with entities created or sponsored by others.
Our involvement with these entities includes structuring, underwriting, distributing and selling debt
instruments and beneficial interests issued by these entities, subject to prevailing market conditions. In
connection with our securitization and equity derivative activities, we also act as a transferor of financial assets tothese entities, as well as, underwriter, distributor and seller of asset-repackaged financial instruments issued bythese entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making,investing and structuring activities. Our other types of off-balance sheet arrangements include guarantee
agreements and derivative contracts. Significant involvement is assessed based on all of our arrangements withthese entities, even if the probability of loss, as assessed at the balance sheet date, is remote.
For further information about transactions with VIEs, see Note 6 “Securitizations and Variable Interest
Entities” in our consolidated financial statements included in this annual report.
F. Tabular Disclosure of Contractual Obligations.
In the ordinary course of our business, we enter into a variety of contractual obligations and contingent
commitments, which may require future payments. These arrangements include:
Standby letters of credit and other guarantees:•

In connection with our banking and financing activities, we enter into various guarantee arrangementswith counterparties in the form of standby letters of credit and other guarantees, which generally have
fixed expiration dates.

Long-term borrowings and contractual interest payments:•

In connection with our operating activities, we issue Japanese yen and non-Japanese yen denominatedlong-term borrowings which incur variable and fixed interest payments in accordance with our funding
policy.

Operating lease commitments:•

We lease our office space, certain employees’ residential facilities and other facilities in Japan andoverseas primarily under cancellable lease agreements which are customarily renewed upon expiration;•

We lease certain equipment and facilities in Japan and overseas under non-cancellable operating leaseagreements.

Capital lease commitments:•

We lease certain equipment and facilities in Japan and overseas under capital lease agreements.
74

Purchase obligations:•

We have purchase obligations for goods and services which include payments for construction,
advertising, and computer and telecommunications maintenance agreements.

Commitments to extend credit:•

In connection with our banking and financing activities, we enter into contractual commitments toextend credit, which generally have fixed expiration dates;•

In connection with our investment banking activities, we enter into agreements with clients under which
we commit to underwrite securities that may be issued by clients.

Commitments to invest in partnerships:•

We have commitments to invest in interests in various partnerships and other entities and commitments
to provide financing for investments related to those partnerships.

Note 8 “Leases” in our consolidated financial statements contains further detail on our operating leases andcapital leases. Note 10 “Borrowings” in our consolidated financial statements contains further detail on our shortterm and long-term borrowing obligations and Note 20 “Commitments, contingencies and guarantees” in ourconsolidated financial statements included in this annual report contains further detail on our other commitments,
contingencies and guarantees.
The contractual amounts of commitments to extend credit represent the maximum amounts at risk should
the contracts be fully drawn upon, should the counterparties default, and assuming the value of any existing
collateral becomes worthless. The total contractual amount of these commitments may not represent future cash
requirements since the commitments may expire without being drawn upon. The credit risk associated with thesecommitments varies depending on our clients’ creditworthiness and the value of collateral held. We evaluateeach client’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by
us upon extension of credit, is based on management’s credit evaluation of the counterparty.
The following table presents information regarding amounts and timing of our future contractual obligations
and contingent commitments as of March 31, 2017.

Total
contractual
amountStandby letters of credit and otherguarantees . . . . . . . . . . . . . . . . . . . . . . . . . . ¥8,604 ¥
Long-term borrowings(1) . . . . . . . . . . . . . . . . . 7,155,196
Contractual interest payments(2) . . . . . . . . . . .
743,046
Operating lease commitments . . . . . . . . . . . .
127,818
Capital lease commitments(3) . . . . . . . . . . . . .
46,579Purchase obligations(4) . . . . . . . . . . . . . . . . . .
27,313
Commitments to extend credit . . . . . . . . . . . . 1,010,257
Commitments to invest . . . . . . . . . . . . . . . . .
15,194

Less than
1 yearMillions of yen
Years to maturity
1 to 33 to 5years
years

More than
5 years

15 ¥
3 ¥
688 ¥
7,898
478,658 2,337,682 1,536,160 2,802,696
108,237
181,505
112,363
340,941
17,075
26,954
17,93565,854
3,666
7,085
7,279
28,54919,663
4,221
1,600
1,829
388,275
123,303
157,510
341,169465—
383
14,346

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥9,134,007 ¥1,016,054 ¥2,680,753 ¥1,833,918 ¥3,603,282(1) The amounts disclosed within long-term borrowings exclude financial liabilities recognized within longterm borrowings as a result of transfers of financial assets that are accounted for as financings rather thansales in accordance with ASC 860. These are not borrowings issued for our own funding purposes andtherefore do not represent actual contractual obligations by us to deliver cash.
75

(2) The amounts represent estimated future interest payments related to long-time borrowings based on the
period through to their maturity and applicable interest rates as of March 31, 2017.
(3) The total contractual amount of capital lease commitments is the total minimum lease payments before
deducting interest.
(4) The minimum contractual obligations under enforceable and legally binding contracts that specify all
significant terms. Amounts exclude obligations that are already reflected on our consolidated balance sheets
as liabilities or payables.
Excluded from the above table are obligations that are generally short-term in nature, including short-termborrowings, deposits received at banks and other payables, collateralized agreements and financing transactions(such as reverse repurchase and repurchase agreements), and trading liabilities.
In addition to amounts presented above, we have commitments under reverse repurchase and repurchaseagreements including amounts in connection with collateralized agreements and collateralized financing. These
commitments amount to ¥1,830 billion for reverse repurchase agreements and ¥968 billion for repurchaseagreements as of March 31, 2017.

76

Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management.
Directors
The following table provides information about Directors of the Company as of June 26, 2017.
Name(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Nobuyuki Koga
(Aug. 22, 1950)

Director
Chairman of the Board of Directors
Chairman of the Nomination Committee
Chairman of the Compensation
Committee
Director of Nomura Securities Co., Ltd.
Representative Director and President ofKanagawa Kaihatsu Kanko Co., Ltd.

Apr. 1974 Joined the Company
Jun. 1995 Director of the Company
Apr. 1999 Managing Director of theCompany
Jun. 2000 Director and Deputy Presidentof the Company
Oct. 2001 Director and Deputy Presidentof the Company
Director and Deputy Presidentof Nomura Securities Co., Ltd.
Apr. 2003 Director and President of theCompany
Director and President of
Nomura Securities Co., Ltd.
Jun. 2003 Director, President & CEO of
the Company
Director and Executive Officer
and President of Nomura
Securities Co., Ltd.
Apr. 2008 Director and Representative
Executive Officer of theCompany
Director and Chairman of
Nomura Securities Co., Ltd.
Jun. 2008 Director and Chairman of
Nomura Securities Co., Ltd.
Jun. 2011 Director and Chairman of theCompany
Director and Chairman of
Nomura Securities Co., Ltd.
Apr. 2017 Director and Chairman of theCompany (Current)
Director of Nomura Securities
Co., Ltd. (Current)

Koji Nagai(Jan. 25, 1959)

Director, Representative Executive
Officer, President, and Group CEO
Director and Chairman of Nomura
Securities Co., Ltd.

Apr. 1981 Joined the Company
Apr. 2003 Director of Nomura Securities
Co., Ltd.
Jun. 2003 Senior Managing Director of
Nomura Securities Co., Ltd.
Apr. 2007 Executive Managing Directorof Nomura Securities Co., Ltd.

77

Business ExperienceName(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Business Experience

Oct. 2008

Apr. 2009

Apr. 2011
Apr. 2012

Aug. 2012

Jun. 2013

Apr. 2017

Tetsu Ozaki(Jan. 16, 1958)

Director, Representative Executive
Officer, Deputy President, and Group
COO
Director of Nomura Securities Co., Ltd.

78

Senior Corporate Managing
Director of Nomura Securities
Co., Ltd.
Executive Managing Directorand Executive Vice Presidentof Nomura Securities Co., Ltd.
Co-COO and Deputy Presidentof Nomura Securities Co., Ltd.
Senior Managing Director of
the Company
Director and President of
Nomura Securities Co., Ltd.
Representative Executive
Officer & Group CEO of theCompany
Director and President of
Nomura Securities Co., Ltd.
Director, Representative
Executive Officer and GroupCEO of the Company
Director and President of
Nomura Securities Co., Ltd.
Director, Representative
Executive Officer, President,
and Group CEO of theCompany (Current)
Director and Chairman of
Nomura Securities Co., Ltd.
(Current)

Apr. 1982 Joined the Company
Apr. 2004 Senior Managing Director of
the Company
Senior Managing Director of
Nomura Securities Co., Ltd.
Apr. 2008 Executive Managing Directorof Nomura Securities Co., Ltd.
Oct. 2008 Senior Corporate Managing
Director of Nomura Securities
Co., Ltd.
Aug. 2012 Deputy President of Nomura
Securities Co., Ltd.
Apr. 2013 Director and Deputy Presidentof Nomura Securities Co., Ltd.
Apr. 2014 Executive Managing Directorof the Company
Deputy President of Nomura
Securities Co., Ltd.

Name
(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Business Experience

Apr. 2016 Representative Executive
Officer & Group COO of theCompany
Director and Deputy Presidentof Nomura Securities Co., Ltd.
Jun. 2016 Director, Representative
Executive Officer and GroupCOO of the Company
Director and Deputy Presidentof Nomura Securities Co., Ltd.
Apr. 2017 Director, Representative
Executive Officer, Deputy
President, and Group COO of
the Company (Current)
Director of Nomura Securities
Co., Ltd. (Current)
Hisato Miyashita(Dec. 26, 1958)

Director
Member of the Audit Committee(full-time)
Director of Nomura Asset Management
Co., Ltd.
Director of The Nomura Trust andBanking Co., Ltd.
Statutory Auditor of Nomura Financial
Products & Services, Inc.

Jul. 1987
Jun. 1993
Aug. 1996
Apr. 1998

Dec. 1999

Mar. 2005

Jul. 2009

Apr. 2012

Jun. 2012

Apr. 2013

79

Joined the Company
Joined Union Bank of
Switzerland (currently, UBS)
Joined Bankers Trust Asia
Securities Ltd.
Joined Credit Suisse First
Boston Securities (Japan)
LimitedJoined Nikko Citigroup
Limited (currently, Citigroup
Global Markets Japan Inc.)
Executive Officer of Nikko
Citigroup Limited, Internal
Control Supervisory Manager
Managing Director of Group
Compliance Department of theCompany
Senior Managing Director of
the Company, Head ofWholesale Compliance
Senior Managing Director of
the Company, Group
Compliance Head Senior
Managing Director of Nomura
Securities Co., Ltd.
Senior Managing Director of
the Company, Group
Compliance Head
Representative Executive
Officer of Nomura Securities
Co., Ltd., Internal Control
Supervisory Manager

Name(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Business Experience

Apr. 2015 Senior Managing Director of
the Company, Deputy Chief ofStaff and Group Compliance
Head
Representative Executive
Officer and Senior Corporate
Managing Director of Nomura
Securities Co., Ltd., Internal
Control Supervisory Manager
Apr. 2016 Advisor of the Company
Jun. 2016

Director of the Company(Current)

Takao Kusakari(Mar. 13, 1940)

Outside Director
Member of the Nomination Committee
Member of the Compensation Committee
Senior Advisor of NYK Line

Apr. 1964 Joined Nippon Yusen
Kabushiki Kaisha (“NYKLine”)
Aug. 1999 President of NYK Line
Apr. 2002 President, Corporate Officer of
NYK Line
Apr. 2004 Chairman, Corporate Officer of
NYK Line
Apr. 2006 Chairman, Chairman Corporate
Officer of NYK Line
Apr. 2009 Director and Corporate
Advisor of NYK Line
Jun. 2010 Corporate Advisor of NYK
Line
Jun. 2011 Outside Director of theCompany (Current)
Apr. 2015 Senior Advisor of NYK Line(Current)

Hiroshi Kimura(Apr. 23, 1953)

Outside Director
Member of the Nomination Committee
Member of the Compensation Committee
Advisor of Japan Tobacco Inc.
Outside Director of Asahi Glass Co., Ltd.
Outside Director of IHI Corporation

Apr. 1976 Joined Japan Tobacco and Salt
Public Corporation (currently,
Japan Tobacco Inc.)
Jun. 1999 Director of Japan Tobacco Inc.
Jun. 2001 Resigned as Director of Japan
Tobacco Inc.
Jun. 2005 Director of Japan Tobacco Inc.
Jun. 2006 President and CEO and
Representative Director ofJapan Tobacco Inc.
Jun. 2012 Chairman of the Board ofJapan Tobacco Inc.
Jun. 2014 Special Advisor of Japan
Tobacco Inc.
Jun. 2015 Outside Director of theCompany (Current)
Jul. 2016 Advisor of Japan Tobacco Inc.
(Current)

80

Name
(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Business Experience

Noriaki Shimazaki(Aug. 19, 1946)

Outside Director
Chairman of the Audit Committee
Director of Nomura Securities Co., Ltd.
Outside Director of Autobacs Seven Co.,Ltd.
Outside Director of UKC Holdings
Corporation
Outside Director of Loginet Japan Co.,Ltd.

Apr. 1969 Joined Sumitomo Corporation
Jun. 1998 Director of Sumitomo
Corporation
Apr. 2002 Representative Director andManaging Director of
Sumitomo Corporation
Jan. 2003 Member of the BusinessAccounting Council of the
Financial Services Agency
Apr. 2004 Representative Director andSenior Managing Executive
Officer of Sumitomo
Corporation
Apr. 2005 Representative Director andExecutive Vice President of
Sumitomo Corporation
Jan. 2009 Trustee of the IFRSFoundation
Jul. 2009 Special Advisor of Sumitomo
Corporation
Jun. 2011 Director of the Financial
Accounting Standards
Foundation
Chairman of Self-regulation
Board and Public Governor of
the Japan Securities Dealers
Association
Sep. 2013 Advisor of the IFRSFoundation Asia-Oceania
Office (Current)
Advisor of the JapaneseInstitute of Certified Public
Accountants (Current)
Jun. 2016 Outside Director of theCompany (Current)
Director of Nomura Securities
Co., Ltd. (Current)

Toshinori Kanemoto(Aug. 24, 1945)

Outside Director
Member of the Audit Committee
Of-Counsel of City-Yuwa Partners
Outside Statutory Auditor of Nippon
Television Holdings, Inc.
Outside Director of Riken Corporation

Apr. 1968 Joined National Police Agency
Apr. 1992 Kumamoto Prefecture Police
Headquarters, Director-General
Aug. 1995 Director General of theInternational Affairs
Department, National Police
AgencyOct. 1996 President of ICPO-INTERPOL
Aug. 2000 President, National Police
AcademyApr. 2001 Director of Cabinet
Intelligence, Cabinet
Secretariat, Government of
Japan

81

Name
(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Business ExperienceJan. 2007

Registered as Attorney-at-Law(Dai-ichi Tokyo Bar
Association)
Feb. 2007 Of-Counsel, City-Yuwa
Partners (Current)
Jun. 2011 Outside Director of theCompany (Current)
Mari Sono(Feb. 20, 1952)

Outside Director

Oct. 1976

Mar. 1979
Nov. 1988

Nov. 1990

Apr. 1992

Dec. 1994

Oct. 2002

Apr. 2005
Jul. 2008
Aug. 2012
Dec. 2013

Jun. 201782

Joined NISSHIN Audit
Corporation (currently Ernst &Young ShinNihon LLC)
Registered as Certified Public
Accountant
Partner of CENTURY Audit
Corporation (currently Ernst &Young ShinNihon LLC)
Member of “Certified Public
Accountant Examination
System Subcommittee”,
Certified Public Accountant
Examination and Investigation
Board, Ministry of FinanceMember of “BusinessAccounting Council”, Ministryof Finance
Senior Partner, CENTURY
Audit Corporation (currently
Ernst & Young ShinNihon
LLC)
Member of Secretariat of theInformation Disclosure,Cabinet Office (currently
Secretariat of the Information
Disclosure and Personal
Information Protection Review
Board, Ministry of Internal
Affairs and Communications)
External Comprehensive
Auditor, Tokyo
Senior Partner of Ernst &Young ShinNihon LLC
Retired Ernst & Young
ShinNihon LLC
Commissioner of the Securities
and Exchange SurveillanceCommission
Outside Director of theCompany (Current)Name(Date of Birth)

Michael Lim Choo
San
(Sep. 10, 1946)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Outside Director
Non-Executive Chairman of Fullerton
Healthcare Corporation Limited
Non-Executive Chairman of Nomura
Singapore Ltd.

Business Experience

Aug. 1972 Joined Price Waterhouse,
SingaporeJan. 1992 Managing Partner of Price
Waterhouse, Singapore
Oct. 1998 Member of the Singapore
Public Service Commission(Current)
Jul. 1999 Executive Chairman ofPricewaterhouseCoopers,
Singapore
Sep. 2002 Chairman of the Land
Transport Authority ofSingapore
Sep. 2004 Independent Director of OlamInternational Limited
Jun. 2011 Outside Director of theCompany (Current)
Nov. 2011 Chairman of the AccountingStandards Council, Singapore
Apr. 2013 Chairman of the Singapore
Accountancy Commission
Sep. 2016 Non-Executive Chairman of
Fullerton Healthcare
Corporation Limited (Current)

Among the Directors listed above, Takao Kusakari, Hiroshi Kimura, Noriaki Shimazaki, Toshinori
Kanemoto, Mari Sono and Michael Lim Choo San satisfy the requirements for an “Outside Director” under theCompanies Act.

83

Executive Officers
The following table provides information about the Company’s Executive Officers as of June 26, 2017.
Name(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Business Experience

Koji Nagai(Jan. 25, 1959)

See “Directors” under this Item 6.A.

See “Directors” under this Item 6.A.

Tetsu Ozaki(Jan. 16, 1958)

See “Directors” under this Item 6.A.

See “Directors” under this Item 6.A.

Shoichi Nagamatsu(Jul. 6, 1958)

Representative Executive Officer,
Deputy President of the Company
Chief of Staff
Director of Nomura Securities Co., Ltd.

Apr. 1982
Apr. 2004
Oct. 2008

Jun. 2010

Apr. 2012

Jun. 2012

Apr. 2013

Apr. 2016

Apr. 2017

Toshio Morita(Apr. 17, 1961)

Executive Managing Director
Director, Representative Executive
Officer and President of Nomura
Securities Co., Ltd.

Apr. 1985
Apr. 2008
Oct. 2008
Apr. 201084

Joined the Company
Senior Managing Director of
Nomura Securities Co., Ltd.
Executive Managing Directorof the Company
Senior Managing Director of
Nomura Securities Co., Ltd.
Senior Corporate Managing
Director of the Company
Senior Corporate Managing
Director of Nomura Securities
Co., Ltd.
Senior Corporate Managing
Director of Nomura Securities
Co., Ltd.
Executive Managing Director
and Senior Corporate
Managing Director of Nomura
Securities Co., Ltd.
Executive Managing Directorof the Company
Executive Managing Directorand Executive Vice Presidentof Nomura Securities Co., Ltd.
Executive Managing Directorof the Company
Deputy President of Nomura
Securities Co., Ltd.
Representative Executive
Officer, Deputy President of
the Company (Current)
Chief of Staff (Current)
Director of Nomura Securities
Co., Ltd. (Current)
Joined the Company
Senior Managing Director of
Nomura Securities Co., Ltd.
Senior Managing Director of
Nomura Securities Co., Ltd.
Senior Corporate Managing
Director of Nomura Securities
Co., Ltd.

Name(Date of Birth)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Business Experience

Apr. 2011
Apr. 2012

Aug. 2012

Apr. 2015

Apr. 2016

Apr. 2017

Kunio Watanabe(Feb. 22, 1963)

Executive Managing Director
Head of the Asset Management
Director, President and CEO of Nomura
Asset Management Co., Ltd.

Apr. 1985
Apr. 2009

Apr. 2012

Apr. 2014

Takumi Kitamura(Nov. 26, 1966)

Executive Managing Director
Chief Financial Officer
Executive Managing Director of Nomura
Securities Co., Ltd.
Financial Officer of Nomura Securities
Co., Ltd.

85

Apr. 1990
Apr. 2016

Senior Corporate Managing
Director of the Company
Senior Corporate Managing
Director of the Company
Senior Corporate Managing
Director of Nomura Securities
Co., Ltd.
Executive Managing Directorof the Company
Executive Vice President of
Nomura Securities Co., Ltd.
Executive Managing Directorof the Company
Executive Managing Directorand Executive Vice Presidentof Nomura Securities Co., Ltd.
Representative Executive
Officer and Deputy Presidentof Nomura Securities Co., Ltd
Executive Managing Directorof the Company (Current)
Director, Representative
Executive Officer andPresident of Nomura Securities
Co., Ltd. (Current)
Joined the Company
Senior Managing Director of
Nomura Asset Management
Co., Ltd.
Senior Corporate Managing
Director of Nomura AssetManagement Co., Ltd.
Executive Managing Directorof the Company (Current)
Asset Management CEO(currently, Head of the AssetManagement) (Current)
Director, President and CEO of
Nomura Asset Management
Co., Ltd. (Current)
Joined the Company
Executive Managing Directorof the Company (Current)
Chief Financial Officer of theCompany (Current)
Executive Managing Directorof Nomura Securities Co., Ltd.
(Current)
Financial Officer of Nomura
Securities Co., Ltd. (Current)Name(Date of Birth)

Yuji Nakata(Jun. 6, 1959)

Responsibilities and Status within Nomura/
Other Principal Business Activities

Executive Managing Director
Head of Group Entity Structure and
Co-CRO
Representative Executive Officer and
Deputy President of Nomura Securities
Co., Ltd.

Business Experience

Apr. 1983
Apr. 2007
Apr. 2008
Oct. 2008
Nov. 2008
Apr. 2012

Apr. 2014

Apr. 2016

Apr. 2017

Joined the Company
Senior Managing Director of
Nomura Securities Co., Ltd.
Executive Managing Directorof the Company
Senior Managing Director of
the Company
Senior Managing Director of
Nomura Securities Co., Ltd.
Senior Managing Director of
the Company
Senior Managing Director of
Nomura Securities Co., Ltd.
Senior Managing Director of
the Company
Senior Corporate Managing
Director of Nomura Securities
Co., Ltd.
Executive Managing Directorof the Company
Executive Managing Directorand Executive Vice Presidentof Nomura Securities Co., Ltd.
Executive Managing Directorof the Company (Current)
Head of Group Entity Structure
and Co-CRO (Current)
Representative Executive
Officer and Deputy Presidentof Nomura Securities Co., Ltd.
(Current)

B. Compensation.
(1) Compensation policy
We have developed our compensation policy for both executives and employees of the Nomura Group to
enable us to achieve sustainable growth, realize a long-term increase in shareholder value, deliver client
excellence, compete in a global market and enhance our reputation. Our compensation policy is based around thefollowing six key themes. It aims to:1.

align with Nomura values and strategies;2.

reflect group, divisional and individual performance;3.

establish appropriate performance measurement with a focus on risk;

4.

align employee and shareholder interests;

5.

establish appropriate compensation structures; and6.

ensure robust governance and control processes.

86

(2) Compensation governance
The Compensation Committee of Nomura, which is a statutory committee, is responsible for approving ouroverall compensation policy and for ensuring that the Nomura Group’s compensation framework supports ourbusiness strategy.
The Company has delegated authority to the Human Resources Committee (“HRC”) to develop and to
implement the Nomura Group’s compensation policy. The HRC’s responsibilities include:•

approving the compensation framework, while taking into account necessary factors to ensure that all
staff, including members of executive management, are provided with appropriate incentives to enhancetheir performance and are rewarded for their individual contributions to the success of our businessglobally;•

approving the total bonus pool and its allocation to each business;•reviewing the performance measures of senior executives to ensure that compensation reflects theperformance of both individuals and our business globally;•

continually reviewing the appropriateness and relevance of our compensation policy; and•approving any major changes in employee benefits structures globally;

Current members of the HRC include the Group CEO (as Chairman of the Committee), Group COO, CFO,
Chief Risk Officer (“CRO”), Chief of Staff and head of Human Resources.
(3) Nomura’s compensation framework
Nomura delivers compensation to executives and employees through fixed and variable components. The
key objectives of these components are provided below, together with the specific elements of each component.
Compensation
Components

Fixed Compensation

Variable Compensation

Objectives•

Rewards individuals for their knowledge,
skills, competencies and experiences•

Reflects local labour market standards••

Specific Elements•

Base salary

Reflects practices of local labour markets
to deliver allowances as a part of fixedcompensation to individuals•

Housing allowances•

Overtime pay

Rewards team and individual
performances, and their contribution toresults as well as the Company’s
strategic and future value•

Cash bonuses•

Deferred compensation•

Reflects appropriate internal and marketbased peer comparisons•Reflects broad views on compensation,
including individual performances,approaches to risk, compliance andcross-divisional cooperation

Note: Benefits driven by local market regulations and practices are not included in the above.

87

(4) Variable Compensation
Cash bonuses
A proportion of variable compensation is delivered in the form of a cash payment following the end of the
fiscal year. Individuals with higher levels of compensation receive a lower proportion in cash. This is in line withregulatory guidance, and while the policy is global in application, specific local regulatory requirements will beadhered to when deciding on proportions of cash bonuses.
Deferred compensation
Certain senior management and employees whose compensation is above a certain level receive a portion of
their variable compensation through deferred compensation awards. By linking the economic value of a part ofcompensation to Nomura’s stock price and imposing certain vesting periods, such plans will:•align employee interest with that of shareholders;•increase employee retention through providing opportunities to grow personal wealth over the period
from grant to vesting; and•encourage cross-divisional and cross-regional collaboration by focusing individuals on a common goalof long-term increase in corporate value.

As a result of these benefits, deferred compensation awards are also recommended by regulators in the key
jurisdictions in which we operate.
The deferral period over which our deferred compensation awards vest is generally three or more years. This
is in line with the “Principles for Sound Compensation Practices” issued by the FSB, which recommends, among
other things, a deferral period of three or more years. Deferred compensation awards are also generally reduced,
forfeited or clawed back in the event of:•voluntary termination of employment;•material restatement in our consolidated group financial statements;•

material violation of policies of Nomura; and•material detriment to the business or reputation of Nomura.

Deferred compensation awards for the fiscal year ended March 31, 2013 and subsequent fiscal years which
are delivered to senior management and employees who exceed certain compensation levels will also be reduced,
forfeited or clawed back in the event of a material downturn in performance of the Nomura group and/or amaterial failure of risk management.
Furthermore, stricter terms and conditions for reduction, forfeiture and clawback were introduced into
deferred compensation awards for the fiscal year ended March 31, 2015 and subsequent fiscal years.
Certain deferred compensation awards delivered in respect of the fiscal years ended March 31, 2013 andMarch 2014 include“Full Career Retirement” (“FCR”) provisions which permit recipients of the awards tocontinue to vest in the awards upon voluntary termination if certain criteria are met. Awards in respect of the
fiscal year ended March 31, 2015 and subsequent fiscal years include similar FCR provisions, however theability of the recipient to claim FCR in the first year of the award is now limited to a pre-defined election
window which closes at a certain day.
Nomura’s deferred compensation awards currently comprise core deferral awards and supplemental deferralawards.
88

1. Core deferral awards(a) Stock Acquisition Right (“SAR”) awards
Nomura has issued the following two types of SAR awards.
•

SAR Plan A awards
The Company issues SAR Plan A awards linked to price of the Company’s common stock pursuant toseveral stock option plans. These awards vest and are exercisable into the Company’s common stock
two years after grant date, expire approximately seven years after grant date, and are subject toforfeiture on voluntary termination of employment or involuntary termination for cause. The exercise
price is generally not less than the fair value of the Company’s common stock on grant date. The
awards qualify as SARs under Japanese tax law and are therefore delivered primarily to employees inJapan.

•SAR Plan B awards
The Company issues SAR Plan B awards linked to price of the Company’s common stock pursuant toseveral stock unit plans. These awards vest and are exercisable into the Company’s common stock
approximately half to seven years after grant date, expire approximately five and a half to twelve years
after grant date, and are subject to forfeiture on voluntary termination of employment or involuntarytermination for cause.
This plan is intended to offer a similar economic effect as restricted stock, as commonly used in the
U.S. and Europe. Options are granted with an exercise price of ¥1 per share.

(b) Notional Stock Unit (“NSU”) awards
NSU awards are cash-settled awards linked to the price of the Company’s common stock which aredesigned to replicate the key features of SAR Plan B awards described above but are settled in cash rather than
exercisable into the Company’s common stock. This allows equity-linked awards to be made in countries where
SARs are less favorably treated from tax or other perspectives. These awards have graded vesting over sevenyears from grant date and are subject to forfeiture on voluntary termination of employment or involuntarytermination for cause.
2. Supplemental deferral awards
Beginning with the fiscal year ended March 31, 2011, we have also delivered deferred compensation tocertain senior management and employees through supplemental deferral awards which are in additional to thecore deferral awards described above. These awards reinforce our goals of retaining and motivating our key
talent in the competitive market place. These awards have graded vesting over three years or such longer period
where required by local regulations after grant date.
(a) Collared Notional Stock Unit (“CSU”) awards
CSU awards are linked to the value of the Nomura’s stock price subject to a cap and a floor.
(b) Notional Indexed Unit (“NIU”) awards
NIU awards are linked to a world stock index quoted by Morgan Stanley Capital International. Other
material terms, including deferral period and vesting conditions, are the same as those for CSUs.
(5) Consistency with risk management and linkage to performance
In determining aggregate compensation, Nomura considers the ratio of compensation and benefit expenses
to adjusted net income (defined as net income before income taxes and before deduction of compensation and89benefits expenses followed by a specific risk adjustment). The risk adjustment to income is determined bydeducting a certain proportion of economic capital from each division’s revenue. Such economic capitalcomprehensively recognizes quantitatively assessed risks, and reflects various risks including market, credit,
liquidity, and operational risks.
Nomura recognizes that its aggregate compensation should maintain consistency with the current financial
soundness and future prospects of Nomura, and that it should not have significant impact on capital adequacy inthe future.
(6) Compensation for Directors and Executive Officers
Pursuant to the fundamental approach and framework of compensation as described above, and as acompany which adopts a committee-based corporate governance system, a Compensation Committee of Nomura
determines compensation of its Directors and Executive Officers in accordance with our applicable compensation
policy.
1.

Aggregate compensation
Number ofMillions of yen
Directors or
Year
ended
March 31, 2017
Executive
Officers(1) Basic Compensation(2)(3) Bonus Deferred Compensation(4)Total

Directors . . . . . . . . . . . . . . . . . . . . . . . . . .
(Outside Directors included in above) . . .
Executive Officers . . . . . . . . . . . . . . . . . .

9
(6)
6

¥ 315
(146)
430

¥ 94
(—)
379

¥ 88
(—)
288

¥ 497
(146)
1,098

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

¥ 745

¥ 473

¥ 376

¥1,595(1) There were 9 Directors and 6 Executive Officers as of March 31, 2017. Compensation to Directors who
were concurrently serving as Executive Officers is included in that of Executive Officers.
(2) Basic compensation of ¥745 million includes other compensation (such as commuter pass allowances) of¥0.69 million.
(3) In addition to basic compensation, ¥24 million of corporate housing costs, such as housing allowance andrelated tax adjustments, were provided.
(4) Deferred compensation represents amounts recognized as compensation and benefit expense during the year
ended March 31, 2017 in respect of awards such as SARs granted during the year ended March 31, 2017 andprior years.
(5) Subsidiaries of the Company paid ¥47 million to Outside Directors as compensation etc. for theirdirectorship at those subsidiaries for the year ended March 31, 2017.
(6) The Company abolished retirement bonuses to Directors in 2001.

90

2.

Individual compensation of Directors and Executive Officers receiving ¥100 million or more

Name

Company

Category

Nobuyuki Koga . . . . . . . . . . .
Koji Nagai(2) . . . . . . . . . . . . . .

NomuraNomuraTetsu Ozaki . . . . . . . . . . . . . .

NomuraShoichi Nagamatsu . . . . . . . .

NomuraKunio Watanabe . . . . . . . . . .

NomuraTakumi Kitamura . . . . . . . . . .

NomuraYuji Nakata . . . . . . . . . . . . . .

NomuraDirector
Director,
Representative
Executive
Officer(Group CEO)
Director,
Representative
Executive
Officer(Group COO)
Executive
Officer
Executive
Officer
Executive
Officer
Executive
Officer

Millions of yen
Fixed Remuneration(Basic Compensation)
Variable Compensation(1)EquityDeferredCompensation
Cash Compensation
Base Salary(SARs)
Total Bonus (SARs, etc.) Total Total
¥ 87
102

¥—
17

¥ 87
119

¥ 79
155

¥ 80
156

¥159
311

¥246
430

92

16

108

86

86

172

280

66

13

79

45

46

91

170

60

13

73

48

49

97

170

50

8

58

21

21

42

100

60

13

73

23

24

47

120

(1) Variable Compensation indicates the amount determined as remuneration based on the performance during the fiscal year ended
March 31, 2017.
(2) In addition to basic compensation, ¥24 million of corporate housing costs, such as housing allowance and related tax adjustments, were
provided.

91

Stock Acquisition Rights (“SARs”)
The following table presents information regarding unexercised Stock Acquisition Rights as of March 31,
2017.
March 31, 2017

Series of SARs

Allotment Date

Number of
Shares under
SARs

Stock Acquisition Rights
No.34
Stock Acquisition Rights
No.35
Stock Acquisition Rights
No.37
Stock Acquisition Rights
No.38
Stock Acquisition Rights
No.39
Stock Acquisition Rights
No.40
Stock Acquisition Rights
No.41
Stock Acquisition Rights
No.42
Stock Acquisition Rights
No.43
Stock Acquisition Rights
No.44
Stock Acquisition Rights
No.45
Stock Acquisition Rights
No.46
Stock Acquisition Rights
No.47
Stock Acquisition Rights
No.48
Stock Acquisition Rights
No.49
Stock Acquisition Rights
No.50
Stock Acquisition Rights
No.51
Stock Acquisition Rights
No.52
Stock Acquisition Rights
No.53
Stock Acquisition Rights
No.54
Stock Acquisition Rights
No.55

May 18, 2010

122,100

May 18, 2010

351,300

July 28, 2010

516,000

July 28, 2010

482,700

November 16, 2010 1,209,900
June 7, 2011

500,800

June 7, 2011

862,800

June 7, 2011

1,164,400

November 16, 2011 1,234,400
June 5, 2012

622,600

June 5, 2012

1,091,200

June 5, 2012

1,284,300

June 5, 2012

1,013,000

June 5, 2012

4,627,700

June 5, 2012

193,600

June 5, 2012

1,645,000

November 13, 2012 1,539,400
June 5, 2013

767,800

June 5, 2013

967,700

June 5, 2013

1,446,100

November 19, 2013 2,681,200

92

Exercise Periodof SARs

From May 19, 2012
to May 18, 2017
From May 19, 2012
to May 18, 2017
From April 30, 2012
to April 29, 2017
From April 30, 2013
to April 29, 2018
From November 16, 2012
to November 15, 2017
From May 25, 2012
to May 24, 2018
From May 25, 2013
to May 24, 2018
From May 25, 2014
to May 24, 2018
From November 16, 2013
to November 15, 2018
From April 20, 2013
to April 19, 2018
From April 20, 2014
to April 19, 2019
From April 20, 2015
to April 19, 2020
From April 20, 2016
to April 19, 2021
From April 20, 2017
to April 19, 2022
From October 20, 2015
to April 19, 2021
From October 20, 2016
to April 19, 2022
From November 13, 2014
to November 12, 2019
From April 20, 2014
to April 19, 2019
From April 20, 2015
to April 19, 2020
From April 20, 2016
to April 19, 2021
From November 19, 2015
to November 18, 2020

Exercise
Price perPaid-in
Share under Amount for
SARs
SARs

¥

1

¥ 0

1

0

1

0

1

0

474

0

1

0

1

0

1

0

299

0

1

0

1

0

1

0

1

0

1

0

1

0

1

0

298

0

1

0

1

0

1

0

824

0

March 31, 2017

Series of SARs

Allotment Date

Number of
Shares under
SARs

Stock Acquisition Rights
No.56
Stock Acquisition Rights
No.57
Stock Acquisition Rights
No.58
Stock Acquisition Rights
No.59
Stock Acquisition Rights
No.60
Stock Acquisition Rights
No.61
Stock Acquisition Rights
No.62
Stock Acquisition Rights
No.63
Stock Acquisition Rights
No.64
Stock Acquisition Rights
No.65
Stock Acquisition Rights
No.66
Stock Acquisition Rights
No.68
Stock Acquisition Rights
No.69
Stock Acquisition Rights
No.70
Stock Acquisition Rights
No.71
Stock Acquisition Rights
No.72
Stock Acquisition Rights
No.73
Stock Acquisition Rights
No.74

June 5, 2014

1,140,300

June 5, 2014

1,987,800

June 5, 2014

7,988,600

June 5, 2014

510,600

June 5, 2014

1,008,800

June 5, 2014

9,112,700

November 18, 2014 2,675,700
June 5, 2015

1,788,900

June 5, 2015

6,561,400

June 5, 2015

6,526,900

June 5, 2015

371,000

November 18, 2015 2,571,000
June 7, 2016

6,167,500

June 7, 2016

6,142,400

June 7, 2016

6,120,000

June 7, 2016

827,200

June 7, 2016

418,400

November 11, 2016 2,559,400

Exercise Periodof SARs

From April 20, 2015
to April 19, 2020
From April 20, 2016
to April 19, 2021
From April 20, 2017
to April 19, 2022
From March 31, 2015
to March 30, 2020
From March 31, 2016
to March 30, 2021
From March 31, 2017
to March 30, 2022
From November 18, 2016
to November 17, 2021
From April 20, 2016
to April 19, 2021
From April 20, 2017
to April 19, 2022
From April 20, 2018
to April 19, 2023
From November 8, 2015
to November 7, 2020
From November 18, 2017
to November 17, 2022
From April 20, 2017
to April 19, 2022
From April 20, 2018
to April 19, 2023
From April 20, 2019
to April 19, 2024
From October 30, 2016
to October 29, 2021
From April 30, 2017
to April 29, 2022
From November 11, 2018
to November 10, 2023

Exercise
Price perPaid-in
Share under Amount for
SARs
SARs

1

0

1

0

1

0

1

0

1

0

1

0

741

0

1

0

1

0

1

0

1

0

805

0

1

0

1

0

1

0

1

0

1

0

593

0

(1) SARs (including those granted to Directors and Executive Officers of Nomura which are stated in the tablebelow) are issued in conjunction with deferred compensation plan.
(2) The number of shares issuable under SARs is subject to adjustments under certain circumstances including
stock splits.

93

SARs Held by Directors and Executive Officers of Nomura
The following table presents details of Stock Acquisition Rights held by Directors and Executive Officers asof March 31, 2017.
March 31, 2017
Numbers of Holders
Directors andNumber of
Executive Officers
Shares under(excluding
SARs
Outside Directors)

Series of SARs

SARs No.42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.53 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.54 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.58 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.63 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.69 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.70 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SARs No.71 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,100
4,900
4,900
4,900
19,20027,60026,10030,70057,10027,20077,40093,60020,60020,60073,30076,10089,20088,900126,900
126,400
126,300

1
2
2
2
5
7
4
5
6
4
5
7
3
3
5
5
7
7
7
7
7

Pension, Retirement or Similar Benefits
See Note 12 “Employee benefit plans” in our consolidated financial statements included in this annual
report.
C. Board Practices.
Information Concerning Directors
The Companies Act states that a Company with Three Board Committees (as defined below) must establish
three committees; a nomination committee, an audit committee and a compensation committee. The members ofeach committee are chosen from the company’s directors, and the majority of the members of each committee
must be outside directors. At a Company with Three Board Committees, the board of directors is entitled toestablish the basic management policy for the company, has decision-making authority over certain prescribedmatters, and supervises the execution by the executive officers of their duties. Executive officers andrepresentative executive officers appointed by a resolution adopted by the board of directors manage the businessaffairs of the company, based on a delegation of authority by the board of directors.
Since June 2003, the Company has adopted a corporate governance structure that separates management
oversight functions from business execution functions (“Company with Three Board Committees”). Through thisgovernance structure, the Company aims to strengthen management oversight, increase the transparency of theCompany’s management and expedite the decision-making process within the Nomura Group. An outline of theCompany’s Board of Directors, Nomination Committee, Audit Committee and Compensation Committee isprovided below.
94

Board of Directors
The Company’s Board of Directors consists of Directors who are elected at a general meeting ofshareholders and the Company’s Articles of Incorporation provide that the number of Directors shall not exceed
twenty. The term of office of each Director expires upon the conclusion of the ordinary general meeting ofshareholders with respect to the last fiscal year ending within one year after their appointment. Directors may
serve any number of consecutive terms. From among its members, the Company’s Board of Directors elects the
Chairman. The Company’s Board of Directors met eleven times during the fiscal year ended March 31, 2017. As
a group, the Directors attended 100% of the total number of meetings of the Board of Directors during the year.
The Board of Directors has the authority to determine the Company’s basic management policy and supervise theexecution by the Executive Officers of their duties. Although the Board of Directors also has the authority tomake decisions with regard to the Company’s business, most of this authority has been delegated to the
Executive Officers by a resolution adopted by the Board of Directors. There are no Directors’ service contracts
with the Company or any of its subsidiaries providing for benefits upon termination of employment.
Nomination Committee
The Nomination Committee, in accordance with the Company’s Regulations of the Nomination Committee,
determines the details of any proposals concerning the election and dismissal of Directors to be submitted togeneral meetings of shareholders by the Board of Directors. The Nomination Committee met five times during
the fiscal year ended March 31, 2017. As a group, the member Directors attended all of the meetings of theNomination Committee during the year. As of June 23, 2017, the members of the Nomination Committee are
Nobuyuki Koga, a Director not concurrently serving as an Executive Officer, and Outside Directors Takao
Kusakari and Hiroshi Kimura. Nobuyuki Koga is the Chairman of this Committee.
Audit Committee
The Audit Committee, in accordance with the Company’s Regulations of the Audit Committee, (i) audits theexecution by the Directors and the Executive Officers of their duties and the preparation of audit reports and(ii) determines the details of proposals concerning the election, dismissal or non-reappointment of the accounting
auditor to be submitted to general meetings of shareholders by the Board of Directors. With respect to financial
reporting, the Audit Committee has the statutory duty to examine financial statements and business reports to beprepared by Executive Officers designated by the Board of Directors and is authorized to report its opinion to theordinary general meeting of shareholders.
The Audit Committee met sixteen times during the fiscal year ended March 31, 2017. As a group, themember Directors attended all of the meetings of the Audit Committee during the year. As of June 23, 2017, themembers of the Audit Committee are Hisato Miyashita (a full-time member of the Audit Committee) and Outside
Directors, Noriaki Shimazaki, Toshinori Kanemoto and Mari Sono. Noriaki Shimazaki is the Chairman of thisCommittee.
Compensation Committee
The Compensation Committee, in accordance with the Company’s Regulations of the Compensation
Committee, determines the Company’s policy with respect to the determination of the details of each Directorand Executive Officer’s compensation. The Compensation Committee also determines the details of each
Director and Executive Officer’s actual compensation. The Compensation Committee met three times during the
fiscal year ended March 31, 2017. As a group, the member Directors attended all of the meetings of theCompensation Committee during the year. As of June 23, 2017, the members of the Compensation Committee
are Nobuyuki Koga, a Director not concurrently serving as an Executive Officer, and Outside Directors Takao
Kusakari and Hiroshi Kimura. Nobuyuki Koga is the Chairman of this Committee.

95

Limitation of Director Liability
In accordance with Article 33, Paragraph 2 of the Company’s Articles of Incorporation and Article 427,
Paragraph 1 of the Companies Act, the Company may execute agreements with Directors (excluding a person
who serves as an executive director, etc.) that limit their liability to the Company for damages suffered by theCompany if they acted in good faith and without gross negligence. Accordingly, the Company has entered into
agreements to limit Companies Act Article 423 Paragraph 1 liability for damages (“Limitation of Liability
Agreements”) with each of the following Directors: Hisato Miyashita, Takao Kusakari, Hiroshi Kimura, Noriaki
Shimazaki, Toshinori Kanemoto, Mari Sono and Michael Lim Choo San. Liability under each such agreement islimited to either ¥20 million or the amount prescribed by laws and regulations, whichever is greater.
Information Concerning Executive Officers
Executive Officers of the Company are appointed by the Board of Directors, and the Company’s Articles ofIncorporation provide that the number of Executive Officers shall not exceed forty-five. The term of office ofeach Executive Officer expires upon the conclusion of the first meeting of the Board of Directors convened after
the ordinary general meeting of shareholders for the last fiscal year ending within one year after each Executive
Officer’s assumption of office. Executive Officers may serve any number of consecutive terms. Executive
Officers have the authority to determine matters delegated to them by resolutions adopted by the Board of
Directors and to execute business activities.
D. Employees.
The following table shows the number of our employees as of the dates indicated:
2015

March 31,
2016

2017

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia and Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,973 16,083 16,227
3,485 3,424 3,026
2,449 2,503 2,314
6,765 6,855 6,619

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28,672 28,865 28,186

As of March 31, 2017, we had 16,227 employees in Japan, including 9,507 in our Retail Division, 1,562 in
our Wholesale Division and 859 in our Asset Management Division. In overseas, we had 11,959 employees, ofwhich 3,026 were located in Europe, 2,314 in the Americas, and 6,619 in Asia and Oceania.
As of March 31, 2017, 8,121 of Nomura Securities’ employees in Japan were members of the Nomura
employees’ union, with which we have a labor contract. The Company and labor union communicate frequently
in order to resolve labor-related matters.
We have not experienced any strikes or other labor disputes in Japan or overseas and consider our employee
relations to be excellent.

96

E. Share Ownership.
The following table shows the number of shares owned by our Directors and Executive Officers as of
May 31, 2017. As of that date, none of them owned 1% or more of our issued and outstanding shares. None of
the shares referred to below have different voting rights.
Directors
Number of
Shareholdings

Name

Nobuyuki Koga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Koji Nagai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tetsu Ozaki . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hisato Miyashita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Takao Kusakari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hiroshi Kimura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noriaki Shimazaki . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toshinori Kanemoto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mari Sono . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Lim Choo San . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

300,823
284,800
153,899
52,000
—
—
2,838
—
—
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

794,360

Executive Officers
Name

Number of
Shareholdings

Koji Nagai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tetsu Ozaki . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shoichi Nagamatsu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toshio Morita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kunio Watanabe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Takumi Kitamura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yuji Nakata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

See above
See above
200,734
167,294
58,20013,38264,290Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

503,900

For information regarding stock options granted to our Directors and Executive Officers, see Item 6.B“Compensation” of this annual report.
Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders.
The Company is aware that Harris Associates L.P. filed reports of substantial shareholding with the Director
General of the Kanto Finance Bureau on November 2, 2016. According to the reports, as of October 31, 2016,
Harris Associates L.P. owned 139,670,200 shares, representing 3.65% of the issued shares of the Company’scommon stock. However the Company has not confirmed the status of these shareholdings as of March 31, 2017.
To our knowledge, we are not directly or indirectly owned or controlled by another corporation, by any
government or by any other natural or legal person severally or jointly. We know of no arrangements theoperation of which may at a later time result in a change of control of Nomura. Also as of March 31, 2017, there
97

were 283 Nomura shareholders of record with addresses in the U.S., and those U.S. holders held 523,204,551
shares of the Company’s common stock, representing 13.7% of Nomura’s then outstanding common stock. As of
March 31, 2017, there were 25,767,342 ADSs outstanding, representing 25,767,342 shares of the Company’scommon stock or 0.7% of Nomura’s then outstanding common stock. Our major shareholders above do not havedifferent voting rights.
B. Related Party Transactions.
Nomura Research Institute, Ltd.
NRI develops and manages computer systems and provides research services and management consulting
services. We are one of the major clients of NRI.
We held 37.2% of NRI’s outstanding share capital as of March 31, 2017.
For the year ended March 31, 2017, we purchased ¥23,285 million worth of software and computerequipment and paid ¥36,164 million for other services to NRI, while received ¥479 million from NRI.
See also Note 19 “Affiliated companies and other equity-method investees” in the consolidated financial
statements included in this annual report.
Directors
There were no significant transactions.
C. Interests of Experts and Counsel.
Not applicable.
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information.
Financial Statements
The information required by this item is set forth in our consolidated financial statements included
elsewhere in this annual report.
Legal Proceedings
For a discussion of our litigation and related matters, see Note 20 “Commitments, contingencies andguarantees” in the consolidated financial statements included in this annual report.
Dividend Policy
For our dividend policy, see Item 5.B “Liquidity and Capital Resources—Capital Management—Dividends”
in this annual report.
B. Significant Changes.
Except as disclosed in this annual report, there have been no significant changes since March 31, 2017.

98

Item 9. The Offer and Listing
A. Offer and Listing Details.
Price History
The following table sets forth, for the periods indicated, the reported high and low sale prices of ourcommon stock on the Tokyo Stock Exchange and the reported high and low share prices of our ADS on the New
York Stock Exchange.
Tokyo Stock Exchange
Price Per Share ofCommon Stock
High
Low

Year ended March 31,

Annual highs and lows2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quarterly highs and lows
2016
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Monthly highs and lows2017 (calendar year)
January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June (through June 23) . . . . . . . . . . . . . . . . . . . . . . . . . .

New York Stock Exchange
Price Per Share of ADS
High
Low

¥608
980
757
909
784

¥241
535
576
443
339

$6.30
9.64
7.38
7.32
6.80

$3.05
5.76
5.24
3.96
3.33

¥858
909
809
682

¥696
670
664
443

$6.88
7.32
6.63
5.58

$5.85
5.68
5.50
3.96

¥554
505
784
774

¥339
348
451
669

$5.00
4.83
6.77
6.80

$3.33
3.38
4.29
5.85

¥735
774
768
699
713
701

¥669
698
692
633
654
652

$6.45
6.80
6.71
6.52
6.28
6.34

$5.85
6.34
6.26
5.85
5.88
6.00

B. Plan of Distribution.
Not applicable.
C. Markets.
The principal trading market for the Company’s common stock is the Tokyo Stock Exchange. The
Company’s common stock has been listed on the Tokyo Stock Exchange and the Nagoya Stock Exchange since
1961.
Since December 2001, the Company’s common stock has been listed on the New York Stock Exchange inthe form of ADSs evidenced by ADRs. Each ADS represents one share of common stock. The Company’scommon stock has been listed on the Singapore Stock Exchange since 1994.

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D. Selling Shareholders.
Not applicable.
E. Dilution.
Not applicable.
F. Expenses of the Issue.
Not applicable.
Item 10. Additional Information
A. Share Capital.
Not applicable.
B. Memorandum and Articles of Association.
Objects and Purposes in the Company’s Articles of Incorporation
Article 2 of the Company’s Articles of Incorporation, which is an exhibit to this annual report, states theCompany’s purpose. Nomura Holdings, Inc. is incorporated in Japan and is registered in the Commercial
Register (Shogyo Tokibo in Japanese) maintained by the Tokyo Legal Affairs Bureau.
Provisions Regarding the Company’s Directors
Although there is no provision in the Company’s Articles of Incorporation as to a Director’s power to voteon a proposal or arrangement in which the Director is materially interested, under the Companies Act and theCompany’s Regulations of the Board of Directors, a Director must abstain from voting on such matters at
meetings of the Board of Directors.
As a Company with Three Board Committees, the compensation of the Company’s Directors and Executive
Officers is determined by the Compensation Committee (see Item 6.C. “Board Practices—Information
Concerning Directors—Compensation Committee” in this annual report). The Compensation Committee
establishes the policy with respect to the determination of the individual compensation (including variable
compensation) of each of the Company’s Directors and Executive Officers and makes determinations inaccordance with that compensation policy.
With respect to borrowing powers, these as well as other powers relating to the management of the business(with the exception of certain exclusions specified under the Companies Act) have been delegated to the
Executive Officers by the Board of Directors as a Company with Three Board Committees.
There is no mandatory retirement age for the Company’s Directors under the Companies Act or theCompany’s Articles of Incorporation.
There is no requirement concerning the number of shares an individual must hold in order to qualify him or
her to serve as a Director of the Company under the Companies Act or the Company’s Articles of Incorporation.
Pursuant to the Companies Act and the Company’s Articles of Incorporation, the Company may, by aresolution adopted by the Company’s Board of Directors, release the liabilities of any Directors or Executive
Officers to the Company for damages suffered by the Company due to their acts taken in good faith and withoutgross negligence, to the extent permitted by the Companies Act and the Company’s Articles of Incorporation. In
100addition, the Company may execute with Directors (excluding a person who serves as an executive director, etc.)
agreements that limit their liabilities to the Company for damages suffered by the Company if they acted in goodfaith and without gross negligence, to the extent permitted by the Companies Act and the Company’s Articles ofIncorporation. See Item 6.C. “Board Practices—Limitation of Director Liability” in this annual report.
Holding of the Company’s Shares by Foreign Investors
Other than the Japanese unit share system that is described in “Common Stock—Japanese Unit Share
System” below, no limitations on the rights of non-residents or foreign shareholders to hold or exercise voting
rights with respect to the Company’s shares are imposed by law, the Company’s Articles of Incorporation or theCompany’s other constituent documents.
Common Stock
The following describes material features of the shares of the Company’s common stock, and includes abrief overview of the material provisions of the Company’s Articles of Incorporation and Share Handling
Regulations, as currently in effect, and of the Companies Act and related legislation. In this “Common Stock”
section, unless the context otherwise requires, “shares” means shares of the Company’s common stock and“shareholders” means holders of shares of the Company’s common stock.
GeneralUnder the Company’s Articles of Incorporation, the Company is authorized to issue 6,000,000,000 shares,of which 3,822,562,601 shares were issued as of March 31, 2017. All issued shares are fully-paid andnon-assessable.
On January 5, 2009, a central clearing system for shares of Japanese listed companies was establishedpursuant to the Act on Book-Entry Transfer of Company Bonds, Shares, Etc. (including regulations promulgatedthereunder; the “Book-Entry Law”), and the shares of all Japanese companies listed on any Japanese stock
exchange, including the Company’s shares, became subject to this clearing system. On the same day, all existing
share certificates for such shares became null and void. At present, Japan Securities Depository Center, Inc.
(“JASDEC”) is the only institution that is designated by the relevant authorities as a clearing house which ispermitted to engage in the clearing operations of shares of Japanese listed companies under the Book-Entry Law.
Under this clearing system, in order for any person to hold, sell or otherwise dispose of shares of Japanese listedcompanies, they must have an account at an “account managing institution” unless such person has an account at
JASDEC. “Account managing institutions” are financial instruments traders (i.e., securities companies), banks,
trust companies and certain other financial institutions which meet the requirements prescribed by the BookEntry Law, and only those financial institutions that meet further stringent requirements of the Book-Entry Law
can open accounts directly at JASDEC. For purposes of the description under this “Common Stock” section, we
assume that the relevant person has no account at JASDEC.
Under the Book-Entry Law, any transfer of shares is effected through book-entry, and title to the shares
passes to the transferee at the time when the transferred number of the shares is recorded in the transferee’s
account by an account managing institution. The holder of an account at an account managing institution ispresumed to be the legal owner of the shares held in such account.
Under the Companies Act and the Book-Entry Law, except in limited circumstances, a shareholder musthave his or her name and address registered in the Company’s register of shareholders in order to assert
shareholders’ rights against the Company. Such registration is generally made upon receipt by the Company ofnecessary information from JASDEC. See “Share Registrar” and “Record Date” below.

101Non-resident shareholders are required to appoint a standing proxy in Japan or provide a mailing address inJapan. Each such shareholder must give notice of such standing proxy or mailing address to the relevant accountmanaging institution. Such notice will be forwarded to the Company through JASDEC. Japanese securities
companies and commercial banks customarily act as standing proxies and provide related services for standard
fees. Notices from the Company to non-resident shareholders are delivered to such standing proxies or mailingaddresses.
The registered holder of deposited shares underlying the ADRs is the depositary for the ADSs. Accordingly,
holders of ADRs will not be able to directly assert shareholders’ rights.
Dividends
Under the Companies Act, distributions of cash or other assets by joint stock corporations to theirshareholders, so called “dividends,” are referred to as “distributions of Surplus” (“Surplus” is defined in“Restriction on Distributions of Surplus” below). The Company may make distributions of Surplus to theshareholders any number of times per fiscal year, subject to certain limitations described in “Restriction on
Distributions of Surplus.” As a company meeting the necessary requirements, the Companies Act allows for theCompany’s Articles of Incorporation to authorize the Company’s Board of Directors to make decisions regarding
distributions of Surplus (with the exceptions of certain exclusions specified under the Companies Act).
Under the Company’s Articles of Incorporation, dividends, if any, may be distributed to shareholders (orpledgees) appearing in the register of shareholders as of September 30 or March 31 of each year, pursuant to a
resolution adopted by the Company’s Board of Directors. In addition, under the Companies Act and theCompany’s Articles of Incorporation, the Company may (but is not obligated to) make further distributions ofSurplus by a resolution adopted by the Company’s Board of Directors. However, the Company equally may
decide not to pay dividends for any given period, regardless of the amount of Surplus the Company has.
Under the Company’s Articles of Incorporation, the Company is not obliged to pay any dividends in cashthat are left unclaimed for a period of three years after the date on which they first became payable.
Distributions of Surplus may be distributed in cash or in kind in proportion to the number of shares held by
each shareholder. A resolution adopted by the Company’s Board of Directors authorizing a distribution of
Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocationof such assets to shareholders and the effective date of the distribution. If a distribution of Surplus is to be madein kind, the Company may, pursuant to a resolution adopted by the Company’s Board of Directors, grant to theCompany’s shareholders the right to require the Company to make such distribution in cash instead of in kind. If
no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special
resolution adopted by the Company’s general meeting of shareholders.
For information as to Japanese taxes on dividends, see Item 10.E. “Taxation-Japanese Taxation” in thisannual report.
Restriction on Distributions of Surplus
When the Company makes a distribution of Surplus, the Company must, until the aggregate amount of theCompany’s additional paid-in capital and legal reserve reaches one-quarter of the Company’s stated capital, set
aside in the Company’s additional paid-in capital and/or legal reserve an amount equal to one-tenth of theamount of Surplus so distributed in accordance with an ordinance of the Ministry of Justice of Japan.
The amount of Surplus at any given time must be calculated in accordance with the following formula:
A + B + C + D - (E + F + G)
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In the above formula:“A” =the total amount of “other capital surplus” and “other retained earnings”, each such amount beingthat appearing on the Company’s non-consolidated balance sheets as of the end of the last fiscal
year;

“B” =

(if the Company has disposed of treasury stock after the end of the last fiscal year) the amount of
the consideration for such treasury stock received by the Company less the book value thereof;“C” =(if the Company has reduced stated capital after the end of the last fiscal year) the amount of such
reduction less the portion thereof that has been transferred to additional paid-in capital or legal
reserve (if any);“D” =(if the Company has reduced additional paid-in capital or legal reserve after the end of the last
fiscal year) the amount of such reduction less the portion thereof that has been transferred to statedcapital (if any);“E” =(if the Company has cancelled treasury stock after the end of the last fiscal year) the book value ofsuch treasury stock;“F” =(if the Company has distributed Surplus to shareholders after the end of the last fiscal year) the
total book value of Surplus so distributed;“G” =certain other amounts set forth in ordinances of the Ministry of Justice, including (if the Company
has reduced Surplus and increased stated capital, additional paid-in capital or legal reserve after
the end of the last fiscal year) the amount of such reduction and (if the Company has distributed
Surplus to shareholders after the end of the last fiscal year) the amount set aside in the Company’s
additional paid-in capital or legal reserve (if any) as required by ordinances of the Ministry ofJustice.

The aggregate book value of Surplus distributed by the Company may not exceed a prescribed distributableamount (“Distributable Amount”), as calculated on the effective date of such distribution. The Distributable
Amount at any given time shall be equal to the amount of Surplus less the aggregate of the following:(a) the book value of the Company’s treasury stock;(b) the amount of consideration for the Company’s treasury stock disposed of after the end of the last fiscal
year; and(c) certain other amounts set forth in ordinances of the Ministry of Justice, including (if the sum of
one-half of goodwill and the deferred assets exceeds the total of stated capital, additional paid-in
capital and legal reserve, each such amount being that appearing on the Company’s non-consolidatedbalance sheets as of the end of the last fiscal year) all or a certain part of such excess amount ascalculated in accordance with ordinances of the Ministry of Justice.
If the Company becomes, at the Company’s option, a company with respect to which consolidated balance
sheets should also be taken into consideration in the calculation of the Distributable Amount (renketsu haito kisei
tekiyo kaisha), the Company will be further required to deduct from the amount of Surplus the excess amount, if
any, of (x) the total amount of shareholders’ equity appearing on the Company’s non-consolidated balance sheets
as of the end of the last fiscal year and certain other amounts set forth in ordinances of the Ministry of Justiceover (y) the total amount of shareholders’ equity and certain other amounts set forth in ordinances of the Ministryof Justice appearing on the Company’s consolidated balance sheets as of the end of the last fiscal year.
If the Company has prepared non-consolidated interim financial statements as described below, and if suchinterim financial statements have been approved by the Board of Directors or (if so required by the CompaniesAct) by a resolution adopted by the general meeting of shareholders, the Distributable Amount must be adjusted
to take into account the amount of profit or loss, and the amount of consideration for the Company’s treasury
stock disposed of, during the period in respect of which such interim financial statements have been prepared.
103The Company may prepare non-consolidated interim financial statements consisting of a balance sheet as of any
date subsequent to the end of the last fiscal year and an income statement for the period from the first day of thecurrent fiscal year to the date of such balance sheet. Interim financial statements so prepared by the Company
must be approved by the Board of Directors and audited by the Company’s Audit Committee and independent
auditors, as required by ordinances of the Ministry of Justice.
Stock Splits
The Company may at any time split the issued shares into a greater number of shares by a resolution
adopted by the Company’s Board of Directors, and in accordance with the Companies Act, the Company’s Boardof Directors has adopted a resolution delegating powers to make such stock splits to the Executive Officers.
In accordance with the Companies Act, the Company’s Board of Directors has adopted a resolutiondelegating to the Executive Officers powers to increase the number of authorized shares permitted to be issued
up to the number reflecting the rate of stock splits and to amend the Company’s Articles of Incorporation to thiseffect without approval by a resolution adopted by the general meeting of shareholders. For example, if eachshare became three shares by way of a stock split, the Executive Officers may increase the number of authorizedshares from the current 6,000,000,000 shares to 18,000,000,000 shares.
Japanese Unit Share System
The Company’s Articles of Incorporation provide that 100 shares constitute one “unit”. The Companies Act
permits the Company, by a resolution adopted by the Company’s Board of Directors, to reduce the number ofshares which constitutes one unit or abolish the unit share system, and amend the Company’s Articles ofIncorporation to this effect without approval by a resolution adopted by the general meeting of shareholders.
Transferability of Shares Constituting Less Than One Unit. Under the clearing system, shares constituting
less than one unit are transferable. Under the rules of the Japanese stock exchanges, however, shares constituting
less than one unit do not comprise a trading unit, except in limited circumstances, and accordingly may not besold on the Japanese stock exchanges.
Right of a Holder of Shares Constituting Less Than One Unit to Require the Company to Purchase Its
Shares. A holder of shares constituting less than one unit may at any time request the Company to purchase its
shares. Under the clearing system, such request must be made through the relevant account managing institution.
These shares will be purchased at (a) the closing price of the Company’s shares reported by the Tokyo Stock
Exchange on the day when the request to purchase is received by the Company’s share registrar or (b) if no saletakes place on the Tokyo Stock Exchange on that day, the price at which the sale of shares is effected on suchstock exchange immediately thereafter. An amount equal to the applicable handling fee will be deducted from theprice so determined pursuant to the Company’s Share Handling Regulations.
Purchase of Shares up to a Whole Unit for a Holder of Shares Constituting Less than One Unit. The
Company’s Articles of Incorporation provide that a holder of shares constituting less than one unit may request
the Company to sell shares the Company may have to such holder so that the holder can raise the holder’sfractional ownership up to a whole unit. Under the clearing system, such request must be made through therelevant account managing institution. These shares will be sold at (a) the closing price of the Company’s shares
reported by the Tokyo Stock Exchange on the day when the request to sell is received by the Company’s shareregistrar or (b) if no sale has taken place on the Tokyo Stock Exchange on that day, the price at which sale ofshares is effected on such stock exchange immediately thereafter. An amount equal to the applicable handling fee
will be added to the price so determined pursuant to the Company’s Share Handling Regulations.
Voting Rights of a Holder of Shares Constituting Less Than One Unit. A holder of shares constituting lessthan one unit cannot exercise any voting rights pertaining to those shares. In calculating the quorum for various
104

voting purposes, the aggregate number of shares constituting less than one unit will be excluded from the numberof outstanding shares. A holder of shares representing one or more whole units will have one vote for each wholeunit represented.
A holder of shares constituting less than one unit does not have any rights related to voting, such as the rightto participate in a demand for the dismissal of a Director, the right to participate in a demand for the convocationof a meeting of shareholders and the right to join with other shareholders to propose an agenda item to beaddressed at a meeting of shareholders. In addition, a holder of shares constituting less than one unit does nothave the right to institute a representative action by shareholders.
In accordance with the Companies Act, the Company’s Articles of Incorporation provide that a holder ofshares constituting less than one unit does not have any other rights of a shareholder in respect of those shares,
other than those provided by the Company’s Articles of Incorporation which includes the following rights:•

to receive dividends,•

to receive cash or other assets in case of consolidation or split of shares, exchange or transfer of shares,
corporate split or merger,•

to be allotted rights to subscribe for free for new shares and stock acquisition rights when such rights are
granted to shareholders, and•to participate in any distribution of surplus assets upon liquidation.

Annual General Meeting of Shareholders
The Company normally holds its annual general meeting of shareholders in June of each year. In addition,
the Company may hold an extraordinary general meeting of shareholders whenever necessary by giving at least
two weeks’ advance notice. Under the Companies Act, notice of any general meeting of shareholders must be
given to each shareholder having voting rights or, in the case of a non-resident shareholder, to his standing proxyor mailing address in Japan in accordance with the Company’s Share Handling Regulations, at least two weeks
prior to the date of the meeting.
Voting Rights
A shareholder is generally entitled to one vote per one unit of shares as described in this paragraph andunder the section entitled the “Japanese Unit Share System” above. In general, under the Companies Act, aresolution can be adopted at a general meeting of shareholders by the holders of a majority of the total number ofvoting rights represented at the meeting. However, if a corporate shareholder has one-quarter or more of its total
voting rights held by the Company or its subsidiary, or if the Company otherwise has actual control over suchcorporate shareholder, such corporate shareholder is not entitled to exercise its voting rights. The Companies Act
and the Company’s Articles of Incorporation require a quorum for the election of Directors of not less than
one-third of the total number of voting rights. The Company’s shareholders are not entitled to cumulative votingin the election of Directors. Shareholders may exercise their voting rights through proxies, provided that thoseproxies are also shareholders who have voting rights.
The Companies Act provides that certain important matters shall be approved by a “special resolution”
adopted by the general meeting of shareholders. The Company’s Articles of Incorporation provide that thequorum for a special resolution is one-third of the total number of voting rights and the approval of at least
two-thirds of the voting rights presented at the meeting is required for adopting a special resolution. Such
important matters include:•

reduction of stated capital,•

amendment to the Articles of Incorporation (except amendments which the Board of Directors (or for a
Company with Three Board Committees, the Executive Officers) are authorized to make under theCompanies Act),105

•

establishment of a 100% parent-subsidiary relationship by way of share exchange or share transfer
requiring shareholders’ approval,•

dissolution, merger or consolidation requiring shareholders’ approval,•

corporate split requiring shareholders’ approval,•transfer of the whole or an important part of a company’s business,•transfer of the whole or a part of a company’s equity interests in any of the company’s subsidiaries
requiring shareholders’ approval,•

the taking over of the whole of the business of any other corporation requiring shareholders’ approval,•

any issuance of new shares or transfer of existing shares as treasury stock to persons other than theshareholders at a “specially favorable” price,•

any issuance of stock acquisition rights (including those incorporated in bonds with stock acquisitionrights) to persons other than the shareholders under “specially favorable” conditions,•purchase of shares by a company from a specific shareholder other than the company’s subsidiary,•consolidation of shares, and•partial release of a director, independent auditor or executive officers’ liability to the company.

The voting rights of holders of ADRs are exercised by the depositary based on instructions from those
holders.
Subscription Rights
Holders of shares have no preemptive rights under the Company’s Articles of Incorporation when the
Company issues new shares. Under the Companies Act, the Executive Officers, which has been delegated by theCompany’s Board of Directors with the authority to issue new shares, may, however, determine that shareholders
be given subscription rights in connection with a particular issue of new shares. In this case, such rights must be
given on uniform terms to all shareholders as of a specified record date with at least two weeks’ prior notice toshareholders of the record date.
Stock Acquisition Rights
The Company may issue stock acquisition rights (shinkabu yoyakuken). Holders of stock acquisition rights
are entitled to acquire shares from the Company, upon payment of the applicable exercise price, and subject toother terms and conditions thereof. The issuance of stock acquisition rights and bonds with stock acquisitionrights may be authorized by the Executive Officers, which has been delegated by the Company’s Board of
Directors with the authority to issue stock acquisition rights, unless it is made under “specially favorable”
conditions in which case a special resolution adopted by the general meeting of shareholders is required. In
issuing stock acquisition rights, notice must be given at least two weeks prior to the date for allotment in the formof individual notice or public notice. Under the Companies Act, the Company will not be required to give such
notice if the Company makes a relevant securities filing or reporting under the FIEA at least two weeks prior to
the date for allotment, subject to the requirements provided by the ordinance of the Ministry of Justice.
Liquidation Rights
In the event of liquidation, the assets remaining after payment of all debt securities and borrowings,
liquidation expenses and taxes will be distributed among shareholders in proportion to the number of shares theyown.
Liability to Further Calls or Assessments
All of the Company’s currently outstanding shares, including shares represented by the ADSs, are fully paid
and non-assessable.
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Share Registrar
Mitsubishi UFJ Trust and Banking Corporation (“Mitsubishi UFJ Trust”) is the share registrar for theCompany’s shares. Mitsubishi UFJ Trust’s office is located at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo,
100-8212 Japan. Mitsubishi UFJ Trust maintains the Company’s register of shareholders and registers the names
and addresses of the Company’s shareholders and other relevant information in the Company’s register ofshareholders upon notice thereof from JASDEC, as described in “Record Date” below.
Record Date
The close of business on September 30 and March 31 are the record dates for the Company’s distributionsof Surplus (dividends), if any. A holder of shares constituting one or more whole units, who is registered as aholder in the Company’s register of shareholders at the close of business as of March 31, is also entitled toexercise shareholders’ voting rights at the annual general meeting of shareholders with respect to the fiscal year
ended on March 31. In addition, the Company may set a record date for determining the shareholders entitled toother rights and for other purposes by giving at least two weeks’ public notice.
Under the Book-Entry Law, the Company is required to give notice of each record date to JASDEC at least
two weeks prior to such record date. JASDEC is required to promptly give the Company notice of the names andaddresses of the Company’s shareholders, the numbers of shares held by them and other relevant information asof such record date.
The shares are generally traded ex-dividend or ex-rights in the Japanese stock exchanges on the second
business day prior to the record date (or if the record date is not a business day, the third business day prior
thereto), for the purpose of dividends or rights offerings.
Acquisition of Own Shares
The Company may acquire its own shares (i) by soliciting all of the Company’s shareholders to offer to sell
the Company’s shares held by them (pursuant to a resolution adopted by the Board of Directors), (ii) from a
specific shareholder other than any of the Company’s subsidiaries (pursuant to a special resolution adopted by
the general meeting of shareholders), (iii) from any of the Company’s subsidiaries (pursuant to a determination
by Executive Officers under authority delegated by a resolution adopted by the Board of Directors), or (iv) by
way of purchase on any Japanese stock exchange on which the Company’s shares are listed or by way of tender
offer (in either case pursuant to a resolution adopted by the Board of Directors). In the case of (ii) above, anyother shareholder may make a request to the Company that such other shareholder be included as a seller in the
proposed purchase, provided that no such right will be available if the purchase price or any other consideration
to be received by the relevant specific shareholder will not exceed the higher of (x) the last trading price of theshares on the relevant stock exchange on the day immediately preceding the date on which the resolution
mentioned in (ii) was adopted (or, if there is no trading in the shares on the stock exchange or if the stock
exchange is not open on such day, the price at which the shares are first traded on such stock exchange thereafter)and (y) if the shares are subject to a tender offer on the day immediately preceding the date on which theresolution mentioned in (ii) above was adopted, the price of the shares under the agreement with respect to suchtender offer on such day. This acquisition is subject to the condition that the aggregate amount of the purchaseprice must not exceed the Distributable Amount as described in “Restriction on Distributions of Surplus” above.
The Company may hold its shares acquired in compliance with the provisions of the Companies Act, andmay generally dispose of or cancel such shares by a determination by Executive Officers under authority
delegated by a resolution adopted by the Board of Directors.
In addition, the Company may acquire its shares by means of repurchase of any number of sharesconstituting less than one unit upon the request of the holder of those shares, as described under “Japanese Unit
Share System” above.
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Preferred Stock
The following is a description of material features of the Company’s preferred stock. The basic
characteristics of the Company’s preferred stock are set forth in the Company’s Articles of Incorporation, anddetailed terms and conditions of the Company’s preferred stock are to be determined prior to the issuance thereof
by a resolution adopted by the Company’s Board of Directors or by Executive Officer(s) under authority
delegated by a resolution adopted by the Company’s Board of Directors.
GeneralThe Company’s Articles of Incorporation include the possibility of issuing preferred stock. The Company
has not yet issued, and currently has no specific plan to issue, any preferred stock. However, the Company
provides, as follows, certain information on the characteristics of the types of preferred stock set forth in the
Company’s Articles of Incorporation.
Under the Company’s Articles of Incorporation, the Company is authorized to issue 200,000,000 shares ofClass 1 preferred stock, 200,000,000 shares of Class 2 preferred stock, 200,000,000 shares of Class 3 preferredstock and 200,000,000 shares of Class 4 preferred stock. Of these, Class 3 and Class 4 preferred stock areconvertible into common stock, while Class 1 and Class 2 preferred stock are not convertible into common stock.
See “Rights of Shareholders of Preferred Stock to Demand Acquisition thereof (Conversion)” below.
Preferred Dividends
Under the Company’s Articles of Incorporation, preferred dividends may be paid to shareholders ofpreferred stock on record as of March 31 every year. In addition, interim preferred dividends may be paid toshareholders of the Company’s preferred stock on record as of September 30 of any year. Dividends on preferredstock are to be paid always in priority to dividends on common stock. The detailed terms and conditions of eachclass of preferred stock, including the amount of preferred dividends or preferred interim dividends, are to be
determined by a resolution adopted by the Company’s Board of Directors or by Executive Officer(s) underauthority delegated by a resolution adopted by the Company’s Board of Directors prior to the time of issuancethereof, provided that the annual dividend rate applicable to Class 1 and Class 2 preferred stock may not exceed
15%, and the annual dividend rate applicable to Class 3 and Class 4 preferred stock may not exceed 10%.
Notwithstanding the provisions of the Company’s Articles of Incorporation, no payment of any dividend on
preferred stock may be made unless the Company has sufficient Surplus to pay such dividend, and each paymentof a dividend on a preferred stock must be approved by the Company’s Board of Directors.
Dividends on the Company’s preferred stock are non-cumulative. In the event that preferred dividends were
paid, and the amount actually paid by the Company in respect of any fiscal year was less than the amount thereof
payable in respect of such fiscal year, preferred shareholders would have no right to seek payment of the
deficient amount as a cumulative preferred dividend in any subsequent fiscal year.
Shareholders of the Company’s preferred stock will not be entitled to any further dividends or otherparticipation in or distribution of Surplus.
Voting Rights
Any voting rights attached to the Company’s preferred stock are limited to the extent specifically provided
under the Companies Act, any other applicable laws and the Company’s Articles of Incorporation. Subject to theconditions stated therein, the voting rights of the Company’s preferred stock as provided in the Company’s
Articles of Incorporation are as follows:•

If no resolution to pay a preferred dividend has been adopted by the Board of Directors prior to thedispatch of the convocation notice for the annual general meeting of shareholders in respect of any fiscal
108

year, and if no proposal to pay such preferred dividend was submitted to the relevant annual general
meeting of shareholders, then the shareholders of the relevant preferred stock will be entitled to vote atsuch meeting and all subsequent general meetings of shareholders up to the time when the Board of
Directors or general meeting of shareholders adopts a resolution to pay such preferred dividend; and•If a resolution to pay a preferred dividend has not been adopted at any annual general meeting ofshareholders, the shareholders of the relevant preferred stock will be entitled to vote at all subsequent
general meetings of shareholders up to the time when the Board of Directors or general meeting ofshareholders adopts a resolution to pay such preferred dividend.

Liquidation Rights
In the event of the Company’s voluntary or involuntary liquidation, shareholders of the Company’s
preferred stock would be entitled, in preference over shareholders of common stock, to receive such amounts of
the Company’s residual assets as may be determined by a resolution adopted by the Company’s Board of
Directors or by Executive Officer(s) under authority delegated by a resolution adopted by the Board of Directors
taking into consideration the amounts of subscription moneys paid for the respective preferred stock.
Except as described above, shareholders of the Company’s preferred stock would not be entitled to receive a
distribution of residual assets upon liquidation of the Company.
Rights of Shareholders of Preferred Stock to Demand Acquisition thereof (Conversion)
Class 3 preferred stock and Class 4 preferred stock are attached with the right to demand that the Company
acquire such shares of preferred stock during a certain period. In the event of the exercise of such right, theCompany shall be required to deliver to the relevant shareholder a certain number of shares of the Company’scommon stock in exchange for the shares of the preferred stock acquired by the Company from such shareholder.
Specific terms of such right, including the period during which the preferred stock would be acquired (a“conversion period”) and the initial acquisition price (a “conversion price”), would be determined by a resolution
adopted by the Company’s Board of Directors or by Executive Officer(s) under authority delegated by aresolution adopted by the Board of Directors.
The Company’s Right and Obligation to Acquire Preferred Stock
With respect to Class 1 preferred stock, Class 2 preferred stock, or Class 4 preferred stock, if any event
specified in a resolution adopted by the Company’s Board of Directors or by Executive Officer(s) under authority
delegated by a resolution adopted by the Board of Directors prior to the issuance of each class of preferred stock
occurs and the day separately specified in a resolution adopted by the Company’s Board of Directors or by
Executive Officer(s) under authority delegated by a resolution adopted by the Board of Directors arrives, theCompany shall have the right to acquire all or any part of the relevant shares of preferred stock. In the event theCompany exercises such right, the Company would deliver to the relevant shareholder a certain amount of cash
in exchange for the shares of the preferred stock acquired by the Company from such shareholder. The initialacquisition price at which the relevant preferred stock would be acquired by the Company would be determinedprior to the time of issuance thereof by a resolution adopted by the Company’s Board of Directors or by
Executive Officer(s) under authority delegated by a resolution adopted by the Board of Directors taking into
consideration the amount of subscription moneys paid for the relevant preferred stock.
With respect to Class 3 preferred stock and Class 4 preferred stock, the Company has the obligation toacquire all shares of such preferred stock outstanding on the day immediately following the last day of therelevant conversion period. In such an event, the Company would deliver to the relevant shareholders a certain
number of shares of the Company’s common stock in exchange for the shares of the preferred stock acquired by
the Company from them. The number of shares of the Company’s common stock to be delivered to a shareholderof the relevant preferred stock would be calculated by multiplying the number of shares of the preferred stock109

held by such shareholder by the amount of the subscription money per share paid for such preferred stock anddividing the resulting amount by the market price of a share of the Company’s common stock at the time.
Pursuant to amendments to the Company’s Articles of Incorporation approved at the Company’s annual
general meeting of shareholders held on June 28, 2011, the following feature has been added to the preferredstock described in the Company’s Articles of Incorporation: The Company must acquire all or any part of sharesof Class 1 preferred stock, Class 2 preferred stock, Class 3 preferred stock and/or Class 4 preferred stock upon
the occurrence of certain events determined by a resolution adopted by the Company’s Board of Directors or by
Executive Officer(s) under authority delegated by a resolution adopted the Board of Directors (including in theevent that the Company’s capital adequacy ratio or other measure of regulatory capital falls below a predetermined threshold and/or in the event that a supervisory agency (or an equivalent body) determines that awrite-down, capital injection by a public institution or other equivalent action is necessary for the Company)prior to the time of issuance of the relevant preferred stock. In such an event, the Company will deliver to therelevant shareholders a certain number of shares of the Company’s common stock in exchange for the shares ofthe preferred stock acquired by the Company from them. The number of the Company’s common stock to bedelivered to a shareholder of the relevant preferred stock would be determined prior to the issuance of suchpreferred shares by a resolution adopted by the Company’s Board of Directors or by Executive Officer(s)considering the subscription price of the preferred shares, the market value of the Company’s common stock andmarket conditions. An upper limit for the common stock to be delivered in exchange for the relevant preferredshares may also be set pursuant to such resolution or determination.
Order of Priority
Class 1 through Class 4 preferred stock shall have the same order of priority in respect of the payment ofpreferred dividends and preferred interim dividends and the distribution of residual assets. All classes ofpreferred stock will be in priority to the Company’s common stock in respect of the payments of dividends andinterim dividends and the distribution of residual assets.
Report of Substantial Shareholdings
The FIEA requires any person (other than the Company) who has become, beneficially and solely or jointly,
a holder of more than 5% of the total issued shares of a company listed on any Japanese stock exchange to filewith the relevant Local Finance Bureau, within five business days, a report concerning those shareholdings. With
certain exceptions, a similar report must also be filed to reflect any change of 1% or more in the above
shareholding or any change in material matters set out in any previously filed reports. For this purpose, sharesissuable to a person upon exercise of stock acquisition rights are taken into account in determining both thenumber of shares held by that holder and the Company’s total issued share capital.
Daily Price Fluctuation Limits under Japanese Stock Exchange Rules
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between
bids and offers. These exchanges are order-driven markets without specialists or market makers to guide priceformation. To prevent excessive volatility, these exchange set daily upward and downward price fluctuation
limits for each stock, based on the previous day’s closing price. Although transactions may continue at the
upward or downward price limit if the price limit is reached on a particular trading day, no transactions may takeplace outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily
limit may not be able to sell the shares at such price on a particular trading day, or at all.

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The following table shows the daily price limit for a stock on the Tokyo Stock Exchange. Other daily pricelimits would apply if the per share price of shares of the Company moved to other ranges.
Selected Daily Price Limits
Previous Day’s Closing Price or Special Quote

Equal to or greater thanEqual to or greater thanEqual to or greater thanEqual to or greater thanEqual to or greater than

¥ 100
200
500
700
1,000

Less thanLess thanLess thanLess thanLess thanMaximum Daily Price Movement

¥ 200
500
700
1,000
1,500

¥

50
80
100
150
300

For a history of the trading price of shares of the Company on the Tokyo Stock Exchange, see Item 9.A“The Offer and Listing” of this annual report.
Rights of ADR Holders
The rights of ADR holders, including their rights to corporate governance practices, are governed by the
Deposit Agreement which is an exhibit to this annual report. For a description of the rights of holders of ADSs,
see “Rights of Holders of ADSs” under Item 10.B “Memorandum and Articles of Association” of our
Registration Statement on Form 20-F (File No. 1-15270), which we filed with the Securities and Exchange
Commission on December 13, 2001. The information contained in that part of the Registration Statement isincorporated in Item 10.B “Memorandum and Articles of Association” of this annual report by reference. For
fees and charges that a holder of ADSs may have to pay, see Item12.D. “American Depositary Shares—Fees
payable by ADR Holders” in this annual report.
C. Material Contracts.
For the two years immediately preceding the date of this annual report, we have not been a party to any
material agreement other than in the ordinary course of business, except as disclosed in Item 6.C “Board
Practices” of this annual report.
D. Exchange Controls.
Acquisition of Shares
The Foreign Exchange and Foreign Trade Law of Japan and its related cabinet orders and ministerial
ordinances (“Foreign Exchange Regulations”) governs certain aspects relating to the acquisition and holding of
securities by “non-residents of Japan” and “foreign investors,” as defined below.
In general, an acquisition of shares of stock of a Japanese company listed on any Japanese stock exchange
by a non-resident of Japan from a resident of Japan is not subject to any prior notification requirement, but
subject to a post reporting requirement by the resident.
If a foreign investor acquires shares of a Japanese company listed on a Japanese stock exchange and as aresult of this acquisition directly or indirectly holds 10% or more of the issued shares of such company, together
with its existing holdings and those of other parties who have a special relationship with that foreign investor, theforeign investor is, in general, required to report the acquisition to the Minister of Finance and any othercompetent ministers via the Bank of Japan by the 15th day of the immediately following month in which the dateof acquisition falls. In exceptional cases, a prior notification is required in respect of the acquisition.
“Non-residents of Japan” are generally defined as individuals who are not resident in Japan and corporations
whose principal offices are located outside Japan. Branches and other offices of Japanese corporations locatedoutside Japan are considered non-residents of Japan, and branches and other offices located within Japan of
non-resident corporations are considered residents of Japan.
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“Foreign investors” are generally defined as (i) individuals who are not resident in Japan, (ii) corporations
which are organized under the laws of foreign countries or whose principal offices are located outside Japan, and(iii) corporations of which (a) 50% or more of the voting rights are held directly or indirectly by (i) and/or(ii) above, (b) a majority of officers consists of non-residents of Japan or (c) a majority of officers having thepower of representation consists of non-residents of Japan.
Dividends and Proceeds of Sale
Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of sales in Japan of, shares heldby non-residents of Japan may in general be converted into any foreign currency and repatriated abroad. Under theterms of the deposit agreement pursuant to which ADSs of the Company will be issued, the depositary is required,to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the resulting
dollars to the U.S., to convert all cash dividends that it receives in respect of deposited shares into dollars and to
distribute the amount received (after deduction of applicable withholding taxes) to the holders of ADSs.
E. Taxation.
U.S. Federal Income Taxation
This section describes the material U.S. federal income tax consequences of owning shares or ADSs. It
applies to you only if you are a U.S. holder (as defined below), you acquire your shares or ADSs in an offeringand you hold your shares or ADSs as capital assets for tax purposes. This section does not apply to you if you area member of a special class of holders subject to special rules, including:•a dealer in securities,•a trader in securities that elects to use a mark-to-market method of accounting for your securities
holdings,•

a tax-exempt organization,•a life insurance company,•a person liable for alternative minimum tax,•

a person that actually or constructively owns 10% or more of our voting stock,•a person that holds shares or ADSs as part of a straddle or a hedging, conversion, integrated orconstructive sale transaction,•a person that purchases or sells shares or ADSs as part of a wash sale for tax purposes, or•a person whose functional currency is not the U.S. dollar.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing andproposed regulations, published rulings and court decisions, all as currently in effect, as well as on the Income
Tax Convention Between the U.S. and Japan (“Japan-U.S. Tax Treaty”). These laws are subject to change,
possibly on a retroactive basis. In addition, this section is based in part upon the representations of The Bank of
New York Mellon (“depositary”) and the assumption that each obligation in the deposit agreement and any
related agreement will be performed in accordance with its terms.
If a partnership holds the shares or ADSs, the U.S. federal income tax treatment of a partner will generally
depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding theshares or ADSs should consult its tax advisor with regard to the U.S. federal income tax treatment of aninvestment in the shares or ADSs.
You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are:•a citizen or resident of the U.S.,•a corporation created or organized in or under the laws of the U.S. or any political subdivision thereof,112

•an estate whose income is subject to U.S. federal income tax regardless of its source, or•a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more
U.S. persons are authorized to control all substantial decisions of the trust.

You should consult your own tax advisor regarding the U.S. federal, state, local and other tax consequences ofowning and disposing of shares and ADSs in your particular circumstances.
This discussion addresses only U.S. federal income taxation.
In general, and taking into account the earlier assumptions, for U.S. federal income tax purposes, if you hold
ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADSs. Exchanges ofshares for ADRs, and ADRs for shares, generally will not be subject to U.S. federal income tax.
Taxation of Dividends
Under the U.S. federal income tax laws, and subject to the passive foreign investment company (“PFIC”)
rules discussed below, the gross amount of any dividend we pay out of our current or accumulated earnings andprofits (as determined for U.S. federal income tax purposes) is subject to U.S. federal income taxation. If you area non-corporate U.S. holder, dividends that constitute qualified dividend income will be taxable to you at thepreferential rates applicable to long-term capital gains provided that you hold the shares or ADSs for more than
60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding periodrequirements. Dividends we pay with respect to the shares or ADSs generally will be qualified dividend income.
You must include any Japanese tax withheld from the dividend payment in this gross amount even though
you do not in fact receive it.
The dividend is taxable when you, in the case of shares, or the depositary, in the case of ADSs, receive thedividend, actually or constructively. The dividend will not be eligible for the “dividends-received deduction”
generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The amountof the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of
the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date the dividend
distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars.
Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you
include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated asordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income.
The gain or loss generally will be income or loss from sources within the U.S. for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal
income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the shares or
ADSs and thereafter as capital gain. However, we do not expect to calculate earnings and profits in accordancewith United States federal income tax principles. Accordingly, you should expect generally to treat distributions
we make as dividends.
Subject to certain limitations, the Japanese tax withheld in accordance with the Japan-U.S. Tax Treaty andpaid over to Japan will be creditable against your U.S. federal income tax liability. Special rules apply indetermining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates.
To the extent a refund of the tax withheld is available under Japanese law or the Japan-U.S. Tax Treaty, theamount of tax withheld that is refundable will not be eligible for credit against your U.S. federal income tax
liability.
For foreign tax credit purposes, dividends will generally be income from sources outside the U.S., and,depending on your circumstances, will generally be “passive income” or “general income” for purposes ofcomputing the foreign tax credit allowable to you.
113

Taxation of Capital Gains
Subject to the PFIC rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of yourshares or ADSs, you will recognize capital gain or loss for U.S. federal income tax purposes equal to thedifference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S.
dollars, in your shares or ADSs. Capital gain of a noncorporate U.S. holder is generally taxed at preferential rates
where the property is held for more than one year. The gain or loss will generally be income or loss from sources
within the U.S. for foreign tax credit limitation purposes.
PFIC Rules
We do not expect our shares and ADSs to be treated as stock of a PFIC for U.S. federal income tax
purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change.
Moreover, the application of the PFIC rules to a corporation, such as Nomura, that is primarily engaged in an
active business as a securities dealer is not entirely clear.
In general, if you are a U.S. holder, we will be a PFIC with respect to you if for any taxable year in which
you held our ADSs or shares:•

at least 75% of our gross income for the taxable year is passive income, or•at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable toassets that produce or are held for the production of passive income.

Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties
derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income.
If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation istreated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, andas receiving directly its proportionate share of the other corporation’s income.
If we are treated as a PFIC, and you are a U.S. holder that did not make a mark-to-market election, as
described below, you will be subject to special rules with respect to:•

any gain you realize on the sale or other disposition of your shares or ADSs, and•any excess distribution that we make to you (generally, any distributions to you during a single taxable
year that are greater than 125% of the average annual distributions received by you in respect of theshares or ADSs during the three preceding taxable years or, if shorter, your holding period for the sharesor ADSs).

Under these rules:•

the gain or excess distribution will be allocated ratably over your holding period for the shares or ADSs,•

the amount allocated to the taxable year in which you realized the gain or excess distribution, or to prioryears before the first year in which we were a PFIC with respect to you, will be taxed as ordinary
income,•the amount allocated to each other previous year will be taxed at the highest tax rate in effect for thatyear, and•the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax
attributable to each such year.

Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions
by a PFIC.
114

If you own shares or ADSs in a PFIC that are regularly traded on a qualified exchange, they will be treatedas marketable stock, and you may elect to mark your shares or ADSs to market. If you make this election, youwill not be subject to the PFIC rules described above. Instead, in general, you will include as ordinary income
each year the excess, if any, of the fair market value of your shares or ADSs at the end of the taxable year overyour adjusted basis in your shares or ADSs. These amounts of ordinary income will not be eligible for thefavorable tax rates applicable to qualified dividend income or long-term capital gains. You will also be allowed
to take an ordinary loss in respect of the excess, if any, of the adjusted basis of your shares or ADSs over theirfair market value at the end of the taxable year (but only to the extent of the net amount of previously included
income as a result of the mark-to-market election). Your basis in the shares or ADSs will be adjusted to reflect
any such income or loss amounts. We urge you to speak to your tax advisor regarding the availability andadvisability of this election.
Your shares or ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding
period in your shares or ADSs, even if we are not currently a PFIC. For purposes of this rule, if you make amark-to-market election with respect to your shares or ADSs, you will be treated as having a new holding period
in your shares or ADSs beginning on the first day of the first taxable year beginning after the last taxable year forwhich the mark-to-market election applies.
In addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that you
receive from us will not constitute qualified dividend income to you if we are a PFIC (or treated as a PFIC withrespect to you) either in the taxable year of the distribution or the preceding taxable year. Dividends that you
receive that do not constitute qualified dividend income are not eligible for taxation at the 15% maximum rateapplicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paidby us out of our accumulated earnings and profits (as determined for U.S. federal income tax purposes) in yourgross income, and it will be subject to tax at rates applicable to ordinary income.
If you own shares or ADSs during any year that we are a PFIC with respect to you, you may be required tofile Internal Revenue Service Form 8621.
Japanese Taxation
The following is a summary of the principal Japanese tax consequences to owners of shares of the Company
who are non-resident individuals or non-Japanese corporations (“non-resident shareholders”) without apermanent establishment in Japan to which the relevant income is attributable. As tax laws are frequently revised,
the tax treatments described in this summary are also subject to changes in the applicable Japanese laws and/or
double taxation conventions occurring in the future, if any. This summary is not exhaustive of all possible tax
considerations which may apply to specific investors under particular circumstances. Potential investors should,
by consulting with their own tax advisers, satisfy themselves as to•the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including
specifically the tax consequences under Japanese law,•

the laws of the jurisdiction of which they are resident, and•any tax treaty between Japan and their country of residence.

Generally, a non-resident shareholder is subject to Japanese withholding tax on dividends on the shares paidby the Company. A stock split is not subject to Japanese income or corporation tax, as it is characterized merely
as an increase of number of shares (as opposed to an increase of value of shares) from Japanese tax perspectives.
Conversion of retained earnings or legal reserve (but other than additional paid-in capital, in general) into statedcapital on a non-consolidated basis is not characterized as a deemed dividend for Japanese tax purposes, andtherefore such a conversion does not trigger Japanese withholding taxation (Article 2(16) of the JapaneseCorporation Tax Law and Article 8(1)(xiii) of the Japanese Corporation Tax Law Enforcement Order).
115Unless an applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax
applies, the rate of Japanese withholding tax applicable to dividends on listed shares such as those paid by theCompany to non-resident shareholders is currently 15%, except for dividends paid to any individual shareholder
who holds 3% or more of the issued shares for which the applicable rate is 20% (please refer to Article 170 and
Article 213(1)(i) of the Japanese Income Tax Law and Article 9-3(1)(i) of the Japanese Special Tax Measures
Law).
On December 2, 2011, the “Special measures act to secure the financial resources required to implement
policy on restoration after the East Japan Earthquake” (Act No. 117 of 2011) was promulgated and special surtax
measures on income tax were introduced to fund the restoration effort from the earthquake. Income tax andwithholding tax payers will need to pay a surtax, calculated by multiplying the base income tax with 2.1% for 25
years starting from January 1, 2013. As a result of the fractional tax rate increase, 15.315% is applicable until
December 31, 2037. If a non-resident taxpayer is a resident of a country that Japan has tax treaty with, as
described below, such non-residents will not be subject to the surtax to the extent that the applicable rate agreed
in the tax treaty is lower than the aggregate domestic rate.
Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax
rate is reduced, generally to 15% for portfolio investors, with, among others, Belgium, Canada, Denmark,Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, Singapore and Spain. Under theJapan-U.S. Tax Treaty, the withholding tax rate on dividends is 10% for portfolio investors, provided that they do
not have a permanent establishment in Japan, or if there is a permanent establishment, the shares with respect towhich such dividends are paid are not effectively connected with such permanent establishment, and that they are
qualified U.S. residents eligible to enjoy treaty benefits. It shall be noted that, under the Japan-U.S. Tax Treaty,
withholding tax on dividends to be paid is exempt from Japanese taxation by way of withholding or otherwise forpension funds which are qualified U.S. residents eligible to enjoy treaty benefits unless such dividends arederived from the carrying on of a business, directly or indirectly, by such pension funds (please refer to Article
10(3)(b) of the Japan-U.S. Tax Treaty). In addition to the Japan-U.S. Tax Treaty, Japan currently has income tax
treaties with, among others, the U.K., France, Australia, the Netherlands, Switzerland and Sweden whereby thewithholding tax rate on dividends is also reduced from 15% to 10% for portfolio investors.
Non-resident shareholders who are entitled to a reduced treaty rate of Japanese withholding tax on payment
of dividends on the shares by the Company are required to submit the “Application Form for Income Tax
Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on
Dividends” or the “Application Form for Income Tax Convention regarding Relief from Japanese Income Taxand Special Income Tax for Reconstruction on Dividends with respect to Foreign Depositary Receipt”, as thecase may be, in advance through the Company, which is the case for ADS holders, or (in cases where the relevant
withholding taxpayer for the dividend payment is not the Company but a financial institution in Japan) throughthe financial institution, to the relevant tax authority before payment of dividends. Non-resident shareholders
who receive dividends through a financial institution may select a simplified procedure with respect to dividends
payable on or after January 1, 2014. Under such procedure, non-resident shareholders who submit the “Special
Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income
Tax for Reconstruction on Dividends of Listed Stocks” to the relevant tax authority through a financial institution
are deemed to have submitted the “Application Form for Income Tax Convention regarding Relief from Japanese
Income Tax and Special Income Tax for Reconstruction on Dividends” mentioned above with respect to any
dividend which will be paid by the Company to non-resident shareholders through the financial institution
thereafter, provided that such non-resident shareholders shall notify the financial institution of certain
information regarding the dividends before the payment of such dividends. Non-resident shareholders who do not
submit an application in advance will be entitled to claim the refund of withholding taxes withheld in excess of
the rate of an applicable tax treaty from the relevant Japanese tax authority. For Japanese tax purpose, the treaty
rate normally applies superseding the tax rate under the domestic law. However, due to the so-called“preservation doctrine” under Article 3-2 of the Special Measures Law for the Income Tax Law, Corporation Tax
Law and Local Taxes Law with respect to the Implementation of Tax Treaties, if the tax rate under the domestic
116

tax law is lower than that promulgated under the applicable income tax treaty, then the domestic tax rate is still
applicable. Consequently, if the domestic tax rate still applies, no treaty application is required to be filed.
Gains derived from the sale of shares outside Japan by a non-resident shareholder without a permanentestablishment in Japan as a portfolio investor, are, in general, not subject to Japanese income or corporation
taxes.
Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired
shares as a legatee, heir or donee, even if the individual is not a Japanese resident.
You should consult your own tax advisers regarding the Japanese tax consequences of the acquisition,
ownership and disposition of the shares and ADSs in your particular circumstances.
F. Dividends and Paying Agents.
Not applicable.
G. Statement by Experts.
Not applicable.
H. Documents on Display.
The Company is subject to the informational requirements of the Securities Exchange Act of 1934 and, in
accordance therewith, the Company will file with the Securities and Exchange Commission annual reports on
Form 20-F within four months of the Company’s fiscal year-end and other reports and information on Form 6-K.
These reports and other information can be inspected at the public reference room at the Securities and Exchange
Commission at 100 F Street, NE., Washington, D.C. 20549. You can also obtain copies of such material by mailfrom the public reference room of the Securities and Exchange Commission at prescribed fees. You may obtain
information on the operation of the Securities and Exchange Commission public reference room by calling the
Securities and Exchange Commission in the U.S. at 1-800-SEC-0330. You can also access the documents filed
via the Electronic Data Gathering, Analysis, and Retrieval system on the SEC’s website (http://www.sec.gov).
I. Subsidiary Information.
Not applicable.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Risk Management
Nomura defines risks as (i) the potential erosion of Nomura’s capital base due to unexpected losses arisingfrom risks to which its business operations are exposed, such as market risk, credit risk, operational risk andmodel risk, (ii) liquidity risk, the potential lack of access to funds or higher cost of funding than normal levels
due to a deterioration in Nomura’s creditworthiness or deterioration in market conditions, and (iii) business risk,
the potential failure of revenues to cover costs due to a deterioration in the earnings environment or adeterioration in the efficiency or effectiveness of its business operations.
A fundamental principle established by Nomura is that all employees shall regard themselves as principalsof risk management and appropriately manage these risks. Nomura seeks to promote a culture of proactive risk
management throughout all levels of the organization and to limit risks to the confines of its risk appetite. The
risk management framework that Nomura uses to manage these risks consists of its risk appetite, risk
management governance and oversight, the management of financial resources, the management of all risk
classes, and processes to measure and control risks. Each of these key components is explained in further detailbelow.
117

Risk Appetite
Nomura has determined the maximum level and types of risk that it is willing to assume in pursuit of its
strategic objectives and business plan and has articulated this in its Risk Appetite Statement. This document is
jointly submitted by the Chief Risk Officer (“CRO”) and the Chief Financial Officer (“CFO”) to the Executive
Management Board (“EMB”) for approval.
The Risk Appetite Statement provides an aggregated view of risk and includes capital adequacy and balance
sheet measures, liquidity risk, market and credit risk, operational risk, compliance risk and model risk, andconsists of quantitative metrics and qualitative statements. It is subject to regular monitoring and breachescalation as appropriate by the owner of the relevant risk appetite statement.
Nomura’s Risk Appetite Statement is required to be reviewed annually by the EMB but it is reviewed on an
ad hoc basis if necessary, and must specifically be reviewed following any significant changes in Nomura’s
strategy. Risk appetite underpins all additional aspects of Nomura’s risk management framework.
Risk Management Governance and OversightCommittee GovernanceNomura has established a committee structure to facilitate effective business operations and management of
Nomura’s risks. The formal governance structure for risk management within Nomura is as follows:
Board of Directors

Executive Management
Board

Group Integrated Risk
Management Committee

Global Risk
Management Committee

Global Risk
Analytics
Committee

Model Risk
Analytics
Committee

GRMC
Transaction
Committee

Asset Liability
Committee

Chief Risk Officer

Chief Financial Officer

Risk Management
Division

Finance Division

Collateral
Steering
Committee

means “delegation for certain decision making”
means “appointment”

Board of Directors (“BoD”)
The BoD determines the policy for the execution of the business of Nomura and other matters prescribed inlaws and regulations, supervises the execution of Directors’ and Executive Officers’ duties and has the authority
to adopt, alter or abolish the regulations of the EMB.
Executive Management Board (“EMB”)
The EMB deliberates on and determines management strategy, the allocation of management resources andimportant management matters of Nomura, and seeks to increase shareholder value by promoting effective use of118

management resources and unified decision-making with regard to the execution of business. The EMB delegates
responsibility for deliberation of matters concerning risk management to the Group Integrated Risk Management
Committee (“GIRMC”). Key responsibilities of the EMB include the following:•

Resource Allocation—At the beginning of each financial year, the EMB determines the allocation ofmanagement resources and financial resources such as economic capital and unsecured funding tobusiness units and establishes usage limits for these resources;•

Business Plan—At the beginning of each financial year, the EMB approves the business plan and budgetof Nomura. Introduction of significant new businesses, changes to business plans, the budget and theallocation of management resources during the year are also approved by the EMB; and•Reporting—The EMB reports the status of its deliberations to the BoD.

Group Integrated Risk Management Committee (“GIRMC”)
Upon delegation from the EMB, the GIRMC deliberates on or determines important matters concerning
integrated risk management of Nomura to assure the sound and effective management of its businesses. The
GIRMC establishes Nomura’s risk appetite and a framework of integrated risk management consistent with
Nomura’s risk appetite. The GIRMC supervises Nomura’s risk management by establishing and operating its risk
management framework. The GIRMC reports the status of key risk management issues and any other mattersdeemed necessary by the committee chairman to the BoD and the EMB.
In addition, the GIRMC, upon delegation from the EMB, has established the Risk Management Policy,
describing Nomura’s overall risk management framework including the fundamental risk management principles
followed by Nomura.
Global Risk Management Committee (“GRMC”)
Upon delegation from the GIRMC, the GRMC deliberates on or determines, based on strategic risk
allocation and risk appetite determined by the GIRMC, important matters concerning market, credit or
reputational risk management of Nomura in order to assure the sound and effective management of Nomura’s
businesses. The GRMC reports to the GIRMC the status of discussions at its meetings and any other matters as
deemed necessary by the committee chairman.
Asset Liability Committee (“ALCO”)
Upon delegation from the GIRMC, the ALCO deliberates on, based on Nomura’s risk appetite determinedby the GIRMC, balance sheet management, financial resource allocation, liquidity management and related
matters. The ALCO reports to the GIRMC the status of discussions at its meetings and any other matters as
deemed necessary by the committee chairman.
Global Risk Analytics Committee (“GRAC”) and Model Risk Analytics Committee (“MRAC”)
Upon delegation from the GRMC, the GRAC and the MRAC deliberate on or determine matters concerning
the development, management and strategy of risk models and valuation models, respectively. The committees’
primary responsibility is to govern and provide oversight of model management, including the approval of newmodels and significant model changes. Both committees report all significant matters and material decisions
taken to the GRMC, on a regular basis.
GRMC Transaction Committee
Upon delegation from the GRMC, the GRMC Transaction Committee deliberates on or approves individualtransactions in line with Nomura’s risk appetite in order to assure the sound and effective management of
Nomura’s businesses.
119Collateral Steering Committee (“CSC”)
Upon delegation from the GRMC, the CSC deliberates on or determines Nomura’s collateral risk
management, including concentrations, liquidity, collateral re-use, limits and stress tests, provides direction on
Nomura’s collateral strategy and ensures compliance with regulatory collateral requirements.
Chief Risk Officer (“CRO”)
The CRO is responsible for setting the overall strategy and direction of the Risk Management Division. The
CRO is responsible for supervising the Risk Management Division and maintaining the effectiveness of the risk
management framework independently from the business units within Nomura. The CRO regularly reports on thestatus of Nomura’s risk management to the GIRMC, and reports to and seeks the approval of the GIRMC on
measures required for risk management.
Chief Financial Officer (“CFO”)
The CFO is responsible for overall financial strategy of Nomura, and has operational authority andresponsibility over Nomura’s liquidity management based on decisions made by the EMB.
Risk Management Division
The Risk Management Division comprises various departments or units in charge of risk management
established independently from Nomura’s business units. The Risk Management Division is responsible forestablishing and operating risk management processes, establishing and enforcing risk management policies andregulations, verifying the effectiveness of risk management methods, gathering reports from Nomura Group
entities, reporting to Executive Officers/Senior Managing Directors and the GIRMC and others, as well asreporting to regulatory bodies and handling regulatory applications concerning risk management methods andother items as necessary. Important risk management issues are closely communicated between members of the
Risk Management departments and the CRO. The CRO and/or co-CRO regularly attend the EMB and GIRMC
meetings to report specific risk issues.
Risk Policy Framework
Policies and procedures are essential tools of governance used by the Risk Management Division. They
define principles, rules and standards, and the specific processes that must be adhered to in order to effectively
manage risk at Nomura. The Risk Management Division has established a risk policy framework to promote
appropriate standards and consistency for risk policies and procedures and to articulate the principles andprocedures conducive to effective risk management. All risk management policies and procedures are developedin line with this policy framework and a defined process is followed for any exceptions.
Monitoring, Reporting and Data Integrity
Development, consolidation, monitoring and reporting of risk management information (“risk MI”) are
fundamental to the appropriate management of risk. The aim of all risk MI is to provide a basis for sounddecision-making, action and escalation as required. The Risk Management Division and the Finance Division are
responsible for producing regular risk MI, which reflects the position of Nomura relative to stated risk appetite.
Risk MI includes information from across the risk classes defined in the risk management framework and reflect
the use of the various risk tools used to identify and assess those risks. The Risk Management Division is
responsible for implementing appropriate controls over data integrity for risk MI.

120

Management of Financial Resources
Nomura has established a framework for management of financial resources in order to adequately manage
utilization of these resources. The EMB allocates financial resources to business units at the beginning of eachfinancial year. These allocations are used to set revenue forecasts for each business units. Key components are
set out below:
Risk-weighted assets
A key component used in the calculation of our consolidated capital adequacy ratios is risk-weighted assets.
The EMB determines the risk appetite for our consolidated Tier 1 capital ratio on an annual basis and sets thelimits for the usage of risk-weighted assets by each division and by additional lower levels of the divisionconsistent with the risk appetite. In addition the EMB determines the risk appetite for the level of exposures
under the leverage ratio framework which is a non-risk based measure to supplement risk-weighted assets. See
Item 4.B. “Business Overview—Regulatory Capital Rules”, Item 5.B. “Consolidated Regulatory Capital
Requirements” and “Consolidated Leverage Ratio Requirements” in this annual report for further information on
our consolidated capital adequacy ratios and risk-weighted assets.
Economic Capital
Nomura’s internal measure of the capital required to support its business is the Nomura Capital Allocation
Target (“NCAT”). NCAT is measured as the amount of capital required to absorb maximum potential losses overa one-year time horizon, computed by the risk model at the 99.95th percentile, or the equivalent Expected
Shortfall. NCAT consists of Portfolio NCAT and Non-Portfolio NCAT. Portfolio NCAT consists of market risk,
credit risk, event risk, principal finance risk, private equity risk and investment securities risk. Non-Portfolio
NCAT consists of business risk and operational risk. NCAT is aggregated by taking into account the correlation
among its various components. Nomura’s NCAT limit is initially set by the EMB, and the EMB subsequently
allocates it to each business division and additional lower levels of the organization.
Available Funds
The CFO decides the maximum amount of available funds, provided without posting of any collateral, forallocation within Nomura and the EMB approves the allocation of the funds to each business division. Global
Treasury monitors the usage by businesses and reports to the EMB.
Classification and Definition of Risk
Nomura classifies and defines risks as follows and has established departments or units to manage each risk
type.
Risk Category

Definition

Market risk

Risk of loss arising from fluctuations in values of financial assets and liabilities(including off-balance sheet items) due to fluctuations in market risk factors (interest
rates, foreign exchange rates, prices of securities and others).

Credit risk

Risk of loss arising from an obligor’s default, insolvency or administrative proceedingwhich results in the obligor’s failure to meet its contractual obligations in accordancewith agreed terms. This includes both on and off-balance sheet exposures. It is also therisk of loss arising through a credit valuation adjustment (“CVA”) associated withdeterioration in the creditworthiness of a counterparty.

Operational risk

Risk of loss arising from inadequate or failed internal processes, people and systems orfrom external events. It excludes strategic risk (the risk of loss as a result of poor
strategic business decisions), but includes the risk of breach of legal and regulatory
requirements, and the risk of damage to Nomura’s reputation if caused by an operational
risk.
121

Risk Category

Definition

Model risk

Risk of loss arising from model errors or incorrect or inappropriate model application
with regard to valuation models and risk models.

Funding and
Liquidity risk

Risk of loss arising from difficulty in securing the necessary funding or from asignificantly higher cost of funding than normal levels due to deterioration of Nomura’s
creditworthiness or deterioration in market conditions.

Business risk

Risk of failure of revenues to cover costs due to deterioration of the earnings
environment or deterioration of the efficiency or effectiveness of business operations.
Business risk is managed by the senior management at Nomura.

Market Risk Management
Market risk is the risk of loss arising from fluctuations in values of financial assets and liabilities (including
off-balance sheet items) due to fluctuations in market risk factors (interest rates, foreign exchange rates, prices of
securities and others).
Market Risk Management Process
Effective management of market risk requires the ability to analyze a complex and evolving portfolio in aconstantly changing global market environment, identify problematic trends and ensure that appropriate action istaken in a timely manner.
Nomura uses a variety of statistical risk measurement tools to assess and monitor market risk on an ongoingbasis, including, but not limited to, Value at Risk (“VaR”), Stressed VaR (“SVaR”) and Incremental Risk Charge(“IRC”). In addition, Nomura uses sensitivity analysis and stress testing to measure and analyze its market risk.
Sensitivities are measures used to show the potential changes to a portfolio due to standard moves in market risk
factors. They are specific to each asset class and cannot usually be aggregated across risk factors. Stress testingenables the analysis of portfolio risks or tail risks, including non-linear behaviors and can be aggregated acrossrisk factors at any level of the group hierarchy, from group level to business division, units or desk levels. Market
risk is monitored against a set of approved limits, with daily reports and other management information provided
to the business units and senior management.
Value at Risk
VaR is a measure of the potential loss due to adverse movements of market factors, such as equity prices,interest rates, credit, foreign exchange rates, and commodities with associated volatilities and correlations.
VaR Methodology Assumptions
Nomura uses a single VaR model which has been implemented globally in order to determine the total
trading VaR. A historical simulation is implemented, where historical market moves over a two-year window areapplied to current exposure in order to construct a profit and loss distribution. Potential losses can be estimated atrequired confidence levels or probabilities. A scenario weighting scheme is employed to ensure that the VaRmodel responds to changing market volatility. Nomura uses the same VaR model for both internal risk
management purposes and for regulatory reporting. For internal risk management purposes, VaR is calculated
across Nomura at a 99% confidence level and using a 1-day time horizon. For regulatory reporting purposes,
Nomura uses the same confidence level but a 10-day time horizon, calculated using actual 10-day historicalmarket moves. To complement VaR under Basel 2.5 regulations, Nomura also computes SVaR, which samples
from a one-year window during a period of financial stress. The SVaR window is regularly calibrated andobservations are equally weighted.
122

Nomura’s VaR model uses exact time series for each individual risk factor. However, if good quality data is
not available, a ‘proxy logic’ maps the exposure to an appropriate time series. The level of proxying taking place
is carefully monitored through internal risk management processes and there is a continual effort to source newtime series to use in the VaR calculation.
VaR Backtesting
The performance of Nomura’s VaR model is constantly monitored to ensure that it remains fit for purpose.
The main approach for validating VaR is to compare actual 1-day trading losses with the corresponding VaRestimate. Nomura’s VaR model is backtested at different hierarchy levels. Backtesting results are reviewed on amonthly basis by Nomura’s Risk Management Division. One-day trading losses did not exceed the 99% VaRestimate at the Nomura Group level for the twelve months ended March 31, 2017.
Limitations and Advantages of VaRVaR aggregates risks from different asset classes in a transparent and intuitive way. However, there arelimitations. VaR is a backward-looking measure: it implicitly assumes that distributions and correlations ofrecent factor moves are adequate to represent moves in the near future. VaR is appropriate for liquid markets andis not appropriate for risk factors that exhibit sudden jumps. Therefore it may understate the impact of severe
events. Given these limitations, Nomura uses VaR only as one component of a diverse market risk management
process.
VaR metrics
The following graph shows the daily VaR over the last six quarters for substantially all of Nomura’s trading
positions:123

The following tables show the VaR as of each of the dates indicated for substantially all of Nomura’s
trading positions:
Billions of yen
As ofMar. 31, Mar. 31, Mar. 31,
2015
2016
2017

Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 1.014.17
1.06¥ 0.893.80
0.80¥ 0.67
2.66
1.67

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Diversification Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.23(1.62)

5.49(1.96)

4.99(1.66)

VaR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 4.62¥ 3.53¥ 3.34

Billions of yen
For the twelve months ended
Mar. 31, Mar. 31, Mar. 31,
2015
2016
2017

Maximum daily VaR(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average daily VaR(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minimum daily VaR(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 9.846.44
3.11¥ 9.135.31
3.53¥ 6.71
4.32
2.75(1) Represents the maximum, average and minimum VaR based on all daily calculations for the twelve months
ended March 31, 2015, March 31, 2016, and March 31, 2017.
Total VaR decreased to ¥3.34 billion as of March 31, 2017 from ¥3.53 billion as of March 31, 2016. VaR
relating to foreign exchange risk increased to ¥1.67 billion as of March 31, 2017, compared to ¥0.80 billion as ofMarch 31, 2016. VaR relating to equity risk decreased to ¥0.67 billion as of March 31, 2017, compared to¥0.89 billion as of March 31, 2016. VaR relating to interest rate risk decreased to ¥2.66 billion as of March 31,
2017, compared to ¥3.80 billion as of March 31, 2016.
Total VaR decreased to ¥3.53 billion as of March 31, 2016 from ¥4.62 billion as of March 31, 2015. VaR
relating to foreign exchange risk decreased to ¥0.80 billion as of March 31, 2016, compared to ¥1.06 billion as ofMarch 31, 2015. VaR relating to equity risk decreased to ¥0.89 billion as of March 31, 2016, compared to¥1.01 billion as of March 31, 2015. VaR relating to interest rate risk decreased to ¥3.80 billion as of March 31,
2016, compared to ¥4.17 billion as of March 31, 2015.
Stress Testing
Nomura conducts market risk stress testing since VaR and sensitivity analysis have limited ability to capture
all portfolio risks or tail risks. Stress testing for market risk is conducted daily and weekly, using various
scenarios based upon features of trading strategies. Nomura conducts stress testing not only at each desk level,
but also at the Nomura Group level with a set of common global scenarios in order to capture the impact ofmarket fluctuations on the entire Nomura group.
Non-Trading Risk
A major market risk in Nomura’s non-trading portfolio relates to equity investments held for operating
purposes and on a long-term basis. Equity investments held for operating purposes are minority stakes in theequity securities of unaffiliated Japanese financial institutions and corporations held in order to promote existingand potential business relationships. This non-trading portfolio is exposed mainly to volatility in the Japanesestock market. One method that can estimate the market risk in this portfolio is to analyze market sensitivity basedon changes in the TOPIX, which is a leading index of prices of stocks on the First Section of the Tokyo Stock
Exchange.
124

Nomura uses regression analysis covering the previous 90 days which tracks and compares fluctuations in
the TOPIX and the fair value of Nomura’s equity investments held for operating purposes, which allows todetermine a correlation factor. Based on this analysis for each 10% change in the TOPIX, the fair value of
Nomura’s operating equity investments held for operating purposes can be expected to change by¥18,527 million at the end of March 2016 and ¥16,275 million at the end of March 2017. The TOPIX closed at
1,347.20 points at the end of March 2016 and at 1,512.60 points at the end of March 2017. This simulation
analyzes data for the entire portfolio of equity investments held for operating purposes at Nomura and therefore
actual results may differ from Nomura’s expectations because of price fluctuations of individual equities.
Credit Risk Management
Credit risk is the risk of loss arising from an obligor’s default, insolvency or administrative proceedingwhich results in the obligor’s failure to meet its contractual obligations in accordance with agreed terms. This
includes both on and off-balance sheet exposures. It is also the risk of loss arising through a CVA associated withdeterioration in the creditworthiness of a counterparty.
Nomura manages credit risk on a global basis and on an individual Nomura legal entity basis.
Credit Risk Management Framework
The measurement, monitoring and management of credit risk at Nomura are governed by a set of global
policies and procedures. Credit Risk Management (“CRM”), a global function within the Risk Management
Division, is responsible for the implementation and maintenance of these policies and procedures. These policies
are authorized by the GIRMC and/or Global Risk Strategic Committee (“GRSC”), prescribe the basic principles
of credit risk management and set delegated authority limits, which enables CRM personnel to set credit limits.
Credit risk is managed by CRM together with various global and regional risk committees. This ensurestransparency of material credit risks and compliance with established credit limits, the approval of material
extensions of credit and the escalation of risk concentrations to appropriate senior management.
Credit Risk Management Process
CRM operates as a credit risk control function within the Risk Management Division, reporting to the CRO.
The process for managing credit risk at Nomura includes:•

Evaluation of likelihood that a counterparty defaults on its payments and obligations;•

Assignment of internal ratings to all active counterparties;•

Approval of extensions of credit and establishment of credit limits;•

Measurement, monitoring and management of Nomura’s current and potential future credit exposures;•

Setting credit terms in legal documentation; and•Use of appropriate credit risk mitigants including netting, collateral and hedging.

The scope of credit risk management includes counterparty trading and various debt or equity instruments
including loans, private equity investments, fund investments, investment securities and any other as deemednecessary from a credit risk management perspective. The evaluation of counterparties’ creditworthinessinvolves a thorough due diligence and analysis of the business environments in which they operate, theircompetitive positions, management and financial strength and flexibility. Credit analysts also take into accountthe corporate structure and any explicit or implicit credit support. CRM evaluates credit risk not only bycounterparty, but also by counterparty group.
125Following the credit analysis, CRM estimates the probability of default of a given counterparty or obligor
through an alphanumeric ratings scale similar to that used by rating agencies and a corresponding numeric scale.
Credit analysts are responsible for assigning and maintaining the internal ratings, ensuring that each rating isreviewed and approved at least annually.
Nomura’s internal rating system employs a range of ratings models to ensure global consistency andaccuracy. These models are developed and maintained by the Risk Methodology Group. Internal ratings
represent a critical component of Nomura’s approach to managing counterparty credit risk. They are used as key
factors in:•Establishing the amount of counterparty credit risk that Nomura is willing to take to an individual
counterparty or counterparty group (setting of credit limits);•

Determining the level of delegated authority for setting credit limits (including tenor);•

The frequency of credit reviews (renewal of credit limits);•

Reporting counterparty credit risk to senior management within Nomura; and•Reporting counterparty credit risk to stakeholders outside of Nomura.

The Credit Risk Control Unit is a function within the Model Validation Group (“MVG”) which is
independent of CRM. It ensures that Nomura’s internal rating system is properly reviewed and validated,
reporting any breaks or issues to senior management for timely resolution. The unit is responsible for ensuringthat the system remains accurate and predictive of risk and provides periodic reporting on the system to senior
management.
For regulatory capital calculation purposes, Nomura has been applying the Foundation Internal Rating
Based Approach in calculating credit risk weighted assets since the end of March 2011. The Standardized
Approach is applied to certain business units or asset types, which are considered immaterial to the calculation of
credit risk-weighted assets.
Credit Limits and Risk Measures
Internal ratings form an integral part in the assignment of credit limits to counterparties. Nomura’s credit
limit framework is designed to ensure that Nomura takes appropriate credit risk in a manner that is consistent
with its overall risk appetite. Global Credit policies define the delegated authority matrices that establish the
maximum aggregated limit amounts and tenors that may be set for any single counterparty group based on theirinternal rating.
Nomura’s main type of counterparty credit risk exposures arise from derivatives transactions or securities
financing transactions. Credit exposures against counterparties are managed by means of setting credit limits
based upon credit analysis of individual counterparty. Credit risk is managed daily through the monitoring ofcredit exposure against approved credit limits and the ongoing monitoring of the creditworthiness of Nomura’s
counterparties. Any change in circumstance that alters Nomura’s risk appetite for any particular counterparty,
sector, industry or country is reflected in changes to the internal rating and credit limit as appropriate.
Nomura’s global credit risk management systems record all credit limits and capture credit exposures to
Nomura’s counterparties allowing CRM to measure, monitor and manage utilization of credit limits, ensure
appropriate reporting and escalation of any limit breaches.
For derivatives and securities financing transactions, Nomura measures credit risk primarily by way of aMonte Carlo-based simulation model that determines a Potential Exposure profile at a specified confidence level.
The exposure calculation model used for counterparty credit risk management has also been used for the Internal
Model Method based exposure calculation for regulatory capital reporting purposes since the end of December
2012.
126

Loans and lending commitments are measured and monitored on both a funded and unfunded basis.
Wrong Way Risk
Wrong Way Risk (“WWR”) occurs when exposure to a counterparty is highly correlated with thedeterioration of creditworthiness of that counterparty. Nomura has established global policies that govern the
management of any WWR exposures. Stress testing is used to support the assessment of any WWR embedded
within existing portfolios and adjustments are made to credit exposures and regulatory capital, as appropriate.
Stress Testing
Stress Testing is an integral part of Nomura’s management of credit risk. Regular stress tests are used tosupport the assessment of credit risks by counterparties, sectors and regions. The stress tests include potential
concentrations that are highlighted as a result of applying shocks to risk factors, probabilities of default or rating
migrations.
Risk Mitigation
Nomura utilizes financial instruments, agreements and practices to assist in the management of credit risk.
Nomura enters into legal agreements, such as the International Swap and Derivatives Association, Inc. (“ISDA”)
agreements or equivalent (referred to as “Master Netting Agreements”), with many of its counterparties. Master
Netting Agreements allow netting of receivables and payables and reduce losses potentially incurred as a resultof a counterparty default. Further reduction in credit risk is achieved through entering into collateral agreementsthat allow Nomura to obtain collateral from counterparties either upfront or contingent on exposure levels,changes in credit rating or other factors.
Credit Risk to Counterparties in Derivatives Transaction
The credit exposures arising from Nomura’s trading-related derivatives as of March 31, 2017 aresummarized in the table below, showing the positive fair value of derivative assets by counterparty credit rating
and by remaining contractual maturity. The credit ratings are internally determined by Nomura’s CRM.
Billions of yen

Credit Rating

Less than
1 yearYears to Maturity
1 to 33 to 55 to 7
years
years
years

AAA . . . . . . . . . . . . . . . ¥ 77 ¥ 14 ¥3 ¥ 11
AA . . . . . . . . . . . . . . . . .
574
552
486
343
A . . . . . . . . . . . . . . . . . . 1,041
806
441
300
BBB . . . . . . . . . . . . . . .
262
198
206
116
BB and lower . . . . . . . .
59
52
38
31
Other(2) . . . . . . . . . . . . .
81
74
185
253
Sub-total . . . . . . . . . . . . 2,094 1,696 1,359 1,054
Listed . . . . . . . . . . . . . .
99
50
9
0
Total . . . . . . . . . . . . . . . ¥2,193 ¥1,746 ¥1,368 ¥1,054

More than
7 years

CrossMaturity
Netting(1)

¥

¥

58
2,145
947
547
111
1,291
5,099
—
¥5,099Total
Collateral Replacement
Fair Value obtainedcost(3)(a)(b)(a)-(b)(146) ¥ 17
(3,771)329(3,279)
256
(972)
357
(204)
87
(1,956)(72)(10,328)
974
(95)
63
¥(10,423) ¥1,037

¥

1
85
78
89
203
115
571
88
¥659

¥ 16
244
178
268
0
0
706
0
¥706

(1) Represents netting of derivative liabilities against derivatives assets entered into with the same counterparty
across different maturity bands. Derivative assets and derivative liabilities with the same counterparty in thesame maturity band are net within the relevant maturity band. Cash collateral netting against net derivative
assets in accordance with ASC 210-20 “Balance Sheet—Offsetting” and ASC 815 “Derivatives andHedging” is also included.
127

(2) “Other” comprises unrated counterparties and certain portfolio level valuation adjustments not allocated to
specific counterparties.
(3) Zero balances represent instances where total collateral received is in excess of the total fair value;
therefore, Nomura’s credit exposure is zero.
Country Risk
At Nomura, country risk is defined as the risk of loss arising from country-specific events (such as political,
economic, legal and other events) that affect counterparties and/or issuers within that country, causing thosecounterparties and/or issuers to be unable to meet financial obligations. Nomura’s country risk framework acts as
a complement to other risk management areas and encompasses a number of tools including, but no limited to,country limits, which restrict credit exposure concentration to any given country. Other tools to manage country
risk include country ratings as well as country risk policies and procedures that describe responsibilities anddelegation for decision-making.
Nomura’s credit portfolio remains well-diversified by country and concentrated towards highly-rated
countries. Over 95% of the exposure was from investment-grade rated countries. The breakdown of top 10
country exposures is as follows:
Billions of Yen(As of Mar. 31, 2017)

Top 10 Country Exposures(1)United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Luxembourg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,352
1,329
906
242
153
149
116
111
95
63

(1) The table represents the Top 10 country exposures as of 31st March, 2017 based on country of origin,combining counterparty and inventory exposures, offset by Credit Valuations Adjustment (“CVA”) hedges:-

Counterparty exposures include cash and cash equivalents held at banks, margin balances placed at
central clearing counterparties, the positive fair value, after collateral received, of derivative transactions
and securities financing transactions, the fair value of funded loans and the notional amount of unfundedloans.

-

Inventory exposures include the positive fair value of debt and equity securities, equity and credit
derivatives, using the net of long versus short positions.

Operational Risk Management
Operational risk is the risk of loss arising from inadequate or failed internal processes, people, and systems
or from external events. It excludes strategic risk (the risk of loss as a result of poor strategic business decisions),
but includes the risk of breach of legal and regulatory requirements, and the risk of damage to Nomura’s
reputation if caused by an operational risk.
The Three Lines of Defence
Nomura adopts the industry standard “Three Lines of Defence” for the management of operational risk,
comprising the following elements:
1)

1st Line of Defence: The business which owns and manages its risks
128

2)

2nd Line of Defence: The Operational Risk Management (“ORM”) function, which defines andco-ordinates Nomura’s operational risk strategy and framework and provides challenge to the 1st Lineof Defence

3)

3rd Line of Defence: Internal Audit, who provide independent assurance

Operational Risk Management Framework
An Operational Risk Management Framework has been established in order to allow Nomura to identify,
assess, manage, monitor and report on operational risk. The GIRMC, with delegated authority from the EMB has
formal oversight over the management of operational risk.
This framework is set out below:
Infrastructure of the framework•

Policy framework: Sets standards for managing operational risk and details how to monitor adherence tothese standards.

•

Training and awareness: Action taken by ORM to improve business understanding of operational risk.

Products and Services•

Risk and Control Self-Assessment (“RCSA”): The process used by business units to identify and assess
the operational risks to which they are exposed, the controls in place to mitigate risks, and action plansto further reduce risk.

•

Scenario Analysis: Process to identify and assess high impact, low probability ‘tail events’.

•

Event Reporting: Process to obtain information on and learn from actual events impacting Nomura andrelevant external events. A key step is to identify appropriate action plans to prevent or mitigate future
occurrence of events.

•

Key Risk Indicators (“KRI”): Metrics which allow monitoring of certain key operational risks andtrigger appropriate responses as thresholds are breached.

Outputs•

Analysis and reporting: A key aspect of ORM’s role is to analyze, report, and challenge operational risk
information provided by business units, and work with business units to develop action plans to mitigate
risks.

•

Operational risk capital calculation: Calculate operational risk capital as required under applicable Baselstandards and local regulatory requirements.

Regulatory Capital Calculation for Operational Risk
Nomura uses The Standardized Approach for calculating regulatory capital for operational risk. This
involves using a three-year average of gross income allocated to business lines, which is multiplied by a fixed
percentage (“Beta Factor”) determined by the FSA, to establish the amount of required operational risk capital.

129

Nomura uses consolidated net revenue as gross income, however for certain consolidated subsidiaries, grossoperating profit is used as gross income. Gross income allocation is performed by mapping the net revenue ofeach business segment as defined in Nomura’s management accounting data to each business line defined in theStandardised Approach as follows:Business Line

Retail Banking
Commercial Banking
Payment and Settlement
Retail Brokerage
Trading and Sales
Corporate FinanceAgency Services
Asset Management

Description

Beta Factor

Retail deposit and loan-related services
Deposit and loan-related services except for Retail Banking business
Payment and settlement services for clients’ transactions
Securities-related services mainly for individuals
Market-related business
M&A, underwriting, secondary and private offerings, and other funding
services for clients
Agency services for clients such as custody
Fund management services for clients

12%
15%
18%
12%
18%
18%
15%
12%

Nomura calculates the required amount of operational risk capital for each business line by multiplying theallocated annual gross income amount by the appropriate Beta Factor defined above. The operational risk capitalfor any gross income amount not allocated to a specific business line is determined by multiplying such
unallocated gross income amount by a fixed percentage of 18%.
The total operational risk capital for Nomura is calculated by aggregating the total amount of operationalrisk capital required for each business line and unallocated amount and by determining a three-year average.
Where the aggregated amount for a given year is negative, then the total operational risk capital amount for thatyear will be calculated as zero.
In any given year, negative amounts in any business line are offset against positive amounts in otherbusiness lines. However, negative unallocated amounts are not offset against positive amounts in other businesslines and are calculated as zero.
Operational risk capital is calculated at the end of September and March each year.
Model Risk Management
Model Risk is the risk of loss arising from Model errors or incorrect or inappropriate Model application withregard to Valuation Models and Risk Models.
Errors can occur at any point from model assumptions through to implementation. In addition, the quality ofmodel outputs depends on the quality of model parameters and any input data. Even a fundamentally soundmodel producing accurate outputs consistent with the design objective of the model may exhibit high model risk
if it is misapplied or misused.
To address these risks, Nomura has established its model risk appetite, which includes a qualitative
statement and a quantitative measure. The qualitative statement for model risk specifies that it is expected thatmodels are used correctly and appropriately. The quantitative risk appetite measure is based on Nomura’s
assessment of the potential loss arising from model risk.
Model Management Framework
The models within the model management framework are defined as either:•valuation models, used for calculating prices and risk sensitivities of Nomura’s positions; or,•risk models, used for quantifying the risk of a portfolio by calculating the potential losses incurred froma specific type of risk, and used for regulatory or economic capital calculations, margin requirements for
non-centrally cleared derivatives, limit monitoring, or management reporting.
130

Before models are put into official use, the MVG is responsible for validating their integrity andcomprehensiveness independently from those who design and build them. As part of this validation process, theMVG analyzes a number of factors to assess a model’s suitability, to quantify model risk which is then mitigatedby applying model reserves and capital adjustments. Valuation models are developed and maintained by thebusiness units and risk models by the Risk Methodology Group (“RMG”) within the Risk Management Division.
Certain models may also be developed by third party providers. The RMG has primary responsibility for theongoing refinement and improvement of risk models and methodologies within Nomura.
All models are also subject to an annual re-approval process by MVG to ensure they remain suitable. Upondelegation from the GRMC, the MRAC’s and GRAC’s primary responsibility is to govern and provide oversightof model management for valuation and risk models, respectively.
Changes to Valuation and Risk Models
Nomura has documented policies and procedures in place, approved by the GIRMC and/or GRSC, which
define the process and validation requirements for implementing changes to valuation and risk models. In
addition, a Model Performance Monitoring process has been established to identify and assess specific events,that can indicate that a model is not performing as it should or is potentially unsuitable and to determine what
actions (for example, additional validation work) might be necessary. For changes with an impact above certain
materiality thresholds, model approval is required. MVG defines these materiality thresholds in a formal
procedure and operates a control process to identify where the procedure is not followed. For certain materialchanges to risk models, backtesting of the new model, parallel running of both models and stress-testing of the
new model are required prior to the model being approved.
Funding and Liquidity Risk Management
For further information on funding and liquidity risk management, see Item 5.B. “Liquidity and Capital
Resources—Funding and Liquidity Management” in this annual report.
Risk Measures and Controls
Limit Frameworks
The establishment of robust limit monitoring and management is central to appropriate monitoring andmanagement of risk. The limit management frameworks incorporate clear escalation policies to ensure approvalof limits at appropriate levels of seniority. The Risk Management Division is responsible for day-to-day
operation of these limit frameworks including approval, monitoring, and reporting as required. Business units are
responsible for complying with the agreed limits. Limits apply across a range of quantitative measures of risk andacross market and credit risks.
New Business Risk Management
The new business approval process represents the starting point for new business in Nomura and exists to
support management decision-making and ensure that risks associated with new products and transactions are
identified and managed appropriately. The new business approval process consists of two components:
1)

Transaction committees are in place to provide formal governance over the review and decisionmaking process for individual transactions.

2)

The new product approval process allows business unit sponsors to submit applications for new
products and obtain approval from relevant departments prior to execution of the new products. The
process is designed to capture and assess risks across all risk classes as a result of the new product orbusiness.
131

Stress Testing
Stress testing performed at the Nomura Group provides comprehensive coverage of risks across different
hierarchical levels, and covers different time horizons, severities, plausibilities and stress testing methodologies.
The results of stress tests are used in capital planning processes, capital adequacy assessments, liquidity
adequacy assessments, recovery and resolution planning, assessments of whether risk appetite is appropriate, andin routine risk management.
Stress tests are run on a regular basis or on an ad hoc basis as needed, for example, in response to materialchanges in the external environment and/or in the Nomura Group risk profile. The results of stress tests withsupporting detailed analysis are reported to senior management and other stakeholders as appropriate for the
stress test being performed.
Stress testing is categorised either as sensitivity analysis or scenario analysis and may be performed on a
Nomura Group-wide basis or at more granular levels.
•

Sensitivity analysis is used to quantify the impact of a market move in one or two associated risk factors(for example, equity prices, equity volatilities) in order primarily to capture those risks which may not
be readily identified by other risk models;•

Scenario analysis is used to quantify the impact of a specified event across multiple asset classes andrisk classes. This is a primary approach used in performing stress testing at the different hierarchicallevels of the Nomura Group, and in reverse stress testing;•Group-wide stress to assess the capital adequacy of the Nomura Group under severe but plausible
market scenarios is conducted on a quarterly basis at a minimum to calculate the Stressed Tier 1 Ratio;
and•Reverse stress testing, a process of considering the vulnerabilities of the firm and hence how it may
react to situations where it becomes difficult to continue its business and reviewing the results of thatanalysis, is conducted on an annual basis at a minimum.

Stress testing is an integral part of the Nomura Group’s overall governance and is used as a tool for forwardlooking risk management, decision-making and enhancing communication amongst the Risk Management
Division, Front Office, and senior management.
Item 12. Description of Securities Other Than Equity Securities
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.

132

D. American Depositary Shares
Fees payable by ADR Holders
The following table shows the fees and charges that a holder of the Company’s ADR may have to pay,either directly or indirectly:
Type of Services:

Amount of Fee (U.S. Dollars)

Taxes and other governmental charges

As applicable. The depositary may offset any taxes orgovernmental charges it is obligated to withhold, if
applicable, against the proceeds from sale of theproperty received.

Transfers of the Company’s shares to or from the nameof the depositary (or its nominee) or the Custodian (orits nominee) in connection with deposits orwithdrawals

Such registration fees as may be in effect for theregistration of transfers of the Company’s shares on
the Company’s share register (or any entity that
presently carries out the duties of registrar).

Cable, telex and facsimile transmission expenses

As applicable.

Expenses incurred by the depositary in the conversion offoreign currency

As applicable.

Execution and delivery of Receipts in connection withdeposits, stock splits or exercise of subscription rights$5.00 or less per 100 ADSs (or portion thereof).

Surrender of Receipts in connection with a withdrawal
or termination of the Deposit Agreement$5.00 or less per 100 ADSs (or portion thereof).

Any cash distribution pursuant to the Deposit
Agreement, including, but not limited to, cash
distribution(s) made in connection with cash
dividends; distributions in securities, property or
subscription rights; and stock splits.

$.02 or less per ADS (or portion thereof). Only the
cash amounts net of this fee, if applicable, aredistributed.

Distribution by the depositary of securities (other thancommon shares of the Company) that accrued on theunderlying shares to owners of the Receipts

Treating for the purpose of this fee all such securities
as if they were common shares of the Company,$5.00 or less per 100 ADSs (or portion thereof).

General depositary services$.02 or less per ADS (or portion thereof), accruing on
the last day of each calendar year, except where thefee for cash distribution described above was assessed
during that calendar year.

Any other charge payable by the depositary, any of thedepositary’s agents, including the Custodian, or theagents of the depositary’s agents in connection withthe servicing of the Company’s shares or otherdeposited securities

As applicable.

Fees paid to Nomura by the depositary
The Bank of New York Mellon, as depositary, has agreed to pay all its standard out-of-pocket
administration and maintenance expenses for providing services to the registered shareholders and up to 100,000
non-registered shareholders of ADRs. From April 1, 2016 to March 31, 2017, the Bank of New York Mellon has
waived a total of $154,255.45 in fees (including $23,884.49 in connection with the expenses related to theAnnual General Meeting of Shareholders) associated with the administration of the ADR program andadministrative fees for routine corporate actions and for providing investor relations information services.
133

PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15. Controls and Procedures
Disclosure Controls and Procedures.
Our Disclosure Committee is responsible for the establishment and maintenance of our disclosure controls
and procedures. As of March 31, 2017, an evaluation was carried out under the supervision and with theparticipation of our management, including our Group Chief Executive Officer and Chief Financial Officer, andthe Disclosure Committee, of the effectiveness of the disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our Group Chief
Executive Officer and Chief Financial Officer concluded that, as of March 31, 2017, our disclosure controls andprocedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934). Our
management, with the participation of our Group Chief Executive Officer and Chief Financial Officer, evaluatedthe effectiveness of our internal control over financial reporting using the criteria set forth in the Internal
Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, management concluded that our internal control over financial
reporting was effective as of March 31, 2017. Our independent registered public accounting firm, Ernst & Young
ShinNihon LLC, has issued an attestation report on the effectiveness of our internal control over financial
reporting, which appears on page F-3 of this annual report.
Changes in Internal Control Over Financial Reporting.
Our management also carried out an evaluation, with the participation of our Group Chief Executive Officer
and Chief Financial Officer, of changes in our internal control over financial reporting during the year ended
March 31, 2017. Based upon that evaluation, there was no change in our internal control over financial reporting
during the year ended March 31, 2017 that has materially affected, or is reasonably likely to affect, our internal
control over financial reporting.
Item 16A. Audit Committee Financial Expert
The Company’s Board of Directors has determined that each of Noriaki Shimazaki and Mari Sono, a
member of the Audit Committee, qualifies as an “audit committee financial expert” as such term is defined by
the General Instructions for Item 16A of Form 20-F. Additionally, Mr. Shimazaki and Ms. Sono meet theindependence requirements applicable to them under Section 303A.06 of the NYSE Listed Company Manual.
For a description of their business experience, see Item 6.A “Directors and Senior Management—Directors” inthis annual report.
Item 16B. Code of Ethics
On March 5, 2004, the Company adopted the “Code of Ethics of Nomura Group” which includes the “Code of
Ethics for Financial Professionals” applicable to our financial professionals including the Company’s principal
executive officer, principal financial officer, principal accounting officer and persons performing similar functions.
134

Item 16C. Principal Accountant Fees and Services
Ernst & Young ShinNihon LLC has been our principal accountant for the last fifteen fiscal years. The table
set forth below contains the aggregate fees billed for each of the last two fiscal years by our principal accountant
in each of the following categories: (i) Audit Fees, which are fees for professional services for the audit or review
of our financial statements or services that are normally provided in connection with statutory and regulatory
filings or engagements for those fiscal years, (ii) Audit-Related Fees, which are fees for assurance and related
services that are related to the performance of the audit or review of our financial statements and are not reported
as Audit Fees, (iii) Tax Fees, which are fees for professional services provided for tax compliance, tax advice andtax planning, and (iv) All Other Fees, which are fees for products and services other than Audit Fees, AuditRelated Fees and Tax Fees, such as advisory services concerning risk management and regulatory matters.
Millions of yen
Year ended March 31
2016
2017

Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,198155
148
343¥3,052
220
151
144

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,844¥3,567

Audit-Related Fees included fees for consultations on accounting issues relating to our business. Tax Fees
included fees for services relating to tax planning and compliance. All Other Fees included fees for services
relating to advice with respect to regulations and disclosures under the Financial Instruments and Exchange Act
in connection with our underwriting business.
In accordance with the regulations of the Securities and Exchange Commission issued pursuant to Sections
202 and 208 of the Sarbanes-Oxley Act of 2002, our Audit Committee has adopted a pre-approval policy
regarding the engagements of our principal accountant. Under the pre-approval policy, there are two types ofpre-approval procedures, “General Pre-Approval” and “Specific Pre-Approval.”
Under “General Pre-Approval,” our CFO in conjunction with our principal accountant must make a proposal
to our Audit Committee for the types of services and estimated fee levels of each category of services to begenerally pre-approved. Such a proposal must be made at least annually. The Audit Committee will discuss the
proposal and if necessary, consult with outside professionals as to whether the proposed services would impair
the independence of our principal accountant. If such proposal is accepted, the Audit Committee will inform our
CFO and principal accountant of the services that have been pre-approved and are included in a “General
Pre-Approved List.” Our Audit Committee is informed of each such service that is provided.
Under “Specific Pre-Approval,” if any proposed services are not on the General Pre-Approved List, our
CFO is required to submit an application to the Audit Committee for such services. After reviewing the details
and estimated fee levels for each engagement and if necessary, consulting with outside professionals as towhether the proposed services would impair the independence of the principal accountant, the Audit Committee
may make a specific pre-approval decision on these services. Also, if any approved services in the General
Pre-Approved List exceed the fee levels prescribed on the List, our CFO is required to submit an application to
the Audit Committee for new fee levels for such services. The Audit Committee may make a pre-approval
decision after reviewing the details of the services and the estimated fee levels for each engagement.
None of the services described in the first paragraph under this Item 16C were waived from the pre-approvalrequirement pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

135

Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During the year ended March 31, 2017, we acquired 23,324 shares of the Company’s common stock bymeans of repurchase of shares constituting less than one unit upon the request of the holders of those shares and120,987,200 shares under a share buyback program in accordance with Article 459-1 of the Companies Act. For
an explanation of the right of our shareholders to demand such repurchases by us, see “Common Stock” under
Item 10.B of this annual report. As of March 31, 2017, we had 3,528,429,451 outstanding shares of our common
stock excluding 294,133,150 shares held as treasury stock.
The following table sets forth certain information with respect to our purchases of shares of our common
stock during the year ended March 31, 2017.
Total
Number of
SharesPurchased
as Part of
Publicly
Announced
ProgramMaximum
Number of
Shares thatMay Yet Be
Purchased
Under theProgram

Month

Total
Number of
SharesPurchased

Average Price
Paid perShare(in yen)

April 1 to 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . .
May 1 to 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . .
June 1 to 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . .
July 1 to 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
August 1 to 31, 2016 . . . . . . . . . . . . . . . . . . . . . . .
September 1 to 30, 2016 . . . . . . . . . . . . . . . . . . . . .
October 1 to 31, 2016 . . . . . . . . . . . . . . . . . . . . . . .
November 1 to 30, 2016 . . . . . . . . . . . . . . . . . . . . .
December 1 to 31, 2016 . . . . . . . . . . . . . . . . . . . . .
January 1 to 31, 2017 . . . . . . . . . . . . . . . . . . . . . . .
February 1 to 28, 2017 . . . . . . . . . . . . . . . . . . . . . .
March 1 to 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . .

1,100
25,238,725
9,764,101
1,466
22,709,722
15,775,260
23,635,316
9,421,759
14,456,645
1,671
2,478
2,281

¥478
470
457
400
459
477
475
727
621
696
740
740

—
—
25,237,900(1) 9,762,100
9,762,100(1)———22,707,600(2) 77,292,400
15,773,500(2) 61,518,900
23,633,700(2) 37,885,200
9,420,400(2) 28,464,800
14,452,000(2)
—
—
—
—
—
—
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

121,010,524¥507

120,987,200—(1) On April 27, 2016, a resolution of the Board of Directors authorized the Company to purchase up to
35,000,000 shares of our common stock or to a maximum of ¥20 billion during the period from May 18,
2016 through July 22, 2016.
(2) On July 28, 2016, a resolution of the Board of Directors authorized the Company to purchase up to
100,000,000 shares of our common stock or to a maximum of ¥45 billion during the period from August 15,
2016 through January 27, 2017.
Nomura recognizes the need to set out flexible financial strategies that allow the Board of Directors to
respond quickly to any changes in the business environment and is looking into implementing further sharebuybacks. Details will be announced when finalized.
On April 27, 2017, we announced a resolution of the Board of Directors to establish a share buyback
program in accordance with Article 459-1 of the Companies Act. The period of repurchase under the program isfrom May 17, 2017 to March 30, 2018, and we are authorized to purchase up to 100,000,000 shares of ourcommon stock or to a maximum of ¥80 billion.
As of May 31, 2017, 3,544,369,167 shares of common stock were outstanding, excluding 278,193,434
shares held as treasury stock.
136

Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
Companies listed on the NYSE must comply with certain standards regarding corporate governance under
Section 303A of the NYSE Listed Company Manual. However, listed companies that are foreign private issuers,
such as the Company, are permitted to follow home country practice in lieu of certain provisions ofSection 303A.
The following table shows the significant differences between the corporate governance practices followedby U.S. listed companies under Section 303A of the NYSE Listed Company Manual and those followed by theCompany. The information set forth below is current as of the date of this annual report.
Corporate Governance Practices Followed
by NYSE-listed U.S. Companies

Corporate Governance Practices Followed by the Company

A NYSE-listed U.S. company must have a majority of
Directors meeting the independence requirements under
Section 303A of the NYSE Listed Company Manual.

Under the Companies Act, a company which adopts
the Company with Three Board Committees structure
is not required to have a majority of outside directors,
but is required to have a majority of outside directors
on each of the audit, nomination and compensationcommittees.
The Company currently has six outside directors
among its ten Directors.

A NYSE-listed U.S. company must have an audit
committee that satisfies the requirements under
Section 303A of the NYSE Listed Company Manual,including those imposed by Rule 10A-3 under the U.S.
Securities Exchange Act of 1934. The audit committee
must be composed entirely of independent directors andhave at least three members.

The Company has an Audit Committee consisting offour Directors, three of whom are outside directors incompliance with the requirements under theCompanies Act. All four Audit Committee members
are independent directors under Rule 10A-3 under the
U.S. Securities Exchange Act of 1934 with one
member qualified as audit committee financial expert.

A NYSE-listed U.S. company must have a nominating/corporate governance committee with responsibilities
described under Section 303A of the NYSE Listed
Company
Manual.
Thenominating/corporate
governance committee must be composed entirely of
independent directors.

The Company has a Nomination Committee
consisting of three Directors, two of whom areoutside directors in compliance with the requirements
under the Companies Act.

A NYSE-listed U.S. company must have acompensation committee composed entirely of
independent directors. Compensation committee
members must satisfy the additional independence
requirements under Section 303A.02(a)(ii) of the NYSE
Listed Company Manual. A compensation committee
must also have authority to retain or obtain the advice ofcompensation and other advisers, subject to prescribedindependence criteria that the committee must consider
prior to engaging any such adviser.

The Company has a Compensation Committee
consisting of three Directors, two of whom areoutside directors in compliance with the requirements
under the Companies Act.

137

Corporate Governance Practices Followed
by NYSE-listed U.S. Companies

Corporate Governance Practices Followed by the Company

A NYSE-listed U.S. company must generally obtainshareholder approval with respect to any equity
compensation plan.

Under the Companies Act, stock options are deemed
to be compensation for the services performed by theCompany’s Directors and Executive Officers and do
notrequireshareholders’approval.
The
Compensation Committee establishes the policy withrespect to the determination of the individualcompensation of each of the Company’s Directors
and Executive Officers (including stock options in theform of stock acquisition rights as equity
compensation) and makes determinations inaccordance with that compensation policy.

A NYSE-listed U.S. company must adopt and disclose
corporate governance guidelines.

Under the Companies Act, the Company is not
required to adopt and disclose corporate governanceguidelines. However, in response to Japan’s
Corporate Governance Code, which was incorporated
into the Tokyo Stock Exchange’s Securities Listing
Regulations, the Company has established andpublicly disclosed the “Nomura Holdings Corporate
Governance Guidelines.”

The non-management directors of a NYSE-listed U.S. Under the Companies Act, outside directors of thecompany must meet at regularly scheduled executive Company are not required to meet at regularly
sessions without management.
scheduled executive sessions without management.
However, in accordance with the “Nomura Holdings
Corporate Governance Guidelines,” outside directors
hold meetings consisting solely of outside directors inorder to discuss matters such as the business andcorporate governance of the Company.
A NYSE-listed U.S. company must adopt and disclose acode of business conduct and ethics for directors,
officers and employees, and promptly disclose any
waivers of the code for directors or executive officers.

Item 16H. Mine Safety Disclosure
Not applicable.

138

Under the Companies Act, the Company is not
required to adopt and disclose a code of businessconduct and ethics for directors, officers or
employees. However, the Company has adopted the“Code of Ethics of Nomura Group.” Please see Item
16B of this annual report for further information
regarding the “Code of Ethics of Nomura Group.”

PART III
Item 17. Financial Statements
In lieu of responding to this item, we have responded to Item 18 of this annual report.
Item 18. Financial Statements
The information required by this item is set forth in our consolidated financial statements included in thisannual report.

139

Item 19. Exhibits
Exhibit
Number

1.1
1.2
1.3

1.4

1.5
1.6

2.1

4.1
4.2
4.3
8.1
11.1
12.1
12.2
13.1
13.2
15.1
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE

Description

Articles of Incorporation of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an exhibit
to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
Share Handling Regulations of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an
exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
Regulations of the Board of Directors of Nomura Holdings, Inc. (English translation) (filed on June 23, 2016as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein byreference)
Regulations of the Nomination Committee of Nomura Holdings, Inc. (English translation) (filed on June 23,
2016 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein byreference)
Regulations of the Audit Committee of Nomura Holdings, Inc. (English translation) (filed on June 23, 2016 as
an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
Regulations of the Compensation Committee of Nomura Holdings, Inc. (English translation) (filed on June 27,
2012 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein byreference)
Form of Deposit Agreement among Nomura Holdings, Inc., The Bank of New York Mellon as depositary andall owners and holders from time to time of American Depositary Receipts, including the form of American
Depositary Receipt (filed on April 28, 2010 as an exhibit to the Registration Statement on Form F-6 (FileNo. 333-166346) and incorporated herein by reference)
Limitation of Liability Agreement (English translation) (filed on June 30, 2011 as an exhibit to the Annual
Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)(1)Limitation of Liability Agreement (filed on June 30, 2011 as an exhibit to the Annual Report on Form 20-F
(File No. 001-15270) and incorporated herein by reference)(2)Limitation of Liability Agreement (English translation) (filed on June 25, 2015 as an exhibit to the Annual
Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)(3)Subsidiaries of Nomura Holdings, Inc.—See Item 4.C. “Organizational Structure” in this annual report.
Code of Ethics of Nomura Group (English translation) (filed on June 23, 2016 as an exhibit to the Annual
Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)Certification of the chief executive officer required by 18 U.S.C. Section 1350
Certification of the chief financial officer required by 18 U.S.C. Section 1350
Consent of Ernst & Young ShinNihon LLC with respect to its report on the audit of the financial statements
included in this annual reportXBRL Instance Document
XBRL Taxonomy Extension SchemaXBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase(1) The Company and each of Takao Kusakari and Toshinori Kanemoto entered into a Limitation of Liability Agreement
substantially in the form of this exhibit.
(2) The Company and Michael Lim Choo San entered into a Limitation of Liability Agreement substantially in the form of
this exhibit.
(3) The Company and each of Hiroshi Kimura, Noriaki Shimazaki, Hisato Miyashita and Mari Sono entered into a
Limitation of Liability Agreement substantially in the form of this exhibit.

The Company has not included as exhibits certain instruments with respect to our long-term debt. The
amount of debt authorized under each such debt instrument does not exceed 10% or our total assets. We will
furnish a copy of any such instrument to the SEC upon request.
140

NOMURA HOLDINGS, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Page

Consolidated Financial Statements of Nomura Holdings, Inc.:
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-2

Consolidated Balance Sheets as of March 31, 2016 and 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-4

Consolidated Statements of Income for the Years Ended March 31, 2015, 2016 and 2017 . . . . . . . . .

F-7

Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2015, 2016
and 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-8

Consolidated Statements of Changes in Equity for the Years Ended March 31, 2015, 2016
and 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-9Consolidated Statements of Cash Flows for the Years Ended March 31, 2015, 2016 and 2017 . . . . . .

F-11

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-13

F-1

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Nomura Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Nomura Holdings, Inc. (the “Company”) as ofMarch 31, 2016 and 2017, and the related consolidated statements of income, comprehensive income, changes inequity and cash flows for each of the three years in the period ended March 31, 2017. These financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Nomura Holdings, Inc. at March 31, 2016 and 2017, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended March 31, 2017, in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), Nomura Holdings, Inc.’s internal control over financial reporting as of March 31, 2017, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated June 26, 2017 expressed an
unqualified opinion thereon.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
June 26, 2017

F-2

Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Nomura Holdings, Inc.
We have audited Nomura Holdings, Inc.’s internal control over financial reporting as of March 31, 2017, basedon criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Nomura Holdings, Inc.‘smanagement is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on theassessed risk, and performing such other procedures as we considered necessary in the circumstances. We believethat our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion, Nomura Holdings, Inc. maintained, in all material respects, effective internal control overfinancial reporting as of March 31, 2017, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated balance sheets of Nomura Holdings, Inc. as of March 31, 2016 and 2017, andthe related consolidated statements of income, comprehensive income, changes in equity, and cash flows for eachof the three years in the period ended March 31, 2017 and our report dated June 26, 2017 expressed an
unqualified opinion thereon.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
June 26, 2017

F-3

NOMURA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETSMillions of yen
March 31
2016
2017

ASSETSCash and cash deposits:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits with stock exchanges and other segregated cash . . . . . . . . . . . . . . . . . . . . . .

¥ 3,476,261
196,632
225,950¥ 2,536,840
207,792
227,456

Total cash and cash deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,898,843

2,972,088

1,605,603

1,875,828

210,844
1,156,608(3,477)

148,378
1,076,773(3,551)

Total loans and receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,969,578

3,097,428

Collateralized agreements:
Securities purchased under agreements to resell (including ¥1,098,969 million and¥1,089,000 million measured at fair value by applying the fair value option in2016 and 2017, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities borrowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,205,165
5,872,495

11,456,591
7,273,234

Total collateralized agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,077,660

18,729,825

16,379,424

15,165,310

Loans and receivables:
Loans receivable (including ¥301,766 million and ¥537,664 million measured at fairvalue by applying the fair value option in 2016 and 2017, respectively) . . . . . . . .
Receivables from customers (including ¥1,542 million and ¥1,281 million measured
at fair value by applying the fair value option in 2016 and 2017, respectively) . . .
Receivables from other than customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trading assets and private equity investments:
Trading assets (including securities pledged as collateral of ¥6,483,857 million and¥5,123,444 million in 2016 and 2017, respectively; including ¥5,761 million and¥7,334 million measured at fair value by applying the fair value option in 2016
and 2017, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments (including ¥7,145 million and ¥7,451 million measured
at fair value by applying the fair value option in 2016 and 2017, respectively) . . .

30,57827,054

16,410,002

15,192,364

355,507
870,812137,970
395,284

349,696775,025
146,730
420,116

974,5111,168,806

Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,734,084

2,860,373

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥41,090,167¥42,852,078

Total trading assets and private equity investments . . . . . . . . . . . . . . . . . . . . . . .
Other assets:
Office buildings, land, equipment and facilities (net of accumulated depreciation
and amortization of ¥402,599 million and ¥445,000 million in 2016 and 2017,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-trading debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in and advances to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (including ¥60,359 million and ¥177,726 million measured at fair value by
applying the fair value option in 2016 and 2017, respectively) . . . . . . . . . . . . . . . .

The accompanying notes are an integral part of these consolidated financial statements.
F-4

NOMURA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
Millions of yen
March 31
2016
2017

LIABILITIES AND EQUITY
Short-term borrowings (including ¥330,816 million and ¥401,300 million measured atfair value by applying the fair value option in 2016 and 2017, respectively) . . . . . . . . .
Payables and deposits:
Payables to customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables to other than customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits received at banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥662,902¥543,049

688,196
1,337,931
2,222,991

1,005,670
1,569,922
1,132,843

Total payables and deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,249,118

3,708,435

Collateralized financing:
Securities sold under agreements to repurchase (including ¥442,247 million and¥390,677 million measured at fair value by applying the fair value option in 2016
and 2017, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities loaned (including ¥129,201 million and ¥149,377 million measured atfair value by applying the fair value option in 2016 and 2017, respectively) . . . . .
Other secured borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,192,309

17,095,898

1,937,009
476,273

1,627,124
338,069

Total collateralized financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16,605,591

19,061,091

Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities (including ¥17,739 million and ¥11,202 million measured at fair value
by applying the fair value option in 2016 and 2017, respectively) . . . . . . . . . . . . . . . . .
Long-term borrowings (including ¥2,703,816 million and ¥2,562,962 million measured
at fair value by applying the fair value option in 2016 and 2017, respectively) . . . . . . .

7,499,335

8,191,794

1,200,647

1,308,510

8,129,559

7,195,408

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38,347,152

40,008,287

Commitments and contingencies (Note 20)
Equity:Nomura Holdings, Inc. (“NHI”) shareholders’ equity:
Common stock
No par value shares;
Authorized—6,000,000,000 shares in 2016 and 2017
Issued—3,822,562,601 shares in 2016 and 2017
Outstanding—3,608,391,999 shares in 2016 and 3,528,429,451 shares in 2017 . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

594,493692,706
1,516,577
44,980594,493
681,329
1,663,234
33,652

Total NHI shareholder’s equity before treasury stock . . . . . . . . . . . . . . . . . . . . .
Common stock held in treasury, at cost—214,170,602 shares in 2016 and 294,133,150
shares in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,848,756

2,972,708(148,517)(182,792)

Total NHI shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,700,239

2,789,916

Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

42,776
2,743,015

53,8752,843,791

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥41,090,167¥42,852,078

The accompanying notes are an integral part of these consolidated financial statements.
F-5

The following table presents the classification of consolidated variable interest entities’ (“VIEs”) assets andliabilities included in the consolidated balance sheets above. The assets of a consolidated VIE may only be used
to settle obligations of that VIE. Creditors do not typically have any recourse to Nomura beyond the assets heldin the VIEs. See Note 6 “Securitizations and Variable Interest Entities” for further information.
Billions of yen
March 312016
2017

Cash and cash deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading assets and private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

3
1,310
10

¥

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,323¥1,463

Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥¥Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 814

The accompanying notes are an integral part of these consolidated financial statements.
F-6

3
2
809

4
1,400
59
18
2
954

¥ 974

NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME

2015

Millions of yen
Year ended March 31
2016

2017

Revenue:Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees from investment banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset management and portfolio service fees . . . . . . . . . . . . . . . . . .
Net gain on trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on investments in equity securities . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 453,401
95,083203,387
531,337
5,502
436,766
29,410175,702¥ 431,959 ¥
118,333
229,006
354,031
13,761
440,050(20,504)
156,460

327,129
92,580216,479
475,587
1,371
441,036
7,708
153,626

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,930,588
326,4121,723,096
327,415

1,715,516
312,319

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,604,176

1,395,681

1,403,197

Non-interest expenses:
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commissions and floor brokerage . . . . . . . . . . . . . . . . . . . . . . . . . .
Information processing and communications . . . . . . . . . . . . . . . . . .
Occupancy and related depreciation . . . . . . . . . . . . . . . . . . . . . . . . .
Business development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

596,593
129,977
192,300
76,11235,230227,205

574,191
123,881
189,91078,41135,892
228,238

496,385
94,495
175,280
69,83635,111
209,295

Total non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,257,417

1,230,523

1,080,402

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

346,759

165,158

322,795

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

120,780

22,59680,229Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 225,979¥ 142,562¥ 242,566

Less: Net income attributable to noncontrolling interests . . . . . . . . . . . .

1,194

11,012

2,949

Net income attributable to NHI shareholders . . . . . . . . . . . . . . . . . . . . . .

¥ 224,785¥ 131,550¥ 239,617

Yen

Per share of common stock:
Basic— . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to NHI shareholders per share . . . . . . . . . .

¥

61.66

¥

36.53

¥

67.29

Diluted— . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to NHI shareholders per share . . . . . . . . . .

¥

60.03

¥

35.52

¥

65.65

The accompanying notes are an integral part of these consolidated financial statements.
F-7

NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions of yen
Year ended March 31
2015
2016
2017

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss):
Cumulative translation adjustments:
Cumulative translation adjustments . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥225,979¥ 142,562¥242,566

110,628(141)(68,237)(12,856)(6,764)
1,073

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

110,487(81,093)(5,691)

Defined benefit pension plans:
Pension liability adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,259(1,854)(26,074)
8,153(11,340)
3,645

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,405(17,921)(7,695)

Non-trading securities:
Net unrealized gain (loss) on non-trading securities . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,643(8,681)(1,492)
81(9,225)
2,625

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18,962(1,411)(6,600)Own credit adjustments:
Own credit adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—

—
—

(14,696)
1,963

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

——(12,733)

Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .

132,854(100,425)(32,719)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Comprehensive income attributable to noncontrolling interests . . . . .

358,833
10,945

42,137
9,346

209,847
852

Comprehensive income attributable to NHI shareholders . . . . . . . . . . . . . .

¥347,888¥ 32,791¥208,995

The accompanying notes are an integral part of these consolidated financial statements.
F-8

NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Millions of yen
Year ended March 31
2016

2015

2017

Common stock
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 594,493¥ 594,493¥ 594,493

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

594,493594,493594,493

Additional paid-in capital
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on sales of treasury stock . . . . . . . . . . . . . . . . . . . . . . . .
Issuance and exercise of common stock options . . . . . . . . . . . . . . . .
Changes in an affiliated company’s interests in its subsidiary . . . . .

683,638(2,417)2,186—

683,407
—
4,127
5,172

692,706—(11,377)—

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

683,407

692,706

681,329

Retained earnings
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of change in accounting principle(1) . . . . . . . . . .
Net income attributable to NHI shareholders . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on sales of treasury stock . . . . . . . . . . . . . . . . . . . . . . . .

1,287,003—
224,785(68,627)(5,221)

1,437,940—
131,550(46,797)(6,116)

1,516,577(19,294)
239,617(70,810)(2,856)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,437,940

1,516,577

1,663,234

Accumulated other comprehensive income (loss)
Cumulative translation adjustments
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,704
105,667

133,371(79,953)

53,418(5,651)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

133,371

53,41847,767

Defined benefit pension plans
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension liability adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(18,809)
3,405(15,404)(17,921)(33,325)(7,695)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(15,404)(33,325)(41,020)

Non-trading securities
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gain (loss) on non-trading securities . . . . . . . . . . . . .

11,741
14,031

25,772(885)

24,887(4,543)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,772

24,887

20,344

Own credit adjustments
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of change in accounting principle(1) . . . . . . . . . .
Own credit adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—

—
—
—

—
19,294(12,733)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

6,561

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

143,739

44,98033,652

F-9

NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

2015

Millions of yen
Year ended March 31
2016

2017

Common stock held in treasury
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued to employees . . . . . . . . . . . . . . . . . . . . . . . . .
Other net change in treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . .

(72,090)(104,047)3
24,226103(151,805)(20,002)1
23,296(7)(148,517)(61,338)
1
25,796
1,266

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(151,805)(148,517)(182,792)

Total NHI shareholders’equity
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,707,774

2,700,239

2,789,916

Noncontrolling interests
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of change in accounting principle(2) . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . .
Accumulated other comprehensive income (loss) attributable tononcontrolling interests
Cumulative translation adjustments . . . . . . . . . . . . . . . . . . . . .
Net unrealized gain (loss) on non-trading securities . . . . . . . . .
Purchase / sale of subsidiary shares, net . . . . . . . . . . . . . . . . . . . . . .
Other net change in noncontrolling interests . . . . . . . . . . . . . . . . . .

39,533
—
(39)
1,194

37,172—(9,978)11,012

42,776
11,330(1,781)
2,949

4,820
4,931
4,889
(18,156)(1,140)
(525)
500
5,735

(40)
(2,057)(14)712

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37,172

42,77653,875

Total equity
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,744,946¥2,743,015¥2,843,791(1) Represents the adjustment to initially apply Accounting Standards Update (“ASU”) 2016-01, “Recognition
and Measurement of Financial Assets and Financial Liabilities.”(2) Represents the adjustment to initially apply ASU 2015-02, “Amendments to the Consolidation analysis”(“ASU 2015-02”).

The accompanying notes are an integral part of these consolidated financial statements.
F-10

NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSMillions of yen
Year ended March 31
2015
2016
2017
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock option expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) loss on investments in equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates, net of dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of office buildings, land, equipment and facilities . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits with stock exchanges and other segregated cash . . . . . . . . . . . . . . . . . . . . . . . . .
Trading assets and private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities purchased under agreements to resell, net of securities sold under agreements
to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities borrowed, net of securities loaned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other secured borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and receivables, net of allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . .
Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥225,979¥

142,562¥

242,566

78,882
19,364(29,410)(34,772)
9,690
26,48979,394
16,89020,504(22,886)
1,325(58,859)

70,9288,960(7,708)(21,059)
1,339
22,52838,341(66,122)
2,917,895(1,731,133)

124,922
213,288248,495(2,279,966)(18,275)(2,854)
1,197,062
708,196(1,251,323)(221,295)(145,877)(92,713)
236,029(3,659)59,931(113,324)

1,605,658
1,762,173(192,350)(136,694)(41,838)(41,281)(37,126)(165,839)

635,593(1,706,545)(138,204)(193,786)
531,516
4,543
10,220(39,995)

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(77,028)

1,238,372

1,305,025

Cash flows from investing activities:
Payments for purchases of office buildings, land, equipment and facilities . . . . . . . . . . . . . . . .
Proceeds from sales of office buildings, land, equipment and facilities . . . . . . . . . . . . . . . . . . .
Payments for purchases of investments in equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of investments in equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in loans receivable at banks, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in non-trading debt securities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business combinations or disposals, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in investments in affiliated companies, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(209,468)
159,480(354)
6,977(49,192)
109,761(7,308)2,212
229(324,722)
282,473—899(40,767)
56,814
—
1,803
(211)

(312,880)
239,184(647)
1,998(21,322)
88,099—809(113,292)

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,337(23,711)(118,051)

Cash flows from financing activities:
Increase in long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in short-term borrowings, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in deposits received at banks, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of common stock held in treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for repurchases of common stock held in treasury . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,974,115(3,167,956)
34,041
140,571387(104,047)(55,317)

3,018,453(2,922,558)(17,395)
1,010,101
571(20,002)(82,783)

1,526,334(2,403,076)(81,964)(1,068,168)
401(61,338)(42,833)

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(178,206)

986,387(2,130,644)

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68,513(40,195)

4,249

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(174,384)
1,489,792

2,160,853
1,315,408(939,421)
3,476,261

Cash and cash equivalents at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 1,315,408¥ 3,476,261¥ 2,536,840

Supplemental information:
Cash paid during the year for—
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥364,392¥352,276¥

307,635

Income tax payments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥34,359¥118,580¥

47,482

F-11

Non cash activities—
Business acquisitions:
Assets acquired, excluding cash and cash equivalents, and debt assumed were ¥34,271 million and¥18,817 million, respectively, for the year ended March 31, 2015.

The accompanying notes are an integral part of these consolidated financial statements.
F-12

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of accounting policies:
Description of business—
Nomura Holdings, Inc. (“Company”) and its broker-dealer, banking and other financial services subsidiaries
provide investment, financing and related services to individual, institutional and government clients on a global
basis. The Company and other entities in which it has a controlling financial interest are collectively referred toas “Nomura” within these consolidated financial statements.
Nomura operates its business through various divisions based upon the nature of specific products andservices, its main client base and its management structure. Nomura reports operating results through threebusiness segments: Retail, Asset Management and Wholesale.
In its Retail segment, Nomura provides investment consultation services mainly to individual clients inJapan. In its Asset Management segment, Nomura develops and manages investment trusts, and provides
investment advisory services. In its Wholesale segment, Nomura engages in the sales and trading of debt andequity securities, derivatives, and currencies on a global basis, and provides investment banking services such as
the underwriting of debt and equity securities as well as mergers and acquisitions and financial advice.
Basis of presentation—
The accounting and financial reporting policies of the Nomura conform to accounting principles generally
accepted in the United States (“U.S. GAAP”) as applicable to broker-dealers.
These consolidated financial statements include the financial statements of the Company and other entities
in which it has a controlling financial interest. Nomura initially determines whether it has a controlling financial
interest in an entity by evaluating whether the entity is a variable interest entity (“VIE”) under Financial
Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810 “Consolidation”(“ASC 810”). VIEs are entities in which equity investors do not have the characteristics of a controlling financial
interest or which do not have sufficient equity at risk for the entity to finance its activities without additional
subordinated financial support. Nomura consolidates VIEs where Nomura is the primary beneficiary, which iswhere Nomura holds variable interests that provide power over the most significant activities of the VIE and theright to receive benefits or the obligation to absorb losses meeting a significance test, provided that Nomura is
not acting as a fiduciary for other interest holders. For certain VIEs that qualify as investment companies under
ASC 946 “Financial Services—Investment Companies” (“ASC 946”) or for which it is industry practice to apply
guidance consistent with the measurement principles in ASC 946, Nomura is the primary beneficiary when it
holds an interest that will absorb a majority of the expected losses or a majority of the expected residual returnsof the entity, or both.
For entities other than VIEs, Nomura is generally determined to have a controlling financial interest in an
entity when it owns a majority of the voting interests.
Equity investments in entities in which Nomura has significant influence over operating and financial
decisions (generally defined as a holding of 20 to 50 percent of the voting stock of a corporate entity, or at least
3 percent of a limited partnership) are accounted for under the equity method of accounting (“equity method
investments”) and reported within Other assets—Investments in and advances to affiliated companies or at fairvalue by electing the fair value option permitted by ASC 825 “Financial Instruments” (“ASC 825”) and reported
within Trading assets, Private equity investments or Other assets—Other. Other financial investments are
generally reported within Trading assets. Equity investments in which Nomura has neither control nor significant
F-13

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
influence are carried at fair value, with changes in fair value recognized through the consolidated statements ofincome or the consolidated statements of comprehensive income.
Certain entities in which Nomura has a financial interest are investment companies under ASC 946. These
entities carry all of their investments at fair value, with changes in fair value recognized through the consolidated
statements of income.
The Company’s principal subsidiaries include Nomura Securities Co., Ltd. (“NSC”), Nomura Securities
International, Inc. (“NSI”), Nomura International plc (“NIP”) and Nomura Financial Products & Services, Inc.
(“NFPS”).
All material intercompany transactions and balances have been eliminated on consolidation. Certain
reclassifications of previously reported amounts have been made to conform to the current year presentation.
Use of estimates—
In presenting these consolidated financial statements, management makes estimates regarding the valuationof certain financial instruments and investments, the outcome of litigation and tax examinations, the recovery of
the carrying value of goodwill, the allowance for doubtful accounts, the realization of deferred tax assets andother matters that affect the reported amounts of assets and liabilities as well as the disclosures in these
consolidated financial statements. Estimates, by their nature, are based on judgment and available information.
Therefore, actual results may differ from estimates which could have a material impact on these consolidated
financial statements, and it is possible that such adjustments could occur in the near term.
Fair value of financial instruments—
A significant amount of Nomura’s financial assets and financial liabilities are carried at fair value, withchanges in fair value recognized through the consolidated statements of income or the consolidated statements ofcomprehensive income. Use of fair value is either specifically required under U.S. GAAP or Nomura makes anelection to use fair value for certain eligible items under the fair value option.
Other financial assets and financial liabilities are carried at fair value on a nonrecurring basis, where theprimary measurement basis is not fair value. Fair value is only used in specific circumstances after initialrecognition, such as to measure impairment.
In both cases, fair value is generally determined in accordance with ASC 820 “Fair Value Measurements
and Disclosures” (“ASC 820”) which defines fair value as the amount that would be exchanged to sell a financial
asset or transfer a financial liability in an orderly transaction between market participants at the measurement
date. It assumes that the transaction occurs in Nomura’s principal market, or in the absence of a principal market,
the most advantageous market for the relevant financial asset or financial liability. See Note 2 “Fair value
measurements” for further information regarding how Nomura estimates fair value for specific types of financial
instruments used in the ordinary course of business.
The fair value of financial assets and financial liabilities of consolidated VIEs which meet the definition ofcollateralized financing entities are both measured using the more observable fair value of the financial assets
and financial liabilities.

F-14

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Transfers of financial assets—
Nomura accounts for the transfer of a financial asset as a sale when Nomura relinquishes control over theasset by meeting the following conditions: (a) the asset has been isolated from the transferor (even in bankruptcy
or other receivership), (b) the transferee has the right to pledge or exchange the asset received, or if the transferee
is an entity whose sole purpose is to engage in securitization or asset-backed financing activities, if, the holdersof its beneficial interests have the right to pledge or exchange the beneficial interests held and (c) the transferor
has not maintained effective control over the transferred asset.
In connection with its securitization activities, Nomura utilizes special purpose entities (“SPEs”) tosecuritize commercial and residential mortgage loans, government and corporate securities and other types offinancial assets. Nomura’s involvement with SPEs includes structuring and underwriting, distributing and sellingdebt instruments and beneficial interests issued by SPEs to investors. Nomura derecognizes financial assets
transferred in securitizations provided that Nomura has relinquished control over such assets and does notconsolidate the SPE. Nomura may obtain or retain an interest in the financial assets, including residual interestsin the SPEs dependent upon prevailing market conditions. Any such interests are accounted for at fair value andreported within Trading assets in the consolidated balance sheets with the change in fair value reported within
Revenue—Net gain on trading in the consolidated statements of income.
Foreign currency translation—
The financial statements of the Company’s subsidiaries are measured using their functional currency whichis the currency of the primary economic environment in which the entity operates. All assets and liabilities ofsubsidiaries which have a functional currency other than Japanese yen are translated into Japanese yen at
exchange rates in effect at the balance sheet date, and all revenue and expenses are translated at the averageexchange rates for the respective years and the resulting translation adjustments are accumulated and reported
within Accumulated other comprehensive income (loss) in NHI shareholders’ equity.
Foreign currency assets and liabilities are translated at exchange rates in effect at the balance sheet date andthe resulting translation gains or losses are credited or charged to the consolidated statements of income.
Revenue from services provided to clients—
Nomura earns revenue through fees and commissions from providing financial services to clients across all
three business divisions. These services primarily include trade execution and clearing services, financial
advisory services, asset management services, underwriting services, syndication services and distribution
services.
Revenues are recognized when the fees and commissions have been earned and are realizable which iseither at a specific point in time when Nomura has satisfied its obligations to provide the service to the client orover a period of time where Nomura satisfies its obligation to provide services over time. Fees and commissions
may be fixed amounts or variable amounts where the amount to be received is uncertain. Such uncertainty may
arise because the amount Nomura is entitled to is based on a variable amount, is dependent upon a contingent
event occurring or not occurring, or because it may be reduced by amounts to be repaid to the client. Variable
fees and commissions are only recognized when the underlying uncertainty is resolved.
Revenue—Commissions includes amounts charged for executing brokerage transactions accrued on a tradedate basis and are included in current period earnings. Revenue—Fees from investment banking includes
underwriting fees, syndication fees and other financial advisory fees. Underwriting and syndication fees are
F-15

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
recorded when the underlying underwriting or syndication transactions are completed. Financial advisory fees arerecognized when the related services are performed or upon completion of the underlying transaction. Revenue—
Asset management and portfolio service fees are accrued over the period that the related services are provided orwhen specified performance requirements are met.
Trading assets and trading liabilities—
Trading assets and Trading liabilities primarily comprise debt securities, equity securities and derivatives
which are recognized on the consolidated balance sheets on a trade date basis and loans which are recognized on
the consolidated balance sheets on a settlement date basis. Trading assets and liabilities are carried at fair value
and changes in fair value are generally reported within Revenue—Net gain on trading in the consolidated
statements of income.
Certain trading liabilities are held to economically hedge the price risk of investments in equity securities
held for operating purposes. Changes in fair value of these trading liabilities are reported within Revenue—Gain(loss) on investments in equity securities in the consolidated statements of income.
Collateralized agreements and collateralized financing—
Collateralized agreements consist of reverse repurchase agreements disclosed as Securities purchased underagreements to resell and securities borrowing transactions disclosed as Securities borrowed. Collateralized
financing consists of repurchase agreements disclosed as Securities sold under agreements to repurchase,
securities lending transactions disclosed as Securities loaned and certain other secured borrowings.
Reverse repurchase and repurchase agreements principally involve the buying or selling of securities underagreements with clients to resell or repurchase these securities to or from those clients, respectively. Thesetransactions are generally accounted for as collateralized agreements or collateralized financing transactions andare recognized in the consolidated balance sheets at the amount for which the securities were originally acquiredor sold. Certain reverse repurchase and repurchase agreements are carried at fair value through election of the fairvalue option. No allowance for credit losses is generally recognized against reverse repurchase agreements due tothe strict collateralization requirements.
Repurchase agreements where the maturity of the security transferred as collateral matches the maturity of
the repurchase agreement (“repurchase-to-maturity transactions”) are accounted for as secured borrowing
transactions under ASC 860.
Nomura also enters into Gensaki Repo transactions which are the standard type of repurchase agreement
used in Japanese financial markets. Gensaki Repo transactions contain margin requirements, rights of security
substitution, and certain restrictions on the client’s right to sell or repledge the transferred securities. Gensaki
Repo transactions are accounted for as collateralized agreements or collateralized financing transactions and arerecognized on the consolidated balance sheets at the amount that the securities were originally acquired or sold.
Reverse repurchase agreements and repurchase agreements accounted for as collateralized agreements andcollateralized financing transactions, respectively, entered into with the same counterparty and documented undera master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by
ASC 210-20 “Balance Sheet—Offsetting” (“ASC 210-20”) are met. These criteria include requirements aroundthe maturity of the transactions, the underlying systems on which the collateral is settled, associated banking
arrangements and the legal enforceability of close-out and offsetting rights under the master netting agreement.
F-16

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Securities borrowing and lending transactions are generally accounted for as collateralized agreements andcollateralized financing transactions, respectively. These transactions are generally cash collateralized and arerecognized on the consolidated balance sheets at the amount of cash collateral advanced or received. No
allowance for credit losses is generally recognized against securities borrowing transactions due to the strict
collateralization requirements.
Securities borrowing and lending transactions accounted for as collateralized agreements and collateralized
financing transactions, respectively, entered into with the same counterparty and documented under a masternetting agreement are also offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20 are met.
Other secured borrowings consist primarily of secured borrowings from financial institutions and central
banks in the inter-bank money market, and are carried at contractual amounts due.
Trading balances of secured borrowings consist of liabilities related to transfers of financial assets that are
accounted for as secured financing transactions rather than sales under ASC 860 and are reported in the
consolidated balance sheets within Long-term borrowings. The fair value option is generally elected for thesetransactions, which are carried at fair value on a recurring basis. See Note 6 “Securitizations and Variable
Interest Entities” and Note 10 “Borrowings” for further information regarding these transactions.
All Nomura-owned securities pledged to counterparties where the counterparty has the right to sell or
repledge the securities, including collateral transferred under Gensaki Repo transactions, are reported
parenthetically within Trading assets as Securities pledged as collateral in the consolidated balance sheets.
See Note 4 “Collateralized transactions” for further information.
Derivatives—
Nomura uses a variety of derivative financial instruments, including futures, forwards, swaps and options,for both trading and non-trading purposes. All freestanding derivatives are carried at fair value in the
consolidated balance sheets and reported within Trading assets or Trading liabilities depending on whether fairvalue at the balance sheet date is positive or negative, respectively. Certain derivatives embedded in hybrid
financial instruments such as structured notes and certificates of deposit are bifurcated from the host contract andare also carried at fair value in the consolidated balance sheets and reported within Short-term borrowings orLong-term borrowings depending on the maturity of the underlying host contract.
Changes in fair value are recognized either through the consolidated statements of income or the
consolidated statements of comprehensive income depending on the purpose for which the derivatives are used.
Derivative assets and liabilities with the same counterparty documented under a master netting agreement
are offset in the consolidated balance sheets where the specific criteria defined by ASC 210-20 and ASC 815“Derivatives and Hedging” (“ASC 815”) are met. These criteria include requirements around the legal
enforceability of such close-out and offset rights under the master netting agreement. In addition, fair value
amounts recognized for the right to reclaim cash collateral (a receivable) and the obligation to return cash
collateral (a payable) are also offset against net derivative liabilities and net derivative assets, respectively, wherecertain additional criteria are met.
Exchange traded and centrally cleared OTC derivatives typically involve daily variation margin payments
and receipts which reflect changes in the fair value of the related derivative. Such variation margin amounts areaccounted for as either a partial settlement of the derivative or as a separate cash collateral receivable or payabledepending on the legal form of the arrangement.
F-17

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Trading
Derivative financial instruments used for trading purposes, including bifurcated embedded derivatives, arecarried at fair value with changes in fair value reported in the consolidated statements of income within
Revenue—Net gain on trading.
Non-trading
In addition to its trading activities, Nomura uses derivative financial instruments for other than trading
purposes such as to manage risk exposures arising from recognized assets and liabilities, forecasted transactions
and firm commitments. Certain derivatives used for non-trading purposes are formally designated as fair value
and net investment hedges under ASC 815.
Nomura designates certain derivative financial instruments as fair value hedges of interest rate risk andforeign exchange risk arising from specific financial liabilities and foreign currency denominated non-trading
debt securities, respectively. These derivatives are effective in reducing the risk associated with the exposure
being hedged and they are highly correlated with changes in the fair value of the underlying hedged item, both atinception and throughout the life of the hedge contract. Changes in fair value of the hedging derivatives arereported together with those of the hedged financial liabilities through the consolidated statements of income
within Interest expense and Revenue—Other, respectively.
Derivative financial instruments designated as hedges of the net investment in foreign operations are linked
to specific subsidiaries with non-Japanese yen functional currencies. When determining the effectiveness of net
investment hedges, the effective portion of the change in fair value of the hedging derivative is determined bychanges in spot exchange rates and is reported through NHI shareholders’ equity within Accumulated othercomprehensive income (loss). The change in fair value of the hedging derivatives attributable to changes in the
difference between the forward rate and spot rate is excluded from the measure of hedge effectiveness and isreported in the consolidated statements of income within Revenue—Other.
See Note 3 “Derivative instruments and hedging activities” for further information.
Loans receivable—
Loans receivable are loans which management intends to hold for the foreseeable future. Loans receivable
are either carried at fair value or at amortized cost. Interest earned on loans receivable is generally reported in the
consolidated statements of income within Revenue—Interest and dividends.
Loans receivable carried at fair value
Certain loans which are risk managed on a fair value basis are carried at fair value through election of thefair value option. Nomura makes this election to mitigate volatility in the consolidated statements of income
caused by the difference in measurement basis that would otherwise exist between the loans and the derivatives
used to risk manage those loans. Changes in the fair value of loans receivable carried at fair value are reported in
the consolidated statements of income within Revenue—Net gain on trading.
Loans receivable carried at amortized cost
Loans receivable which are not carried at fair value are carried at amortized cost. Amortized cost represents
cost adjusted for deferred fees and direct costs, unamortized premiums or discounts on purchased loans and after
deducting any applicable allowance for credit losses.
F-18

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Loan origination fees, net of direct origination costs, are amortized to Revenue—Interest and dividends as an
adjustment to yield over the life of the loan. Net unamortized deferred fees and costs were immaterial as ofMarch 31, 2016 and March 31, 2017.
See Note 7 “Financing receivables” for further information.
Other receivables—
Receivables from customers include amounts receivable on client securities transactions and Receivablesfrom other than customers include amounts receivable for securities failed to deliver, margin deposits, cash
collateral receivables for derivative transactions, receivables for commissions, and net receivables arising fromunsettled securities transactions. The net receivable arising from unsettled securities transactions reported within
Receivables from other than customers was ¥161,651 million and ¥82,672 million as of March 31, 2016 andMarch 31, 2017, respectively.
These amounts are carried at contractual amounts due less any applicable allowance for credit losses whichreflects management’s best estimate of probable losses incurred within these receivables which have been
specifically identified as impaired. The allowance for credit losses is reported in the consolidated balance sheets
within Allowance for doubtful accounts.
Loan commitments—
Unfunded loan commitments written by Nomura are accounted for as either off-balance sheet instruments,
or are carried at fair value on a recurring basis either as trading instruments or through election of the fair value
option.
These loan commitments are generally accounted for in a manner consistent with the accounting for the loan
receivable upon funding. Where the loan receivable will be classified as a trading asset or will be elected for thefair value option, the loan commitment is also generally held at fair value, with changes in fair value reported in
the consolidated statements of income within Revenue—Net gain on trading. Loan commitment fees arerecognized as part of the fair value of the commitment.
For loan commitments where the loan will be held for the foreseeable future, Nomura recognizes anallowance for credit losses which is reported within Other liabilities—other in the consolidated balance sheets
which reflects management’s best estimate of probable losses incurred within the loan commitments which havebeen specifically identified as impaired. Loan commitment fees are generally deferred and recognized over theterm of the loan when funded as an adjustment to yield. If drawdown of the loan commitment is consideredremote, loan commitment fees are recognized over the commitment period as service revenue.
Payables and deposits—
Payables to customers include amounts payable on client securities transactions and are generally measured
at contractual amounts due.
Payables to other than customers include payables to brokers and dealers for securities failed to receive,
cash collateral payable for derivative transactions, certain collateralized agreements and financing transactions
and net payables arising from unsettled securities transactions. Amounts are measured at contractual amounts
due.
F-19

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deposits received at banks represent amounts held on deposit within Nomura’s banking subsidiaries and aremeasured at contractual amounts due.
Office buildings, land, equipment and facilities—
Office buildings, land, equipment and facilities, held for use by Nomura are stated at cost, net ofaccumulated depreciation and amortization, except for land, which is stated at cost. Significant renewals andadditions are capitalized at cost. Maintenance, repairs and minor renewals are expensed as incurred in the
consolidated statements of income.
The following table presents a breakdown of Office buildings, land, equipment and facilities as of March 31,
2016 and 2017.
Millions of yen
March 312016
2017

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 80,031
99,40027,380147,235
1,461¥ 78,365
94,62639,062
137,537
106

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥355,507¥349,696

Depreciation and amortization charges of assets which are owned by Nomura are generally computed using
the straight-line method and recognized over the estimated useful lives of each asset. Depreciation charges ofassets which are leased by Nomura under agreements which are classified as capital leases under ASC 840“Leases” (“ASC 840”) are generally recognized over the term of the lease. The estimated useful life of an asset
takes into consideration technological change, normal deterioration and actual physical usage by Nomura.
Leasehold improvements are depreciated over the shorter of their useful life or the term of the lease.
The estimated useful lives for significant asset classes are as follows:
Office buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 to 50 years
2 to 20 years
Up to 5 years

Depreciation and amortization charges of both owned and capital lease assets are reported within
Non-interest expenses—Information processing and communications in the amount of ¥59,153 million,¥61,906 million, ¥56,186 million, and in Non-interest expenses—Occupancy and related depreciation in theamount of ¥19,729 million, and ¥17,488 million, and ¥14,742 million for the years ended March 31, 2015, 2016
and 2017, respectively.
Leases that involve real estate are classified as either operating or capital leases in accordance with ASC
840. Rent expense relating to operating leases is recognized over the lease term on a straight-line basis. If thelease is classified as a capital lease, Nomura recognizes the real estate as an asset on the consolidated balance
sheets together with a lease obligation. The real estate is initially recognized at the lower of its fair value or
present value of minimum lease payments, and subsequently depreciated over its useful life on a straight-line
basis. Where Nomura has certain involvement in the construction of real estate subject to a lease, Nomura is
F-20

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
deemed the owner of the construction project and recognizes the real estate on the consolidated balance sheets
until construction is completed. At the end of the construction period the real estate is either derecognized orcontinues to be recognized on the consolidated balance sheets in accordance with ASC 840, depending on theextent of Nomura’s continued involvement with the real estate.
Long-lived assets, excluding goodwill and indefinite-lived intangible assets, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If theestimated future undiscounted cash flows generated by the asset is less than the carrying amount of the asset, aloss is recognized to the extent that the carrying value exceeds its fair value.
Investments in equity securities—
Nomura holds minority stakes in the equity securities of unaffiliated Japanese financial institutions andcorporations in order to promote existing and potential business relationships. These companies often have
similar investments in Nomura. Such cross-holdings are a customary business practice in Japan and provide away for companies to manage shareholder relationships.
These investments, which Nomura refers to as being held for operating purposes, are carried at fair value
and reported within Other assets—Investments in equity securities in the consolidated balance sheets, withchanges in fair value reported within Revenue—Gain (loss) on investments in equity securities in the consolidated
statements of income. These investments comprise listed and unlisted equity securities in the amounts of¥99,203 million and ¥38,767 million, respectively, as of March 31, 2016 and ¥107,800 million and¥38,930 million, respectively, as of March 31, 2017.
Other non-trading debt and equity securities—
Certain non-trading subsidiaries within Nomura, including an insurance subsidiary, hold debt securities andminority stakes in equity securities for non-trading purposes. Non-trading securities held by non-trading
subsidiaries are carried at fair value and reported within Other assets—Non-trading debt securities and Other
assets—Other in the consolidated balance sheets with changes in fair value reported within Revenue—Other inthe consolidated statements of income. Non-trading securities held by the insurance subsidiary are also carried atfair value within Other assets—Non-trading debt securities and Other assets—Other in the consolidated balance
sheets with unrealized changes in fair value generally reported net-of-tax within Other comprehensive income(loss) in the consolidated statements of comprehensive income. Changes in fair value of non-trading debt
securities designated as foreign currency fair value hedges attributable to the risk being hedged are reported
within Revenue—Other in the consolidated statements of income with other unrealized changes in fair value
reported net-of-tax within Other comprehensive income (loss). Realized gains and losses on non-trading
securities are reported within Revenue—Other in the consolidated statements of income.
Where the fair value of non-trading securities held by Nomura’s insurance subsidiary has declined below
amortized cost, the securities are assessed to determine whether the decline in fair value is other-than-temporary
in nature. Nomura considers quantitative and qualitative factors including the length of time and extent to which
fair value has been less than amortized cost, the financial condition and near-term prospects of the issuer and
Nomura’s intent and ability to hold the securities for a period of time sufficient to allow for any anticipated
recovery in fair value. If an other-than-temporary impairment loss exists, for equity securities, the security is
written down to fair value, with the entire difference between fair value and amortized cost reported within
Revenue—Other in the consolidated statements of income. For debt securities, an other-than-temporary
impairment loss is also reported within Revenue—Other in the consolidated statements of income if Nomura
intends to sell the debt security or it is more likely than not that Nomura will be required to sell the debt security
F-21

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
before recovery of amortized cost. If Nomura does not intend to sell the debt security and it is not more likely
than not that Nomura will be required to sell the debt security, only the credit loss component of an other-thantemporary impairment loss is reported in the consolidated statements of income and any non-credit loss
component reported within Other comprehensive income (loss) in the consolidated statements of comprehensive
income.
See Note 5 “Non-trading securities” for further information.
Short-term and long-term borrowings—
Short-term borrowings are defined as borrowings which are due on demand, which have a contractual
maturity of one year or less at issuance date, or which have a longer contractual maturity but which containfeatures outside of Nomura’s control that allows the investor to demand redemption within one year fromoriginal issuance date. Short-term and long-term borrowings primarily consist of commercial paper, bankborrowings, and certain structured notes issued by Nomura and SPEs consolidated by Nomura, and financial
liabilities recognized in transfers of financial assets which are accounted for as financings rather than sales under
ASC 860 (“secured financing transactions”). Of these financial liabilities, certain structured notes and secured
financing transactions are accounted for at fair value on a recurring basis through election of the fair value
option. Other short and long-term borrowings are carried at amortized cost.
Structured notes are debt securities which contain embedded features (often meeting the accounting
definition of a derivative) that alter the return to the investor from simply receiving a fixed or floating rate ofinterest to a return that depends upon some other variable(s) such as an equity or equity index, commodity price,foreign exchange rate, credit rating of a third party or more complex interest rate calculation.
All structured notes issued by Nomura on or after April 1, 2008 are carried at fair value on a recurring basis
through election of the fair value option. This blanket election for structured notes is made primarily to mitigate
the volatility in the consolidated statements of income caused by differences in the measurement basis forstructured notes and the derivatives used to risk manage those positions and to generally simplify the accounting
Nomura applies to these financial instruments.
Certain structured notes issued prior to April 1, 2008 were already measured at fair value but others
continue to be accounted for by Nomura by bifurcating the embedded derivative from the associated debt hostcontract. The embedded derivative is accounted for at fair value and the debt host contract is accounted for atamortized cost.
Changes in the fair value of structured notes elected for the fair value option and bifurcated embedded
derivatives are reported within Revenue—Net gain on trading in the consolidated statements of income.
See Note 10 “Borrowings” for further information.
Income taxes—
Deferred tax assets and liabilities are recognized to reflect the expected future tax consequences of operating
loss carryforwards, tax credit carryforwards and temporary differences between the carrying amounts forfinancial reporting purposes and the tax bases of assets and liabilities based upon enacted tax laws and tax rates.
Nomura recognizes deferred tax assets to the extent it believes that it is more likely than not that a benefit will be
realized. A valuation allowance is established against deferred tax assets for tax benefits available to Nomura thatare not deemed more likely than not to be realized.
F-22

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred tax assets and deferred tax liabilities that relate to the same tax-paying component within aparticular tax jurisdiction are offset in the consolidated balance sheets. Net deferred tax assets and net deferred
tax liabilities are reported within Other assets—Other and Other liabilities in the consolidated balance sheets.
Nomura recognizes and measures unrecognized tax benefits based on Nomura’s estimate of the likelihood,based on technical merits, that tax positions will be sustained upon examination based on the facts andcircumstances and information available at the end of each period. Nomura adjusts the level of unrecognized tax
benefits when there is more information available, or when an event occurs requiring a change. The reassessmentof unrecognized tax benefits could have a material impact on Nomura’s effective tax rate in the period in which it
occurs.
Nomura recognizes income tax-related interest and penalties within Income tax expense in the consolidated
statements of income.
See Note 15 “Income taxes” for further information.
Stock-based and other compensation awards—
Stock-based awards issued by Nomura to senior management and other employees are classified as either
equity or liability awards depending on the terms of the award.
Stock-based awards such as Stock Acquisition Rights (“SARs”) which are expected to be settled by thedelivery of the Company’s common stock are classified as equity awards. For these awards, total compensation
cost is generally fixed at the grant date and measured using the grant-date fair value of the award, net of any
amount the employee is obligated to pay and estimated forfeitures.
Stock-based awards such as Notional Stock Units (“NSUs”) and Collared Notional Stock Units (“CSUs”)
which are expected to be settled in cash are classified as liability awards. Other awards such as Notional Index
Units (“NIUs”) which are linked to a world stock index quoted by Morgan Stanley Capital International andwhich are expected to be cash settled are also effectively classified as liability awards. Liability awards are
remeasured to fair value at each balance sheet date, net of estimated forfeitures with the final measurement of
cumulative compensation cost equal to the settlement amount.
For both equity and liability awards, fair value is determined either by using option pricing models, themarket price of the Company’s common stock or the price of the third party index, as appropriate. Compensation
cost is recognized in the consolidated statements of income over the requisite service period, which generally isequal to the contractual vesting period. Where an award has graded vesting, compensation expense is recognizedusing the accelerated recognition method.
Certain deferred compensation awards granted since May 2013 include “Full Career Retirement” (“FCR”)
provisions which permit recipients of the awards to continue to vest in the awards upon voluntary termination or
by claiming FCR during a pre-defined election window if certain criteria based on corporate title and length ofservice within Nomura are met. The requisite service period for these awards ends on the earlier of thecontractual vesting date and the date that the recipients become eligible for or claim FCR.
See Note 13 “Deferred compensation plans” for further information.

F-23

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Earnings per share—
The computation of basic earnings per share is based on the weighted average number of shares outstanding
during the year. Diluted earnings per share reflects the assumed conversion of all dilutive securities based on themost advantageous conversion rate or exercise price available to the investors, and assuming conversion of
convertible debt under the if-converted method.
See Note 11 “Earnings per share” for further information.
Cash and cash equivalents—
Nomura defines cash and cash equivalents as cash on hand and demand deposits with banks.
Goodwill and intangible assets—
Goodwill is recognized upon completion of a business combination as the difference between the purchaseprice and the fair value of the net assets acquired. Subsequent to initial recognition, goodwill is not amortized but
is tested for impairment at a reporting unit level during the fourth quarter of each fiscal year, or more frequently
during earlier interim periods if events or circumstances indicate there may be impairment. Nomura’s reporting
units are at one level below its business segments.
Nomura tests goodwill of each separate reporting unit by initially qualitatively assessing whether events andcircumstances indicate that it is more likely than not (i.e. greater than 50%) that a reporting unit’s fair value isless than its carrying amount. If such assessment indicates fair value is not less than the carrying value, thereporting unit is deemed not to be impaired and no further analysis is required. If it is more likely than not thatthe fair value of the reporting unit is below its carrying value, a quantitative two-step impairment test is thenperformed.
In the first step, the current estimated fair value of the reporting unit is compared with its carrying value,
including goodwill. If the fair value is less than the carrying value, then a second step is performed. In the second
step, the implied current fair value of the reporting unit’s goodwill is determined by comparing the fair value ofthe reporting unit to the fair value of the net assets of the reporting unit, as if the reporting unit were being
acquired in a business combination. An impairment loss is recognized if the carrying value of goodwill exceeds
its implied current fair value.
Intangible assets not subject to amortization (“indefinite-lived intangible assets”) are tested for impairment
on an individual asset basis during the fourth quarter of each fiscal year, or more frequently during earlier interim
periods if events or circumstances indicate there may be impairment. Similar to goodwill, Nomura tests anindefinite-lived intangible asset by initially qualitatively assessing whether events or circumstances indicate that
it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If suchassessment indicates fair value is not less than the carrying value, the intangible asset is deemed not to be
impaired and no further analysis is required. If it is more likely than not that the fair value of the intangible asset
is below its carrying value, the current estimated fair value of the intangible asset is compared with its carrying
value. An impairment loss is recognized if the carrying value of the intangible asset exceeds its estimated fairvalue.
Intangible assets with finite lives (“finite-lived intangible assets”) are amortized over their estimated useful
lives and tested for impairment either individually or with other assets (“asset group”) when events andcircumstances indicate that the carrying value of the intangible asset (or asset group) may not be recoverable.
F-24

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A finite-lived intangible asset is impaired when its carrying amount or the carrying amount of the asset
group exceeds its fair value. An impairment loss is recognized only if the carrying amount of the intangible asset(or asset group) is not recoverable and exceeds its fair value.
For both goodwill and intangible assets, to the extent an impairment loss is recognized, the loss establishes a
new cost basis for the asset which cannot be subsequently reversed.
See Note 9 “Other assets—Other / Other liabilities” for further information.
Nomura’s equity method investments are tested in their entirety for other-than-temporary impairment when
there is an indication of impairment. The underlying assets associated with the equity method investments,
including goodwill, are not tested separately for impairment.
Restructuring costs—
Costs associated with an exit activity are recognized at fair value in the period in which the liability is
incurred. Such costs include one-time termination benefits provided to employees, costs to terminate certain
contracts and costs to relocate employees. Termination benefits provided to employees as part of ongoing benefit
arrangements are recognized as liabilities at the earlier of the date an appropriately detailed restructuring plan isapproved by regional executive management or the terms of the involuntary terminations are communicated to
employees potentially affected. Contractual termination benefits included in an employee’s contract of
employment that is triggered by the occurrence of a specific event are recognized during the period in which it isprobable that Nomura has incurred a liability and the amount of the liability can be reasonably estimated. A onetime termination benefit is established by a plan of termination that applies to a specified termination event and isrecognized when an appropriately detailed restructuring plan is approved by regional executive management andthe terms of the involuntary terminations are communicated to those employees potentially affected by the
restructuring.
See Note 14 “Restructuring initiatives” for further information.
Employee benefit plans—
Nomura provides certain eligible employees with various benefit plans, including pensions and other postretirement benefits. These benefit plans are classified as either defined benefit plans or defined contributionplans.
Plan assets and benefit obligations, as well as the net periodic benefit cost of a defined benefit pension or
post-retirement benefit plan, are recognized based on various actuarial assumptions such as discount rates,
expected return on plan assets and future compensation levels at the balance sheet date. Actuarial gains andlosses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets andunrecognized prior service costs or credits are amortized to net periodic benefit cost on a straight-line basis over
the average remaining service life of active employees expected to receive benefits. The overfunded orunderfunded status of a plan is reported within Other assets—Other or Other liabilities in the consolidatedbalance sheets, and changes in funded status are reflected in net periodic benefit cost and Other comprehensive
income (loss) on a net-of-tax basis in the consolidated statements of comprehensive income.
The net periodic pension and other benefit cost of defined contribution plans is recognized within
Compensation and benefits in the consolidated statements of income when the employee renders service to
Nomura, which generally coincides with when contributions to the plan are made.
See Note 12 “Employee benefit plans” for further information.
F-25

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
New accounting pronouncements adopted during the current year—
The following table presents a summary of new accounting pronouncements relevant to Nomura which havebeen adopted during the year ended March 31, 2017:

Pronouncement

ASU 2015-02,“Amendments to theConsolidation Analysis”

ASU 2014-13,“Measuring the
Financial Assets and the
Financial Liabilities ofa Consolidated
Collateralized
Financing Entity”

Summary of new guidance•

Simplifies complex consolidation
guidance in ASC 810 “Consolidation” byeliminating the legacy variable interest
consolidation model applied to certain
investment companies, money market
funds, qualifying real estate funds andsimilar entities.

•

Provides a new consolidation exception
for certain registered money market funds
and similar entities.

•

Modifies the evaluation of whether
limited partnerships and similar legal
entities are variable interest entities orvoting interest entities under ASC 810.

•

Modifies how fee arrangements andrelated party relationships should beconsidered in determining whether avariable interest entity should be
consolidated.

•

Requires new footnote disclosures
regarding financial support arrangementswith certain registered money market
funds and similar entities to which the
exception from consolidation has been
applied.

•Provides an alternative method formeasuring both financial assets andliabilities of consolidated collateralized
financing entity by using either the fairvalue of the financial assets or financial
liabilities, whichever is more observable.

•

Requires certain new qualitative footnote
disclosures where the alternative method
is applied.

F-26

Actual adoption
date and methodof adoption

Effect on these
consolidated
statements

Modified
retrospective
adoption from
April 1, 2016.

Nomuraconsolidated
certain investment
funds, which
increased total
assets and total
equity by ¥11,330
million upon
adoption as ofApril 1, 2016.
No impact on
Nomura’s results ofoperations.

Modified
retrospective
adoption from
April 1, 2016.

No material impact.

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Pronouncement

Summary of new guidance

Actual adoption
date and methodof adoption

Effect on these
consolidated
statements

Fullretrospective
adoption from
April 1, 2016.

No material impact.

ASU 2015-07,“Disclosures forinvestments in certain
entities that calculate
net asset value pershare (or Its
Equivalents)”•

Removes the requirement to categorize
investments for which fair value isestimated using net asset value as apractical expedient within the fair value
hierarchy.

•

Revises certain other related fair value
footnote disclosure requirements.

ASU 2016-01,“Recognition andMeasurement of
Financial Assets andFinancial Liabilities”—Presentation of own
credit adjustments•

Requires unrealized changes in the fairvalue of financial liabilities elected for thefair value option attributable to
instrument-specific credit risk (“owncredit adjustments”) to be presented
separately in other comprehensive
income.

Modified
retrospective
adoption from
April 1, 2016.

Significant
reclassificationfrom Retained
earnings to
Accumulated othercomprehensive
income (loss) on
adoption date andsignificant own
credit adjustments
recognized throughothercomprehensive
income rather thanearnings during theyear ended
March 31,2017.(1)ASU 2015-03,“Simplifying the
Presentation of Debt
Issuance Costs”•

Requires issuance costs related to arecognized debt liability be presented as adirect deduction from the carrying amountof the related debt liability rather than aseparate asset.

Fullretrospective
adoption from
April 1, 2016.

No material impact.

ASU 2015-15,“Presentation and
Subsequent
Measurement of Debt
Issuance Costs
Associated with Line-ofCredit Arrangements”•

Clarifies the SEC staff’s position onpresentation and measurement of debt
issuance costs associated with line-ofcredit arrangements which are permitted
to be presented as an asset andsubsequently amortized ratably over theterm of the related line-of-credit
arrangements.

Prospective
adoption from
April 1, 2016.

No material impact.

ASU 2014-12,“Accounting for
Share-Based Payments
When the Terms of anAward Provide That a
Performance Target
Could be Achieved after
the Requisite Service
Period”•

Clarifies a performance target that affects
vesting and that could be achieved after
the requisite service period is accounted
for as a performance condition.

Prospective
adoption from
April 1, 2016.

No material impact.

F-27

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Pronouncement

Summary of new guidance

Actual adoption
date and methodof adoption

Effect on these
consolidated
statements

ASU 2015-05,“Customer’s
Accounting for Fees
Paid in a Cloud
Computing
Arrangement”•

Provides guidance on evaluating theaccounting for fees paid in a cloudcomputing arrangement.

Prospective
adoption from
April 1, 2016.

No material impact.

ASU 2015-16,“Simplifying the
Accounting for
Measurement-Period
Adjustments”•

Eliminates the requirement for an
acquirer in a business combination toaccount for adjustments made toprovisional amounts retrospectively.

Prospective
adoption from
April 1, 2016.

No material impact.

•

New footnote disclosure requirement forany measurement-period adjustments
identified during the reporting period.

(1) A cumulative catch up adjustment, net of taxes, of ¥19,294 million was recognized as of April 1, 2016 toreclassify cumulative unrealized gains arising from own credit adjustments from Retained earnings to
Accumulated other comprehensive income (loss). During the year, net losses, net of taxes, of¥12,147 million were recognized through other comprehensive income rather than earnings. See Note 16“Other comprehensive income (loss)” for further information regarding movements in own credit
adjustments during the year.

F-28

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Future accounting developments—
The following table presents a summary of new authoritative accounting pronouncements relevant to
Nomura which will or may potentially be adopted during the year ending March 31, 2018:

Pronouncement

Summary of new guidanceExpected
adoption dateand method of
adoption

Effect on these
consolidated
statements

ASU 2016-05,“Effect ofDerivative Contract
Novations on Existing
Hedge Accounting
Relationships”•

Clarifies how a change in counterparty of a
derivative designated as hedging
instrument in an existing hedging
relationship affects the hedging relationshipunder ASC 815.

Prospective ormodified
retrospective
adoption from
April 1, 2017.

No material impact
expected.

ASU 2016-07,“Simplifying theTransition Method of
Equity Method of
Accounting”•

Simplifies investor’s accounting for equity
method investments as a result of anincrease in ownership level or degree of
influence over the investee from priorperiod.

Prospective
adoption from
April 1, 2017.

No material impact
expected.

•

Requires prospective application of equity
method accounting from the date when an
equity investment qualifies for equity
method of accounting.

•Allows an accounting policy election to bemade to either account for forfeitures when
they occur or to include estimatedforfeitures in compensation expense
recognized during a reporting period.

No material impact
expected.

•

Requires all associated excess tax benefits
to be recognized as an income tax benefit
through earnings rather than as additional
paid-in capital with excess tax deficiencies
recognized as income tax expense rather
than as an offset of excess tax benefits, if
any.

Modified
retrospective
or prospective
adoption from
April 1, 2017
depending on
the nature of
the accountingchange.

•Requires recognition of excess tax benefits
regardless of whether the benefit reduces
taxes payable in the current reporting
period.

ASU 2016-09“Improvements to
Employee ShareBased Payment
Accounting”

F-29

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents a summary of new authoritative accounting pronouncements relevant to
Nomura which will be adopted on or after April 1, 2018 and which may have a material impact on these financial
statements:

Pronouncement

ASU 2016-01,“Recognition andMeasurement of
Financial Assets andFinancial Liabilities”—Other amendments

ASU 2014-09,“Revenue fromContracts with
Customers”(2)Summary of new guidance•Requires all equity investments, withcertain exceptions, to be measured at fairvalue with changes in fair value recognizedin earnings.

•

Introduces new disclosures for financial
instruments including embedded
derivatives.

•

Eliminates certain existing disclosuresaround the assumptions and methodology
used to determine fair value of financial
instruments.

•

Replaces existing revenue recognition
guidance in ASC 605 “Revenue
Recognition“and certain industry-specificrevenue recognition guidance.

•

Requires an entity to recognize the amountof revenue to which it expects to be entitled
for the transfer of promised goods orservices to customers.

•

Specifies the accounting for costs to obtainor fulfill a customer contract.

•

Revises existing guidance for principalversus-agency determination.

•

Requires extensive new footnote
disclosures around nature and type ofrevenue from services provided tocustomers.

F-30

Expected
adoption dateand method of
adoption

Effect on these
consolidated
statements

Modified
retrospective
adoption from
April 1, 2018.

No material impact
expected.

Modified
retrospective
adoption from
April 1, 2018.(3)Expected impact
on timing ofrecognition andpresentation ofcertain revenues
and costs in the
consolidated
statement ofincome.(4)NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Pronouncement

ASU 2016-02,“Leases”

ASU 2016-13,“Measurement ofCredit Losses on
Financial
Instruments”

Summary of new guidance•Replaces ASC 840 “Leases”, the current
guidance on lease accounting, and revised
the definition of a lease.

•

Requires all lessees to recognize a right ofuse asset and corresponding lease liability
on balance sheet.

•

Lessor accounting is largely unchanged
from current guidance.

•

Simplifies the accounting for saleleaseback and “build-to-suit” leases.

•

Requires extensive new qualitative andquantitative footnote disclosures on leasearrangements.

•

Introduces a new model for recognition andmeasurement of credit losses against
certain financial instruments such as loans,debt securities and receivables which are
not carried at fair value with changes in fairvalue recognized through earnings. The
model also applies to off balance sheet
credit exposures such as written loan
commitments standby letters of credit andissued financial guarantees not accounted
for as insurance, which are not carried atfair value through earnings.

•

The new model based on lifetime current
expected credit losses (CECL)
measurement, to be recognized at the time
an in-scope instrument is originated,acquired or issued.

•

Replaces existing incurred credit losses
model under current GAAP.

•

Requires enhanced qualitative andquantitative disclosures around credit risk,
the methodology used to estimate andmonitor expected credit losses and changes
in estimates of expected credit losses.

F-31

Expected
adoption dateand method of
adoption

Effect on these
consolidated
statements

Modified
retrospective
adoption from
April 1, 2019.(1)Currently
evaluating thepotential impact
however a grossup of Nomura’sbalance sheet is
expected.

Modified
retrospective
adoption from
April 1, 2020.(1)Currently
evaluating thepotential impact.

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Pronouncement

ASU 2016-15,“Classification of
Certain Cash Receipts
and Cash Payments”
and ASU 2016-18,“Restricted Cash”

Summary of new guidance

•

•

•

Expected
adoption dateand method of
adoption

Amends the classification of certain cash
Fullreceipts and cash payments in the statement retrospectiveof cash flows.
adoption from
April 1, 2018.(1)Requires movements in restricted cash andrestricted cash equivalents to be presented
as part of cash and cash equivalents in thestatement of cash flows.

Effect on these
consolidated
statements

Currently
evaluating thepotential impact.

Requires new disclosures on the nature andamount of restricted cash and restrictedcash equivalents.

(1) Unless Nomura early adopts which is considered unlikely as of the date of these consolidated financial
statements.
(2) As subsequently amended by ASU 2015-14 “Revenue from Contracts with Customers—Deferral of theEffective Date”, ASU 2016-08 “Revenue from Contracts with Customers—Principal versus Agent
Considerations”, ASU 2016-10 “Revenue from Contracts with Customers—Identifying Performance
Obligations and Licensing”, ASU 2016-12 “Revenue from Contracts with Customers—Narrow-Scope
Improvements and Practical Expedients”, ASU 2016-20 “Technical Corrections and Improvements to
Topic 606, Revenue from Contracts with Customers” and ASU 2017-05 “Clarifying the Scope of Asset
Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”.
(3) Nomura currently expects to adopt ASU 2014-09 and related guidance on April 1, 2018 through modified
retrospective adoption.
(4) Based on the current status of Nomura’s evaluation of ASU 2014-09 and related guidance, Nomura
currently expects the new guidance to have the following impacts on these consolidated financial
statements:•

A delay in the timing of when certain financial advisory fees are recognized as revenue but earlier
recognition of certain asset management distribution fees;•

A change in the timing of when certain costs to obtain and fulfill a contract in scope of the ASU are
expensed, because of new guidance requiring such costs to be capitalized;•

A change in the presentation of certain trade execution revenues and associated costs from a gross to a
net basis in the consolidated statement of income as a result of revised principal-versus-agency
guidance;•

A change in the presentation of certain investment banking revenues and associated costs from a net to agross basis in the consolidated statement of income as a result of revised principal-versus-agency
guidance; and;•A significant increase in qualitative disclosures included within the footnotes to the financial statements
which will discuss the accounting policies applied by Nomura in recognition of revenue from services
and the treatment of associated costs.

Nomura continues to assess and evaluate the impact of the new guidance and as a result, additional impacts
may be identified through to adoption date on April 1, 2018. Whilst Nomura’s evaluation is not complete,changes to the timing of when revenues or costs are recognized are not expected to have a material impact onthese consolidated financial statements.
F-32

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2. Fair value measurements:
The fair value of financial instruments
A significant amount of Nomura’s financial instruments are carried at fair value. Financial assets carried atfair value on a recurring basis are reported in the consolidated balance sheets within Trading assets and private
equity investments, Loans and receivables, Collateralized agreements and Other assets. Financial liabilities
carried at fair value on a recurring basis are reported within Trading liabilities, Short-term borrowings, Payables
and deposits, Collateralized financing, Long-term borrowings and Other liabilities.
Other financial assets and financial liabilities are measured at fair value on a nonrecurring basis, where theprimary measurement basis is not fair value but where fair value is used in specific circumstances after initialrecognition, such as to measure impairment.
In all cases, fair value is determined in accordance with ASC 820 which defines fair value as the amountthat would be exchanged to sell a financial asset or transfer a financial liability in an orderly transaction between
market participants at the measurement date. It assumes that the transaction occurs in Nomura’s principal market,
or in the absence of the principal market, the most advantageous market for the relevant financial assets orfinancial liabilities.
Fair value is usually determined on an individual financial instrument basis consistent with the unit ofaccount of the financial instrument. However, certain financial instruments managed on a portfolio basis arevalued as a portfolio, namely based on the price that would be received to sell a net long position (i.e. a net
financial asset) or transfer a net short position (i.e. a net financial liability) consistent with how market
participants would price the net risk exposure at the measurement date.
Financial assets carried at fair value also include investments in certain funds where, as a practical
expedient, fair value is determined on the basis of net asset value per share (“NAV per share”) if the NAV pershare is calculated in accordance with certain industry standard principles.
Increases and decreases in the fair value of assets and liabilities will significantly impact Nomura’s position,
performance, liquidity and capital resources. As explained below, valuation techniques applied contain inherent
uncertainties and Nomura is unable to predict the accurate impact of future developments in the market. Where
appropriate, Nomura uses economic hedging strategies to mitigate its risk, although these hedges are also subject
to unpredictable movements in the market.

F-33

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Valuation methodology for financial instruments carried at fair value on a recurring basis
The fair value of financial instruments is based on quoted market prices including market indices, broker or dealer
quotations or an estimation by management of the expected exit price under current market conditions. Various
financial instruments, including cash instruments and over-the-counter (“OTC”) contracts, have bid and offer pricesthat are observable in the market. These are measured at the point within the bid-offer range which best represents
Nomura’s estimate of fair value. Where quoted market prices or broker or dealer quotations are not available, prices for
similar instruments or valuation pricing models are considered in the determination of fair value.
Where quoted prices are available in active markets, no valuation adjustments are taken to modify the fairvalue of assets or liabilities marked using such prices. Other instruments may be measured using valuation
techniques, such as valuation pricing models incorporating observable valuation inputs, unobservable parameters
or a combination of both. Valuation pricing models use valuation inputs which would be considered by market
participants in valuing similar financial instruments.
Valuation pricing models and their underlying assumptions impact the amount and timing of unrealized andrealized gains and losses recognized, and the use of different valuation pricing models or underlying assumptions
could produce different financial results. Valuation uncertainty results from a variety of factors, including thevaluation technique or model selected, the quantitative assumptions used within the valuation model, the inputs
into the model, as well as other factors. Valuation adjustments are used to reflect the assessment of thisuncertainty. Common valuation adjustments include model reserves, credit adjustments, close-out adjustments,and other appropriate instrument-specific adjustments, such as those to reflect transfer or sale restrictions.
The level of adjustments is largely judgmental and is based on an assessment of the factors that management
believe other market participants would use in determining the fair value of similar financial instruments. The typeof adjustments taken, the methodology for the calculation of these adjustments, and the valuation inputs for thesecalculations are reassessed periodically to reflect current market practice and the availability of new information.
For example, the fair value of certain financial instruments includes adjustments for credit risk; both withregards to counterparty credit risk on positions held and Nomura’s own creditworthiness on positions issued.
Credit risk on financial assets is significantly mitigated by credit enhancements such as collateral and netting
arrangements. Any net credit exposure is measured using available and applicable valuation inputs for the
relevant counterparty. The same approach is used to measure the credit exposure on Nomura’s financial liabilities
as is used to measure counterparty credit risk on Nomura’s financial assets.
Such valuation pricing models are calibrated to the market on a regular basis and inputs used are adjusted
for current market conditions and risks. The Global Model Validation Group (“MVG”) within Nomura’s Risk
Management Department reviews pricing models and assesses model appropriateness and consistency
independently of the front office. The model reviews consider a number of factors about a model’s suitability forvaluation and sensitivity of a particular product. Valuation models are calibrated to the market on a periodic basis
by comparison to observable market pricing, comparison with alternative models and analysis of risk profiles.
As explained above, any changes in fixed income, equity, foreign exchange and commodity markets canimpact Nomura’s estimates of fair value in the future, potentially affecting trading gains and losses. Where
financial contracts have longer maturity dates, Nomura’s estimates of fair value may involve greater subjectivity
due to the lack of transparent market data.

F-34

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair value hierarchy
All financial instruments measured at fair value, including those carried at fair value using the fair value
option, have been categorized into a three-level hierarchy (“fair value hierarchy”) based on the transparency ofvaluation inputs used by Nomura to estimate fair value. A financial instrument is classified in the fair value
hierarchy based on the lowest level of input that is significant to the fair value measurement of the financial
instrument. The three levels of the fair value hierarchy are defined as follows, with Level 1 representing the mosttransparent inputs and Level 3 representing the least transparent inputs:
Level 1:
Observable valuation inputs that reflect quoted prices (unadjusted) for identical financial instruments tradedin active markets at the measurement date.
Level 2:
Valuation inputs other than quoted prices included within Level 1 that are either directly or indirectly
observable for the financial instrument.
Level 3:
Unobservable valuation inputs which reflect Nomura assumptions and specific data.
The availability of valuation inputs observable in the market varies by product and can be affected by avariety of factors. Significant factors include, but are not restricted to the prevalence of similar products in themarket, especially for customized products, how established the product is in the market, for example, whether it
is a new product or is relatively mature, and the reliability of information provided in the market which would
depend, for example, on the frequency and volume of current data. A period of significant change in the market
may reduce the availability of observable data. Under such circumstances, financial instruments may bereclassified into a lower level in the fair value hierarchy.
Significant judgments used in determining the classification of financial instruments include the nature of
the market in which the product would be traded, the underlying risks, the type and liquidity of market data
inputs and the nature of observed transactions for similar instruments.
Where valuation models include the use of valuation inputs which are less observable or unobservable in themarket, significant management judgment is used in establishing fair value. The valuations for Level 3 financial
instruments, therefore, involve a greater degree of judgment than those valuations for Level 1 or Level 2
financial instruments.
Certain criteria management use to determine whether a market is active or inactive include the number oftransactions, the frequency that pricing is updated by other market participants, the variability of price quotes
among market participants, and the amount of publicly available information.

F-35

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the amounts of Nomura’s financial instruments measured at fair value on arecurring basis as of March 31, 2016 and 2017 within the fair value hierarchy.
Billions of yen
March 31, 2016

Level 1

Level 2

Level 3

Assets:Trading assets and private equity investments(2)Equities(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese government securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese agency and municipal securities . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal securities . . . . . . . . . . . . . .
Bank and corporate debt securities and loans for trading purposes . . . .
Commercial mortgage-backed securities (“CMBS”) . . . . . . . . . . . . . . .
Residential mortgage-backed securities (“RMBS”) . . . . . . . . . . . . . . . .
Real estate-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized debt obligations (“CDOs”) and other(4) . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,032
—
2,973
—
3,673
—
—
—
—
—
356

¥

742
—
—
215
1,383
1,061
44
3,065
—
80
95

¥ 34
20
—
—
4
107
17
9
38
10
2

Total trading assets and private equity investments . . . . . . . . . . . . . . . . . . . .

8,034

6,685

Derivative assets(5)Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5
11
1
0
1
—

1,229
28,688
649
6,886
0
—

Counterparty
andCash Collateral
Netting(1)¥Balance as ofMarch 31, 2016

—
—
—
—
—
—
—
—
—
—
—

¥ 1,808
20
2,973
215
5,060
1,168
61
3,074
38
90
453

241

—

14,960

51
126
29
21
—
—

—
—
—
—
—
(36,325)

1,285
28,825679
6,907
1(36,325)

Total derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1837,452

227(36,325)

1,372

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥8,052¥44,137¥468¥(36,325)¥ 16,332

Loans and receivables(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized agreements(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets
Non-trading debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—

277
1,099

26
—

—
—

303
1,099

337
426

534
122

0
57

—
—

871
605

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥8,815¥46,169¥551¥(36,325)¥ 19,210

Liabilities:
Trading liabilities
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese government securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese agency and municipal securities . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal securities . . . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial mortgage-backed securities (“CMBS”) . . . . . . . . . . . . . . .
Residential mortgage-backed securities (“RMBS”) . . . . . . . . . . . . . . . .
Collateralized debt obligations (“CDOs”) and other(4) . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,108
1,746
—
2,203
—
—
—
—
78

¥

¥

¥

—
—
—
—
—
—
—
—
—

¥ 1,137
1,746
9
2,950
522
0
3
2
80

Total trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,135

1,311

3

—

6,449

Derivative liabilities(5)Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5
8
1
0
8

1,491
28,380
776
6,624
0
—

45
109
29
30
—
—

—
—
—
—
—
(36,456)

1,541
28,497806
6,654
8(36,456)

—

29
—
9
747
519
0
3
2
2

0
—
—
—
3
—
—
—
0

Total derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2237,271

213(36,456)

1,050

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,157¥38,582¥216¥(36,456)¥ 7,499

¥

¥

309
0
571
2,265
111

¥ 21
0
—
331
2

¥

¥

¥41,838¥570¥(36,456)

Short-term borrowings(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables and deposits(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized financing(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings(8)(10)(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-36

1
—
—
105
150

¥5,413

—
—
—
—
—

331
0
571
2,701
263

¥ 11,365

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Billions of yen
March 31, 2017

Level 1

Level 2

Level 3

Assets:Trading assets and private equity investments(2)Equities(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese government securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese agency and municipal securities . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal securities . . . . . . . . . . . . . .
Bank and corporate debt securities and loans for trading purposes . . . .
Commercial mortgage-backed securities (“CMBS”) . . . . . . . . . . . . . . .
Residential mortgage-backed securities (“RMBS”) . . . . . . . . . . . . . . . .
Real estate-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized debt obligations (“CDOs”) and other(4) . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,199
—
2,319
—
2,704
—
—
—
—
—
256

¥

984
—
—
174
1,134
1,178
10
3,787
—
64
56

¥ 34
13
—
1
3
108
1
0
41
27
0

Total trading assets and private equity investments . . . . . . . . . . . . . . . . . . . .

6,478

7,387

Derivative assets(5)Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6
10
1
0
1
—

986
15,293
485
6,399
0
—

Counterparty
andCash Collateral
Netting(1)¥Balance as ofMarch 31, 2017

—
—
—
—
—
—
—
—
—
—
—

¥ 2,217
13
2,319
175
3,841
1,286
11
3,787
41
91
312

228

—

14,093

40
88
11
39
—
—

—
—
—
—
—
(22,322)

1,032
15,391497
6,438
1(22,322)

Total derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18

23,163

178(22,322)

1,037

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥6,496¥30,550¥406¥(22,322)¥ 15,1300Loans and receivables(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized agreements(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets
Non-trading debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

473
1,084

66
5

—
—

539
1,089

212
571

563
109

—
163

—
—

775
843

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥7,279¥32,779¥640¥(22,322)¥ 18,376

Liabilities:
Trading liabilities
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese government securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese agency and municipal securities . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal securities . . . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities (“RMBS”) . . . . . . . . . . . . . . . .
Collateralized debt obligations (“CDOs”) and other(4) . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,000
2,182
—
2,634
—
—
—
42

¥

¥

¥

—
—
—
—
—
—
—
—

¥ 1,274
2,182
4
3,261
503
0
3
45

Total trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,858

1,412

2

—

7,272

Derivative liabilities(5)Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5
5
1
0
4

1,199
15,084
619
6,080
0
—

46
110
21
16
—
—

—
—
—
—
—
(22,270)

1,250
15,199641
6,096
4(22,270)

—

273
—
4
627
503
0
2
3

1
—
—
—
—
—
1
—

Total derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

22,982

193(22,270)920

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,873¥24,394¥195¥(22,270)¥ 8,192

Short-term borrowings(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables and deposits(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized financing(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings(8)(10)(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ —
—
—
109
351

¥

331
0
537
2,036
105

¥ 70
0
3
410
1

¥

¥

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥6,333¥27,403¥679¥(22,270)

—
—
—
—
—

401
0
540
2,555
457

¥ 12,145(1) Represents the amount offset under counterparty netting of derivative assets and liabilities as well as cash collateral netting against net
derivatives.
(2) In accordance with ASU 2015-07 “Disclosures for investments in certain entities that calculate net asset value per share (or Its
Equivalents)” (“ASU2015-07”), certain investments that are measured at fair value using net asset value per share as a practical
expedient have not been classified in the fair value hierarchy. Certain reclassifications of previously reported amounts have been made to

F-37

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
conform to the current year presentation. As of March 31, 2016 and March 31, 2017, the fair values of these investments which areincluded in “Trading assets and private equity investments” were ¥78 billion and ¥62 billion, respectively. As of March 31, 2016 andMarch 31, 2017, the fair values of these investments which are included in “Other assets— Others” were ¥4 billion and ¥8 billion,
respectively.
(3) Includes equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value
option.
(4) Includes collateralized loan obligations (“CLOs”) and asset-backed securities (“ABS”) such as those secured on credit card loans, autoloans and student loans.
(5) Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate contracts include complex
derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts
include credit default swaps as well as derivatives referencing corporate and government debt securities.
(6) Includes loans for which the fair value option has been elected.
(7) Includes collateralized agreements or collateralized financing for which the fair value option has been elected.
(8) Includes structured notes for which the fair value option has been elected.
(9) Includes embedded derivatives bifurcated from deposits received at banks. If unrealized gains are greater than unrealized losses, deposits
are reduced by the excess amount.
(10) Includes embedded derivatives bifurcated from issued structured notes. If unrealized gains are greater than unrealized losses, borrowings
are reduced by the excess amount.
(11) Includes liabilities recognized from secured financing transactions that are accounted for as financings rather than sales. Nomura elected
the fair value option for these liabilities.
(12) Includes loan commitments for which the fair value option has been elected.

Valuation techniques by major class of financial instrument
The valuation techniques used by Nomura to estimate fair value for major classes of financial instruments,
together with the significant inputs which determine classification in the fair value hierarchy, are as follows.
Equities and equity securities reported within Other assets—Equities and equity securities reported within
Other assets include direct holdings of both listed and unlisted equity securities, and fund investments. The fairvalue of listed equity securities is determined using quoted prices for identical securities from active markets
where available. These valuations should be in line with market practice and therefore can be based on bid prices
or mid-market prices. Nomura determines whether the market is active depending on the sufficiency andfrequency of trading activity. Where these securities are classified in Level 1 of the fair value hierarchy, novaluation adjustments are made to fair value. Listed equity securities traded in inactive markets are also generally
valued using the exchange price and are classified in Level 2. Whilst rare in practice, Nomura may apply a
discount or liquidity adjustment to the exchange price of a listed equity security traded in an inactive market if
the exchange price is not considered to be an appropriate representation of fair value. These adjustments are
determined by individual security and are not determined or influenced by the size of holding. The amount ofsuch adjustments made to listed equity securities traded in inactive markets was ¥nil as of March 31, 2016 and2017. The fair value of unlisted equity securities is determined using the same methodology as private equity
investments described below and are usually classified in Level 3 because significant valuation inputs such as
liquidity discounts and credit spreads are unobservable. As a practical expedient, fund investments which do nothave a readily determinable fair value are generally valued using NAV per share where available. Publicly tradedmutual funds which are valued using a daily NAV per share are classified in Level 1. Fund investments where
Nomura has the ability to redeem its investment with the investee at NAV per share as of the balance sheet dateor within the near term are classified in Level 2. Fund investments where Nomura does not have the ability toredeem in the near term or does not know when it can redeem are classified in Level 3. The Direct Capitalization
Method (“DCM”) is used as a valuation technique for certain equity investments in real estate funds, with net
operating income used as a measure of financial performance which is then applied to a capitalization ratedependent on the characteristics of the underlying real estate. Equity investments which are valued using DCM
valuation techniques are generally classified in Level 3 since observable market capitalization rates are usually
not available for identical or sufficiently similar real estate to that held within the real estate funds being valued.

F-38

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Private equity investments—The determination of fair value of unlisted private equity investments requires
significant management judgment because the investments, by their nature, have little or no price transparency.
Private equity investments are initially carried at cost as an approximation of fair value. Adjustments to carrying
value are made if there is third-party evidence of a change in value. Adjustments are also made, in the absence ofthird-party transactions, if it is determined that the expected exit price of the investment is different fromcarrying value. In reaching that determination, Nomura primarily uses either a discounted cash flow (“DCF”) or
market multiple valuation technique. A DCF valuation technique incorporates estimated future cash flows to begenerated from the underlying investee, as adjusted for an appropriate growth rate discounted at a weighted
average cost of capital (“WACC”). Market multiple valuation techniques include comparables such as Enterprise
Value/earnings before interest, taxes, depreciation and amortization (“EV/EBITDA”) ratios, Price/Earnings(“PE”) ratios, Price/Book ratios, Price/Embedded Value ratios and other multiples based on relationships
between numbers reported in the financial statements of the investee and the price of comparable companies. A
liquidity discount may also be applied to either a DCF or market multiple valuation to reflect the specificcharacteristics of the investee. Where possible these valuations are compared with the operating cash flows andfinancial performance of the investee or properties relative to budgets or projections, price/earnings data forsimilar quoted companies, trends within sectors and/or regions and any specific rights or terms associated with
the investment, such as conversion features and liquidation preferences. Private equity investments are generallyclassified in Level 3 since the valuation inputs such as those mentioned above are usually unobservable.
Government, agency and municipal securities—The fair value of Japanese and other G7 government
securities is primarily determined using quoted market prices, executable broker or dealer quotations, oralternative pricing sources. These securities are traded in active markets and therefore are classified within
Level 1 of the fair value hierarchy. Non-G7 government securities, agency securities and municipal securities arevalued using similar pricing sources but are generally classified in Level 2 as they are traded in inactive markets.
Certain non-G7 securities may be classified in Level 1 because they are traded in active markets. Certain
securities may be classified in Level 3 because they are traded infrequently and there is not sufficient informationfrom comparable securities to classify them in Level 2. These are valued using DCF valuation techniques which
include significant unobservable inputs such as credit spreads of the issuer.
Bank and corporate debt securities—The fair value of bank and corporate debt securities is primarily
determined using DCF valuation techniques but also using broker or dealer quotations and recent market
transactions of identical or similar debt securities, if available. Consideration is given to the nature of the broker
and dealer quotations, namely whether these are indicative or executable, the number of available quotations andhow these quotations compare to any available recent market activity or alternative pricing sources. The
significant valuation inputs used for DCF valuations are yield curves, asset swap spreads, recovery rates andcredit spreads of the issuer. Bank and corporate debt securities are generally classified in Level 2 of the fair value
hierarchy because these valuation inputs are usually observable or market-corroborated. Certain bank andcorporate debt securities will be classified in Level 3 because they are traded infrequently and there isinsufficient information from comparable securities to classify them in Level 2, or credit spreads or recovery
rates of the issuer used in DCF valuations are unobservable.
Commercial mortgage-backed securities (“CMBS”) and Residential mortgage-backed securities(“RMBS”)—The fair value of CMBS and RMBS is primarily determined using DCF valuation techniques but
also using broker or dealer quotations and recent market transactions of identical or similar securities, if
available. Consideration is given to the nature of the broker and dealer quotations, namely whether these areindicative or executable, the number of available quotations and how these quotations compare to any available
recent market activity or alternative pricing sources. The significant valuation inputs include yields, prepayment
rates, default probabilities and loss severities. CMBS and RMBS securities are generally classified in Level 2
F-39

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
because these valuation inputs are observable or market-corroborated. Certain CMBS and RMBS positions will
be classified in Level 3 because they are traded infrequently and there is insufficient information fromcomparable securities to classify them in Level 2, or one or more of the significant valuation inputs used in DCF
valuations are unobservable.
Real estate-backed securities—The fair value of real estate-backed securities is determined using broker ordealer quotations, recent market transactions or by reference to a comparable market index. Consideration is
given to the nature of the broker and dealer quotations, namely whether these are indicative or executable, thenumber of available quotations and how these quotations compare to any available recent market activity oralternative pricing sources. Where all significant inputs are observable, the securities will be classified in
Level 2. For certain securities, no direct pricing sources or comparable securities or indices may be available.
These securities are valued using DCF or DCM valuation techniques and are classified in Level 3 as thevaluation includes significant unobservable valuation inputs such as yields or loss severities.
Collateralized debt obligations (“CDOs”) and other—The fair value of CDOs is primarily determinedusing DCF valuation techniques but also using broker or dealer quotations and recent market transactions ofidentical or similar securities, if available. Consideration is given to the nature of the broker and dealer
quotations, namely whether these are indicative or executable, the number of available quotations and how these
quotations compare to any available recent market activity or alternative pricing sources. The significant
valuation inputs used include market spread data for each credit rating, yields, prepayment rates, default
probabilities and loss severities. CDOs are generally classified in Level 2 of the fair value hierarchy because
these valuation inputs are observable or market-corroborated. CDOs will be classified in Level 3 where one ormore of the significant valuation inputs used in the DCF valuations are unobservable.
Investment trust funds and other—The fair value of investment trust funds is primarily determined using
NAV per share. Publicly traded funds which are valued using a daily NAV per share are classified in Level 1 of
the fair value hierarchy. For funds that are not publicly traded but Nomura has the ability to redeem its
investment with the investee at NAV per share on the balance sheet date or within the near term, the investments
are classified in Level 2. Investments where Nomura does not have the ability to redeem in the near term or does
not know when it can redeem are classified in Level 3. The fair value of certain other investments reported within
Investment trust funds and other is determined using DCF valuation techniques. These investments are classified
in Level 3 as the valuation includes significant unobservable valuation inputs such as credit spreads of issuer andcorrelation.
Derivatives—Equity contracts—Nomura enters into both exchange-traded and OTC equity derivativetransactions such as index and equity options, equity basket options and index and equity swaps. Where thesederivatives are traded in active markets and the exchange price is representative of fair value, the fair value of
exchange-traded equity derivatives is determined using an unadjusted exchange price and classified in Level 1 of
the fair value hierarchy. The fair value of exchange-traded equity derivatives which are traded in inactive
markets or where the exchange price is not representative of fair value is determined using a model price and areclassified in Level 2. The fair value of OTC equity derivatives is determined through option models such as
Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include equity prices, dividend
yields, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect
counterparty credit risk on derivative assets and Nomura‘s own creditworthiness on derivative liabilities. OTC
equity derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments areobservable or market-corroborated. Certain less liquid vanilla or more complex equity derivatives are classified
in Level 3 where dividend yield, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—Interest rate contracts—Nomura enters into both exchange-traded and OTC interest rate
derivative transactions such as interest rate swaps, currency swaps, interest rate options, forward rate agreements,
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
swaptions, caps and floors. Where these derivatives are traded in active markets and the exchange price isrepresentative of fair value, the fair value of exchange-traded interest rate derivatives is determined using an
unadjusted exchange price and classified in Level 1 of the fair value hierarchy. The fair value of exchange-tradedinterest rate derivatives which are traded in inactive markets or where the exchange price is not representative offair value is determined using a model price and are classified in Level 2. The fair value of OTC interest rate
derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes andMonte Carlo simulation. The significant valuation inputs used include interest rates, forward foreign exchange(“FX”) rates, volatilities and correlations. Valuation adjustments are also made to model valuations in order toreflect counterparty credit risk on derivative assets and Nomura‘s own creditworthiness on derivative liabilities.
OTC interest rate derivatives are generally classified in Level 2 because all significant valuation inputs andadjustments are observable or market-corroborated. Certain less liquid vanilla or more complex OTC interest rate
derivatives are classified in Level 3 where interest rate, volatility or correlation valuation inputs are significant
and unobservable.
Derivatives—Credit contracts—The significant unobservable inputs are credit spreads, recovery rates,
volatilities and correlations. The range of credit spreads reflects the different risk of default present within theportfolio. At the low end of the range, underlying reference names have a very limited risk of default whereas at
the high end of the range, underlying reference names have a much greater risk of default. The range of recovery
rates varies primarily due to the seniority of the underlying exposure with senior exposures having a higher
recovery than subordinated exposures. The range of volatilities is wide as the volatilities of shorter-dated credit
contracts are typically higher than those of longer-dated instruments. The correlation range is positive sincecredit spread moves are generally in the same direction. Highly positive correlations are those for which the
movement is very closely related and in the same direction, with correlation falling as the relationship becomesless strong.
Derivatives—Foreign exchange contracts—Nomura enters into both exchange-traded and OTC foreignexchange derivative transactions such as foreign exchange forwards and currency options. The fair value of
exchange-traded foreign exchange derivatives which are traded in inactive markets or where the exchange priceis not representative of fair value is determined using a model price and are classified in Level 2. The fair valueof OTC foreign exchange derivatives is determined through DCF valuation techniques as well as option models
such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include interest rates,
forward FX rates, spot FX rates and volatilities. Valuation adjustments are also made to model valuations inorder to reflect counterparty credit risk on derivative assets and Nomura’s own creditworthiness on derivative
liabilities. OTC foreign exchange derivatives are generally classified in Level 2 because all significant valuation
inputs and adjustments are observable or market-corroborated. Certain foreign exchange derivatives areclassified in Level 3 where interest rates, volatility or correlation valuation inputs are significant andunobservable.
Nomura includes valuation adjustments in its estimation of fair value of certain OTC derivatives relating tofunding costs associated with these transactions to be consistent with how market participants in the principal
market for these derivatives would determine fair value.
Loans—The fair value of loans carried at fair value either as trading assets or through election of the fairvalue option is primarily determined using DCF valuation techniques as quoted prices are typically not available.
The significant valuation inputs used are similar to those used in the valuation of corporate debt securities
described above. Loans are generally classified in Level 2 of the fair value hierarchy because all significant
valuation inputs are observable. Certain loans, however, are classified in Level 3 because they are tradedinfrequently and there is not sufficient information from comparable securities to classify them in Level 2 orcredit spreads of the issuer used in DCF valuations are significant and unobservable.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Collateralized agreements and Collateralized financing—The primary types of collateralized agreement andfinancing transactions carried at fair value are reverse repurchase and repurchase agreements elected for the fairvalue option. The fair value of these financial instruments is primarily determined using DCF valuation
techniques. The significant valuation inputs used include interest rates and collateral funding spreads such as
general collateral or special rates. Reverse repurchase and repurchase agreements are generally classified in
Level 2 of the fair value hierarchy because these valuation inputs are usually observable.
Non-trading debt securities—These are debt securities held by certain non-trading subsidiaries in the group andare valued and classified in the fair value hierarchy using the same valuation techniques used for other debt securities
classified as Government, agency and municipal securities and Bank and corporate debt securities described above.
Short-term and long-term borrowings (“Structured notes”)—Structured notes are debt securities issued by
Nomura or by consolidated variable interest entities (“VIEs”) which contain embedded features that alter the
return to the investor from simply receiving a fixed or floating rate of interest to a return that depends upon someother variables, such as an equity or equity index, commodity price, foreign exchange rate, credit rating of a third
party or a more complex interest rate (i.e., an embedded derivative).
The fair value of structured notes is determined using a quoted price in an active market for the identicalliability if available, and where not available, using a mixture of valuation techniques that use the quoted price of
the identical liability when traded as an asset, quoted prices for similar liabilities, similar liabilities when tradedas assets, or an internal model which combines DCF valuation techniques and option pricing models, dependingon the nature of the embedded features within the structured note. Where an internal model is used, Nomura
estimates the fair value of both the underlying debt instrument and the embedded derivative components. The
significant valuation inputs used to estimate the fair value of the debt instrument component include yield curves,prepayment rates, default probabilities and loss severities. The significant valuation inputs used to estimate thefair value of the embedded derivative component are the same as those used for the relevant type of freestanding
OTC derivative discussed above. A valuation adjustment is also made to the entire structured note in order toreflect Nomura’s own creditworthiness. As of March 31, 2016 and March 31, 2017, the fair value of structured
notes includes debit adjustments of ¥23 billion and ¥10 billion, respectively, to reflect Nomura’s own
creditworthiness. The valuation methodology used to determine this adjustment was refined during the year
ended March 31, 2016 by incorporating certain additional term features in Nomura’s credit spreads, which are a
key valuation input used to determine the amount of the adjustment. This adjustment is determined based onrecent observable secondary market transactions and executable broker quotes involving Nomura debt
instruments and is therefore typically treated as a Level 2 valuation input. Structured notes are generallyclassified in Level 2 of the fair value hierarchy as all significant valuation inputs and adjustments are observable.
Where any unobservable inputs are significant, such as yields, prepayment rates, default probabilities, loss
severities, volatilities and correlations used to estimate the fair value of the embedded derivative component,
structured notes are classified in Level 3.
Long-term borrowings (“Secured financing transactions”)—Secured financing transactions are liabilities
recognized when a transfer of a financial asset does not meet the criteria for sales accounting under ASC 860 andtherefore the transaction is accounted for as a secured borrowing. These liabilities are valued using the samevaluation techniques that are applied to the transferred financial assets which remain on the consolidated balance
sheets and are therefore classified in the same level in the fair value hierarchy as the transferred financial assets.
These liabilities do not provide general recourse to Nomura and therefore no adjustment is made to reflect
Nomura’s own creditworthiness.

F-42

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Valuation processes
In order to ensure the appropriateness of any fair value measurement of a financial instrument used withinthese consolidated financial statements, including those classified in Level 3 within the fair value hierarchy,
Nomura operates a governance framework which mandates determination or validation of a fair value
measurement by control and support functions independent of the trading businesses assuming the risk of thefinancial instrument. Such functions within Nomura with direct responsibility for either defining, implementing
or maintaining valuation policies and procedures are as follows:•

The Product Control Valuations Group (“PCVG”) within Nomura’s Finance Department has primary
responsibility for determining and implementing valuation policies and procedures in connection withdetermination of fair value measurements. In particular, this group will ensure that valuation policies are
documented for each type of financial instrument in accordance with U.S. GAAP. While it is the
responsibility of market makers and investment professionals in our trading businesses to price ourfinancial instruments, the PCVG are responsible for independently verifying or validating these prices.
In the event of a difference in opinion or where the estimate of fair value requires judgment, thevaluation used within these consolidated financial statements is made by senior managers independentof the trading businesses. This group reports to the Global Head of Product Control and ultimately to theChief Financial Officer (“CFO”);•

The Accounting Policy Group within Nomura’s Finance Department defines the group’s accounting
policies and procedures in accordance with U.S. GAAP, including those associated with determinationof fair value under ASC 820 and other relevant U.S. GAAP pronouncements. This group reports to the
Global Head of Accounting Policy and ultimately to the CFO; and•The MVG within Nomura’s Risk Management Department validates the appropriateness andconsistency of pricing models used to determine fair value measurements independently of those who
design and build the models. This group reports to the Chief Risk Officer.

The fundamental components of this governance framework over valuation processes within Nomura
particularly as it relates to Level 3 financial instruments are the procedures in place for independent priceverification, pricing model validation and revenue substantiation.
Independent price verification processes
The key objective of the independent price verification processes within Nomura is to verify theappropriateness of fair value measurements applied to all financial instruments within Nomura. In applying thesecontrol processes, observable inputs are used whenever possible and when unobservable inputs are necessary, theprocesses seek to ensure the valuation technique and inputs are appropriate, reasonable and consistently applied.
The independent price verification processes aim to verify the fair value of all positions to external levels ona regular basis. The process will involve obtaining data such as trades, marks and prices from internal andexternal sources and examining the impact of marking the internal positions at the external prices. Margin
disputes within the collateral process will also be investigated to determine if there is any impact on valuations.
Where third-party pricing information sourced from brokers, dealers and consensus pricing services is used aspart of the price verification process, consideration is given as to whether that information reflects actual recent market
transactions or prices at which transactions involving identical or similar financial instruments are currently executable.
If such transactions or prices are not available, the financial instrument will generally be classified in Level 3.
Where there is a lack of observable market information around the inputs used in a fair value measurement,
then the PCVG and the MVG will assess the inputs used for reasonableness considering available information
F-43

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
including comparable products, surfaces, curves and past trades. Additional valuation adjustments may be taken
for the uncertainty in the inputs used, such as correlation and where appropriate trading desks may be asked to
execute trades to evidence market levels.
Model review and validation
For more complex financial instruments pricing models are used to determine fair value measurements. The
MVG performs an independent model approval process which incorporates a review of the model assumptions
across a diverse set of parameters. Considerations include:•

Scope of the model (different financial instruments may require different but consistent pricing approaches);•

Mathematical and financial assumptions;•

Full or partial independent benchmarking along with boundary and stability tests, numericalconvergence, calibration quality and stability;•

Model integration within Nomura’s trading and risk systems;•

Calculation of risk numbers and risk reporting; and•Hedging strategies/practical use of the model.

New models are reviewed and approved by the MVG. The frequency of subsequent MVG reviews (“Model
Re-approvals”) is at least annually.
Revenue substantiation
Nomura’s Product Control function also ensures adherence to Nomura’s valuation policies through daily
and periodic analytical review of net revenues. This process involves substantiating revenue amounts throughexplanations and attribution of revenue sources based on the underlying factors such as interest rates, credit
spreads, volatilities, foreign exchange rates, and etc. In combination with the independent price verification
processes, this daily, weekly, monthly and quarterly review substantiates the revenues made while helping to
identify and resolve potential booking, pricing or risk quantification issues.
Level 3 financial instruments
As described above, the valuation of Level 3 financial assets and liabilities is dependent on certain
significant valuation inputs which are unobservable. Common characteristics of an inactive market include a low
number of transactions of the financial instrument, stale or non-current price quotes, price quotes that vary
substantially either over time or among market makers, non-executable broker quotes or little publicly released
information.
If corroborative evidence is not available to value Level 3 financial instruments, fair value may be measured
using other equivalent products in the market. The level of correlation between the specific Level 3 financial
instrument and the available benchmark instrument is considered as an unobservable valuation input. Other
techniques for determining an appropriate value for unobservable input may consider information such asconsensus pricing data among certain market participants, historical trends, extrapolation from observable market
data and other information Nomura would expect market participants to use in valuing similar instruments.
Use of reasonably possible alternative valuation input assumptions to value Level 3 financial instruments
will significantly influence fair value determination. Ultimately, the uncertainties described above about input
assumptions imply that the fair value of Level 3 financial instruments is a judgmental estimate. The specificvaluation for each instrument is based on management’s judgment of prevailing market conditions, in accordancewith Nomura’s established valuation policies and procedures.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Quantitative and qualitative information regarding significant unobservable inputs
The following tables present quantitative and qualitative information about the significant unobservablevaluation inputs used by Nomura to measure the fair value of financial instruments classified in Level 3 as ofMarch 31, 2016 and 2017. These financial instruments will also typically include observable valuation inputs (i.e.
Level 1 or Level 2 valuation inputs) which are not included in the table and are also often hedged using financial
instruments which are classified in Level 1 or Level 2 of the fair value hierarchy. Changes in each of thesesignificant unobservable valuation inputs used by Nomura will impact upon the fair value measurement of thefinancial instrument. The following tables also therefore qualitatively summarize the sensitivity of the fair value
measurement for each type of financial instrument as a result of an increase in each unobservable valuation input
and summarize the interrelationship between significant unobservable valuation inputs where more than one is used
to measure fair value.
March 31, 2016

Fair
value inbillions ofFinancial Instrument
yen

ValuationtechniqueSignificant
unobservablevaluation input

Range ofvaluation
inputs(1)Weighted
Average(2)Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)Interrelationships
between valuation
inputs(5)Assets:Trading assets andprivate equity
investments
Equities . . . . . . . . . . ¥

34

DCF

Liquidity discounts

30.0 – 45.0%

41.7%

Lower fair value

Not applicable

Private equity
investments . . . . .

20

Marketmultiples

EV/EBITDA ratios
Price/Book ratios
Liquidity discounts

7.8 x
1.1 x
0.0 – 30.0%

7.8 x
1.1 x
22.9%

Higher fair value
Higher fair value
Lower fair value

Generally changes in
multiples results in acorresponding similar
directional change in afair value measurement,
assuming earnings levels
remain constant.

Foreigngovernment,
agency andmunicipal
securities . . . . . . .

4

DCF

Credit spreads

0.0 – 5.9%

1.3%

Lower fair value

Not applicable

Bank andcorporate debt
securities andloans for trading
purposes . . . . . . .

107

DCF

Credit spreads
Recovery rates

0.0 – 40.7%
0.0 – 97.0%

5.3%
68.6%

Lower fair value
Higher fair value

No predictableinterrelationship

17

DCF

YieldsLoss severities

0.0 – 183.1%
0.0 – 20.0%

7.7%
10.0%

Lower fair value
Lower fair value

No predictableinterrelationship9

DCF

Yields
Prepayment rates
Loss severities

0.0 – 17.4%
2.7 – 12.0%
4.5 – 60.6%

4.1%
9.0%
30.1%

Lower fair value
Lower fair value
Lower fair value

No predictableinterrelationship

38

DCF

YieldsLoss severities

4.0 – 165.1%
0.0 – 100.0%

25.3%
21.4%

Lower fair value
Lower fair value

No predictableinterrelationshipCommercial
mortgage-backed
securities(“CMBS”) . . . . .
Residential
mortgagebacked securities(“RMBS”) . . . . .
Real estate-backed
securities . . . . . . .

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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
March 31, 2016

Fair
value inbillions ofFinancial InstrumentyenCollateralized debt
obligations(“CDOs”) andother . . . . . . . . . .

ValuationtechniqueSignificant
unobservablevaluation input

Range ofvaluation
inputs(1)10.8 – 25.0%
Yields
4.0 – 20.0%
Prepayment rates
Default probabilities 2.0 – 5.5%
30.0 – 88.0%
Loss severities

Weighted
Average(2)Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)

21.1%
19.6%
2.6%
31.8%

Lower fair value
Lower fair value
Lower fair value
Lower fair value

Change in default
probabilities typicallyaccompanied bydirectionally similarchange in loss
severities and oppositechange in prepayment
rates

Interrelationships
between valuation
inputs(5)

10

DCF

6

Option models

Dividend yield
Volatilities
Correlations

0.0 – 13.7%
0.0 – 125.2%(0.74) – 0.99———

Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationship

Interest rate
contracts . . . . . .

17

DCF/
Option models

Interest rates
Volatilities
Volatilities
Correlations

0.1 – 3.3%
13.8 – 17.4%
31.9 – 83.0 bp(0.65) – 1.00

—
—
—
—

Higher fair value
Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationship

Credit contracts . .

0

DCF/
Option models

Credit spreads
Recovery rates
Volatilities
Correlations

0.0 – 45.9%
0.0 – 90.0%
30.0 – 58.1%
0.26 – 0.87

—
—
—
—

Higher fair value
Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationshipForeign exchange
contracts . . . . . .

Derivatives, net:
Equity¥contracts . . . . . .

(9) Option models

Volatilities

1.0 – 31.6%—

Higher fair value

Not applicable

Loans andreceivables . . . . . . . .

26

DCF

Credit spreads

0.0 – 16.8%

4.9%

Lower fair value

Not applicable

Other assets
Other(6) . . . . . . . .

57

DCF

WACC
Growth rates
Credit spreads
Liquidity discounts

5.5%
1.0%
0.6 – 0.7%
30.0%

5.5%
1.0%
0.7%
30.0%

Lower fair value
Higher fair value
Lower fair value
Lower fair value

No predictableinterrelationship

EV/EBITDA ratios 4.0 – 13.5 x
PE ratios
3.7 – 31.5 x
Price/Book ratios
0.0 – 5.6 x
Liquidity discounts 20.0 – 30.0%

8.0 x
19.6 x
1.1 x
27.7%

Higher fair value Generally changes inHigher fair value multiples results in a
Higher fair value corresponding similar
Lower fair value directional change in afair value measurement,
assuming earnings
levels remain
constant.

Marketmultiples

Liabilities:
Trading liabilities
Bank andcorporate debt¥
securities . . . . .

3

DCF

Credit spreads

0.9 – 10.3%

2.9%

Lower fair value

Not applicable

Short-termborrowings . . . . . . . .

21

DCF/
Option models

Volatilities

34.6%

—

Higher fair value

Not applicable

Long-term
borrowings . . . . . . . .

331

DCF/
Option models

Volatilities
Volatilities
Correlations

13.8 – 34.6%
44.7 – 71.2 bp(0.57) – 0.99———

Higher fair value
Higher fair value
Higher fair value

No predictableinterrelations

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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
March 31, 2017

Fair
value inbillions ofFinancial Instrument
yen

ValuationtechniqueSignificant
unobservablevaluation input

Range ofvaluation
inputs(1)Weighted
Average(2)Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)Interrelationships
between valuation
inputs(5)Assets:Trading assets andprivate equity
investments
Equities . . . . . . . . . . ¥

34

DCF

Liquidity discounts

45.0 – 65.0%

57.7%

Lower fair value

Not applicable

Private equity
investments . . . . .

13Marketmultiples

EV/EBITDA ratios
Liquidity discounts

7.4x
30.0%

7.4x
30.0%

Higher fair value
Lower fair value

Generally changes in
multiples results in acorresponding similar
directional change in afair value measurement,
assuming earnings
levels remain constant.

Foreigngovernment,
agency andmunicipal
securities . . . . . . .

3

DCF

Credit spreads

0.0 – 1.3%

0.9%

Lower fair value

Not applicable

108

DCF

Credit spreads
Recovery rates

0.0 – 16.9%
0.0 – 97.0%

4.4%
38.0%

Lower fair value
Higher fair value

No predictableinterrelationshipReal estate-backed
securities . . . . . . .

41

DCF

YieldsLoss severities

7.0 – 77.8%
0.0 – 35.2%

20.7%
15.8%

Lower fair value
Lower fair value

No predictableinterrelationship

Collateralized debt
obligations(“CDOs”) andother . . . . . . . . . .

27

DCF

5.0 – 18.0%
Yields20.0%
Prepayment rates
Default probabilities 1.0 – 2.0%
44.0 – 100.0%
Loss severities

11.9%
20.0%
2.0%
90.3%

Lower fair value
Lower fair value
Lower fair value
Lower fair value

Change in default
probabilities typicallyaccompanied bydirectionally similarchange in loss
severities and oppositechange in prepayment
rates

Derivatives, net:
Equity contracts . . . ¥(6)

Option models

Dividend yield
Volatilities
Correlations

0.0 – 10.0%
3.0 – 70.0%(0.80) – 0.96———

Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationship

Interest rate
contracts . . . . . . .

(22)

DCF/
Option models

Interest rates
Volatilities
Volatilities
Correlations

0.1 – 3.7%
12.4 – 15.7%
30.2 – 79.0 bp(0.55) – 0.99

—
—
—
—

Higher fair value
Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationship

Credit contracts . . .

(10)

DCF/
Option models

Credit spreads
Recovery rates
Volatilities
Correlations

0.0 – 17.0%
20.0 – 90.0%
16.2 – 83.0%
0.35 – 0.93

—
—
—
—

Higher fair value
Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationshipForeign exchange
contracts . . . . . . .

23

DCF/
Option models

Interest rates
Volatilities
Correlations

0.1 – 3.0%
1.0 – 27.5%
0.35 – 0.80———

Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationshipBank and corporate
debt securities
and loans for
trading
purposes . . . . . . .

F-47

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
March 31, 2017

Fair
value inbillions ofFinancial Instrument
yen

ValuationtechniqueSignificant
unobservablevaluation input

Range ofvaluation
inputs(1)Weighted
Average(2)Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)Interrelationships
between valuation
inputs(5)Loans andreceivables . . . . . . . .

66

DCF

Credit spreads

0.0 – 20.0%

2.1%

Lower fair value

Not applicable

Collateralized
agreements . . . . . . . .

5

DCF

Repo rate

3.5%

3.5%

Lower fair value

Not applicable

Other assets
Other(6) . . . . . . . . .

163

DCF

WACC
5.2 – 10.5%
Growth rates
1.0 – 2.5%
Credit spreads
0.6 – 0.7%
Liquidity discounts 0.0 – 30.0%

10.0%
2.4%
0.7%
2.7%

Lower fair value
Higher fair value
Lower fair value
Lower fair value

No predictableinterrelationshipMarketmultiples

EV/EBITDA ratios 3.3 – 8.8x
PE ratios
6.7 – 59.2x
Price/Book ratios
0.0 – 3.8x
EV/AUM
1.5x
Liquidity discounts 12.9 – 30.0%

7.0x
15.1x
1.1x
1.5x
27.3%

Higher fair value Generally changes inHigher fair value multiples results in a
Higher fair value corresponding similar
Higher fair value directional change in a
Lower fair value fair value measurement,
assuming earnings
levels remain
constant.

——

Higher fair value
Higher fair value

Liabilities:
Short-termborrowings . . . . . . . .
Collateralized
financing . . . . . . . . .
Long-term
borrowings . . . . . . . .

70

DCF/
Option models

Volatilities
Correlations

3.9 – 60. 1%(0.80) – 0.96

3

DCF

Repo rate

2.2%

410

DCF

DCF/
Option models

Yields
9.2 – 13.0%
Prepayment rates
20.0%
Default probabilities
2.0%
Loss severities
30.0%

Volatilities
Volatilities
Correlations

3.9 – 60.1%
38.4 – 61.6 bp(0.80) – 0.99

No predictableinterrelationship

2.2%

Lower fair value

Not applicable

11.3%
20.0%
2.0%
30.0%

Lower fair value
Lower fair value
Lower fair value
Lower fair value

Change in default
probabilities typicallyaccompanied bydirectionally similarchange in loss
severities andopposite change inprepayment rates———

Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationship(1) Range information is provided in percentages, coefficients and multiples and represents the highest and lowest level significant
unobservable valuation input used to value that type of financial instrument. A wide dispersion in the range does not necessarily reflectincreased uncertainty or subjectivity in the valuation input and is typically just a consequence of the different characteristics of thefinancial instruments themselves.
(2) Weighted average information for non-derivative instruments is calculated by weighting each valuation input by the fair value of thefinancial instrument.
(3) The above table only considers the impact of an increase in each significant unobservable valuation input on the fair value measurementof the financial instrument. However, a decrease in the significant unobservable valuation input would have the opposite effect on the fairvalue measurement of the financial instrument. For example, if an increase in a significant unobservable valuation input would result in alower fair value measurement, a decrease in the significant unobservable valuation input would result in a higher fair value measurement.
(4) The impact of an increase in the significant unobservable input on the fair value measurement for a derivative assumes Nomura is longrisk to the input e.g., long volatility. Where Nomura is short such risk, the impact of an increase would have a converse effect on the fairvalue measurement of the derivative.
(5) Consideration of the interrelationships between significant unobservable inputs is only relevant where more than one unobservablevaluation input is used to determine the fair value measurement of the financial instrument.
(6) Valuation technique(s) and unobservable valuation inputs in respect of equity securities reported within Other assets in the consolidatedbalance sheets.
(7) Certain changes to the presentation of previously reported amounts have been made to conform to the current year.

F-48

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Qualitative discussion of the ranges of significant unobservable inputs
The following comments present qualitative discussion about the significant unobservable valuation inputs
used by Nomura for financial instruments classified in Level 3.
Derivatives—Equity contracts—The significant unobservable inputs are dividend yield, volatilities andcorrelations. The range of dividend yields varies as some companies do not pay any dividends, for example due
to a lack of profits or as a policy during a growth period, and hence have a zero dividend yield while others may
pay high dividends, for example to return money to investors. The range of volatilities is wide as the volatilities
of shorter-dated equity derivatives or those based on single equity securities can be higher than those of longerdated instruments or those based on indices. Correlations represent the relationships between one input andanother (“pairs”) and can either be positive or negative amounts. The range of correlations moves from positive
to negative because the movement of some pairs is very closely related and in the same direction causing highly
positive correlations while others generally move in opposite directions causing highly negative correlations withpairs that have differing relationships throughout the range.
Derivatives—Interest rate contracts—The significant unobservable inputs are interest rates, volatilities andcorrelations. The range of interest rates is due to interest rates in different countries/currencies being at different
levels with some countries having extremely low levels and others being at levels that while still relatively low
are less so. The range of volatilities is wide as volatilities can be higher when interest rates are at extremely low
levels, and also because volatilities of shorter-dated interest rate derivatives are typically higher than those of
longer-dated instruments. The range of correlations moves from positive to negative because the movement ofsome pairs is very closely related and in the same direction causing highly positive correlations while others
generally move in opposite directions causing highly negative correlations with pairs that have differing
relationships through the range. All significant unobservable inputs are spread across the ranges.
Derivatives—Credit contracts—The significant unobservable inputs are credit spreads, recovery rates,
volatilities and correlations. The range of credit spreads reflects the different risk of default present within theportfolio. At the low end of the range, underlying reference names have a very limited risk of default whereas at
the high end of the range, underlying reference names have a much greater risk of default. The range of recovery
rates varies primarily due to the seniority of the underlying exposure with senior exposures having a higher
recovery than subordinated exposures. The range of volatilities is wide as the volatilities of shorter-dated credit
contracts are typically higher than those of longer-dated instruments. The correlation range is positive sincecredit spread moves are generally in the same direction. Highly positive correlations are those for which the
movement is very closely related and in the same direction, with correlation falling as the relationship becomesless strong.
Derivatives—Foreign exchange contracts—The significant unobservable inputs are interest rates,
volatilities and correlations. The range of interest rates is due to interest rates in different countries/currencies
being at different levels with some countries having extremely low levels and others being at levels that whilestill relatively low are less so. The range of volatilities is relatively narrow with the lower end of the range arisingfrom currencies that trade in narrow ranges versus the U.S. Dollar. The range of correlations moves from positive
to negative because the movement of some pairs is very closely related and in the same direction causing highly
positive correlations while others generally move in opposite directions causing highly negative correlations withpairs that have differing relationships through the range.
Short-term borrowings and Long-term borrowings—The significant unobservable inputs are yields,
prepayment rates, default probabilities, loss severities, volatilities and correlations. The range of volatilities is
F-49

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
wide as the volatilities of shorter-dated instruments are typically higher than those in longer-dated instruments.
The range of correlations moves from positive to negative because the movement of some pairs is very closely
related and in the same direction causing highly positive correlations while others generally move in opposite
directions causing highly negative correlations with pairs that have differing relationships through the range.
Movements in Level 3 financial instruments
The following tables present gains and losses as well as increases and decreases of financial instruments
measured at fair value on a recurring basis which Nomura classified in Level 3 for the years ended March 31,
2016 and 2017. Financial instruments classified in Level 3 are often hedged with instruments within Level 1 orLevel 2 of the fair value hierarchy. The gains or losses presented below do not reflect the offsetting gains orlosses for these hedging instruments. Level 3 financial instruments are also measured using both observable andunobservable valuation inputs. Fair value changes presented below, therefore, reflect realized and unrealized
gains and losses resulting from movements in both observable and unobservable valuation inputs.

F-50

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For the years ended March 31, 2016 and 2017, gains and losses related to Level 3 assets and liabilities did
not have a material impact on Nomura’s liquidity and capital resources management.
Billions of yen
Year ended March 31, 2016
Total gains(losses)
Balance Total gains
recognized in
Balance
as of(losses)other
Foreign Transfers Transfers
as ofApril 1, recognized comprehensive Purchases
Sales /
exchange
into
out of March 31,
2015 in net revenue(1)income/ issues(2) redemptions(2) Settlements movements Level 3(3) Level 3(3)2016

Assets:Trading assets and private equity
investments
Equities . . . . . . . . . . . . . . . . . . ¥ 25
Private equity investments . . .
39
Japanese agency andmunicipal securities . . . . . . —Foreign government, agency
and municipal securities . . .
3Bank and corporate debt
securities and loans for
trading purposes . . . . . . . . . 167
Commercial mortgage-backed
securities (“CMBS”) . . . . .
2
Residential mortgage-backed
securities (“RMBS”) . . . . .
1
Real estate-backed
securities . . . . . . . . . . . . . . .
13
Collateralized debt obligations(“CDOs”) and other . . . . . .
15
Investment trust funds andother . . . . . . . . . . . . . . . . . .
4

¥—
14

¥—
—

¥ 17
—

0

—

0

¥

(7)
(25)

¥—
—

¥ (1)
(2)

¥ 2
—

11

(11)

—

—

—

21

(22)

—

(9)

—

164

(243)

2

—

15

0

—

0

—

(8)

—

0

¥

(2)
(6)

¥ 34
20

—

0

—

0

3

(1)

4

—

(9)

60

(23)

107

(3)

—

0

1

—

17

1

(1)

—

0

8

—

9

35

(20)

—

(3)

13

—

38

9

(14)

—

(1)

16

(7)

10

—

2

(1)

—

0

0

(3)

2

Total trading assets and private
equity investments . . . . . . . . . . .

269

(1)

—

275

(347)

—

(16)

103

(42)

241

Derivatives, net(4)Equity contracts . . . . . . . . . . .
Interest rate contracts . . . . . . .
Credit contracts . . . . . . . . . . .
Foreign exchange contracts . .
Commodity contracts . . . . . . .

(6)
(22)
4
(5)
0

11
(17)
(1)
(14)
0

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(4)
61
(4)
18
0

0
(3)
0
1
0

1
(1)
(6)
(3)
—

4
(1)
7
(6)
—

6
17
0
(9)
—

Total derivatives, net . . . . . . . . . . .

(29)

(21)

—

—

—

71

(2)

(9)

4

14

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . ¥240

¥ (22)¥—¥275¥(347)¥ 71¥ (18)¥ 94¥ (38)¥255

Loans and receivables . . . . . . . . . . ¥ 15
Other assets . . . . . . . . . . . . . . . . . .
Non-trading debt securities . .
0
Other . . . . . . . . . . . . . . . . . . . .
53

¥ (1)

¥—

¥

¥

(1)

¥—

¥ (2)

¥

¥—

¥ 26

—

—

—

—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥308

¥ (17)

¥

¥ (1)

¥—

(2)

—

Liabilities:
Trading liabilities
Equities . . . . . . . . . . . . . . . . . . ¥ 3Bank and corporate debt
securities . . . . . . . . . . . . . . .
0Investment trust funds andother . . . . . . . . . . . . . . . . . . —

7
3

—
(4)

—
—

0
(1)

—

0

0

0

0
57

0

¥285

¥(352)¥ 71¥ (21)¥102¥ (38)

¥338

¥

¥

(4)

¥—

¥

¥

¥

¥

0

—

6

1
1

0

—

—

3

¥ (3)

¥—

¥

1
0
525
—

(2)
0
30
(2)

—
—
—
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥529

¥ 23

¥—

Total trading liabilities . . . . . . . . . . ¥Short-term borrowings . . . . . . . . . .
Payables and deposits . . . . . . . . . . .
Long-term borrowings . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . .

8

0
0

—

—

(4)

¥—

27
0
232
0

(1)
0
(412)
0

—
—
—
—

0
0
(7)
0

¥261

¥(417)

¥—

¥ (7)

F-51

2

¥

1

0
¥

0

1

2

0

(1)

0
¥

(2)

3

—
¥

0

(3)

¥

3

9
—
114
0

(17)
—
(91)
0

21
0
331
2

¥125

¥(111)¥357

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Billions of yen
Year ended March 31, 2017
Total gains(losses)
Balance Total gains
recognized in
Balance
as of(losses)other
Foreign Transfers Transfers
as ofApril 1, recognized comprehensive Purchases
Sales /
exchange
into
out of March 31,
(1)
(2)
(2)
(3)
(3)
2016 in net revenue
income/ issues redemptions Settlements movements Level 3 Level 3
2017

Assets:Trading assets and private equity
investments
Equities . . . . . . . . . . . . . . . . . . ¥ 34
Private equity investments . . .
20Japanese agency andmunicipal securities . . . . . . —Foreign government, agency
and municipal securities . . .
4Bank and corporate debt
securities and loans for
trading purposes . . . . . . . . . 107
Commercial mortgage-backed
securities (“CMBS”) . . . . .
17
Residential mortgage-backed
securities (“RMBS”) . . . . .
9Real estate-backed
securities . . . . . . . . . . . . . . .
38
Collateralized debt obligations(“CDOs”) and other . . . . . .
10Investment trust funds andother . . . . . . . . . . . . . . . . . .
2

¥ (2)
1

¥—
—

¥ 11
0

¥ (10)
(5)

¥—
—

¥ (1)
(2)

¥ 9
—

¥

(7)
(1)

¥ 34
13

0

—

1

0

—

—

0

—

1

0

—

5

(7)

—

0

5

(4)

3

2

—

97

(131)

—

(2)

62

(27)

108

0

—

—

(16)

—

0

0

0

1

0

—

14

(20)

—

(2)

0

(1)

0

(4)

—

41

(34)

—

0

—

—

41

(11)

—

76

(58)

—

1

16

(7)

27

1

—

0

(3)

—

0

0

0

0

Total trading assets and private
equity investments . . . . . . . . . . .

241

(13)

—

245

(284)

—

(6)

92

(47)

228

Derivatives, net(4)Equity contracts . . . . . . . . . . .
Interest rate contracts . . . . . . .
Credit contracts . . . . . . . . . . .
Foreign exchange contracts . .
Commodity contracts . . . . . . .

6
17
0
(9)
—

(16)
24
0
9
0

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(7)
(39)
(5)
14
0

0
0
(1)
1
0

22
(15)
(4)
4
—

(11)
(9)
0
4
—

(6)
(22)
(10)
23
—

Total derivatives, net . . . . . . . . . . .

14

17

—

—

—

(37)

0

7

(16)

(15)

4

¥—

¥245

¥(284)¥ (37)

¥ (6)

¥ 99

¥ (63)¥213

Loans and receivables . . . . . . . . . . ¥ 26
Collateralized agreements . . . . . . . —Other assets
Non-trading debt securities . .
0
Other . . . . . . . . . . . . . . . . . . . .
57

¥ (1)
0

¥—
—

¥ 47
—

¥ (16)
—

¥—
—

¥

1
0

¥ 14
5

¥

(5)
—

¥ 66
5

0
(5)

—

—
108

0
(4)

—
—

0
10

—

0

7

—
(10)

—
163

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥338

¥ (2)

¥

0

¥400

¥(304)¥ (37)¥

5¥125¥ (78)

¥447

¥

0

¥—

¥

¥

(3)

¥—

¥

0

¥

¥

¥

0

—

0

(1)

—

0

0

(2)

0

0

—

4

(3)

—

0

—

0

1

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . ¥255

Liabilities:
Trading liabilities
Equities . . . . . . . . . . . . . . . . . . ¥ 0Bank and corporate debt
securities . . . . . . . . . . . . . . .
3
Collateralized debt obligations(“CDOs”) and other . . . . . . —Investment trust funds andother . . . . . . . . . . . . . . . . . .
0Total trading liabilities . . . . . . . . . . ¥3

Short-term borrowings . . . . . . . . . .
Payables and deposits . . . . . . . . . . .
Collateralized financing . . . . . . . . .
Long-term borrowings . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . .

21
0
—
331
2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥357

¥

¥

0

—

0
0
9
0

0
—
—
(4)
—

87
0
3
190
1

(38)
0
—
(113)
(1)

—
—
—
—
(2)

(3)
—
—
0
0

7
—
—
132
1

(4)
0
—
(125)
0

70
0
3
410
1

9

¥ (4)

¥289

¥(159)

¥ (2)

¥ (3)

¥143

¥(134)

¥486

¥

(7)

¥

0

0
¥

0

—
¥

3

0

1

¥—

8

—

(3)

0

¥

0

3

0

—

¥

4

¥

(5)

0
¥

2

(1) Includes gains and losses reported primarily within Net gain on trading, Gain on private equity investments, and also within Gain on
investments in equity securities, Revenue—Other and Non-interest expenses—Other, Interest and dividends and Interest expense in the
consolidated statements of income.

F-52

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(2) Amounts reported in Purchases / issues include increases in trading liabilities while Sales / redemptions include decreases in trading liabilities.
(3) If financial instruments move from Level 3 to another Level or move from another Level to Level 3, the amount reported in Transfers
into Level 3 and Transfers out of Level 3 is the fair value as of the beginning of the quarter during which the movement occurs. Therefore
if financial instruments move from another Level to Level 3, all gains/ (losses) during the quarter are included in the table and if financial
instruments move from Level 3 to another Level, all gains/ (losses) during the year are excluded from the table.
(4) Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate contracts include complex
derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts
include credit default swaps as well as derivatives referencing corporate and government debt securities.
(5) In accordance with ASU 2015-07, certain investments that are measured at fair value using net asset value per share as a practical
expedient have not been classified in the fair value hierarchy. Certain reclassifications of previously reported amounts have been made toconform to the current year presentation.

Unrealized gains and losses recognized for Level 3 financial instruments
The following table presents the amounts of unrealized gains (losses) for the years ended March 31, 2016
and 2017, relating to those financial instruments which Nomura classified in Level 3 within the fair value
hierarchy and that were still held by Nomura at the relevant consolidated balance sheet date.
Billions of yen
March 312016
2017
Unrealized gains / (losses)(1)

Assets:Trading assets and private equity investments
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese agency and municipal securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal securities . . . . . . . . . . . . . . . . . .
Bank and corporate debt securities and loans for trading purposes . . . . . . . .
Commercial mortgage-backed securities (“CMBS”) . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities (“RMBS”) . . . . . . . . . . . . . . . . . . . .
Real estate-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized debt obligations (“CDOs”) and other . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

0
6
0
0
(8)
4
0
0
(4)
0

¥ (1)
1
0
0
0
0
0
(1)
(3)
0

(2)

(4)

Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4
14
(4)
(9)
—

(8)
(12)
0
6
0

Total derivatives, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

(14)

3

¥ (18)

(1)
—

1
0

0
4

0
(4)

6

¥ (21)

Total trading assets and private equity investments . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives, net(2)Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥Loans and receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets
Non-trading debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-53¥

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Billions of yen
March 312016
2017
Unrealized gains / (losses)(1)Liabilities:
Trading liabilities
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized debt obligations (“CDOs”) and other . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

0
(2)
—
0

¥ (1)
1
0
—

Total trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (2)

¥

Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables and deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)
1
33
(2)

0
0
(4)
0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 28

¥ (4)

0

(1) Includes gains and losses reported within Net gain on trading, Gain on private equity investments, and also
within Gain on investments in equity securities, Revenue—Other and Non-interest expenses—Other, Interestand dividends and Interest expense in the consolidated statements of income.
(2) Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate
contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or otherfactors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives
referencing corporate and government debt securities.
(3) In accordance with ASU 2015-07, certain investments that are measured at fair value using net asset value
per share as a practical expedient have not been classified in the fair value hierarchy. Certain
reclassifications of previously reported amounts have been made to conform to the current year
presentation.
Transfers between levels of the fair value hierarchy
Nomura assumes that all transfers of financial instruments from one level to another level within the fairvalue hierarchy occur at the beginning of the relevant quarter in which the transfer takes place. Amounts reported
below therefore represent the fair value of the financial instruments at the beginning of the relevant quarter when
the transfer was made.
Transfers between Level 1 and Level 2
During the year ended March 31, 2016, a total of ¥85 billion of financial assets (excluding derivative assets)
were transferred from Level 1 to Level 2. This comprised primarily ¥65 billion of equities reported within
Trading assets and private equity investments—Equities which were transferred because the observable markets
in which these instruments were traded became less active. This also comprised ¥20 billion of Investment trust
funds and other, which were transferred because the observable markets in which these instruments were tradedbecame less active. During the same period, a total of ¥28 billion of financial liabilities (excluding derivative
liabilities) were transferred from Level 1 to Level 2. This comprised primarily ¥27 billion of short sales of
equities reported within Trading liabilities which were transferred because the observable markets in which these
instruments were traded became less active.
F-54

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
During the year ended March 31, 2017, a total of ¥464 billion of financial assets (excluding derivative
assets) were transferred from Level 1 to Level 2. This comprised primarily ¥423 billion of equities reported
within Trading assets and private equity investments—Equities, which were transferred because the observable
markets in which these instruments were traded became less active. This also comprised ¥40 billion of
Investment trust funds and other, which were transferred because the observable markets in which these
instruments were traded became less active. During the same period, a total of ¥466 billion of financial liabilities(excluding derivative liabilities) were transferred from Level 1 to Level 2. This comprised primarily ¥452 billionof short sales of equities reported within Trading liabilities which were transferred because the observable
markets in which these instruments were traded became less active. This also comprised ¥14 billion of short salesof Investment trust funds and other, which were transferred because the observable markets in which these
instruments were traded became less active.
During the year ended March 31, 2016, a total of ¥87 billion of financial assets (excluding derivative assets)
were transferred from Level 2 to Level 1. This comprised primarily ¥60 billion of equities reported within
Trading assets and private equity investments—Equities which were transferred because the observable markets
in which these instruments were traded became more active. This also comprised ¥21 billion of Investment trust
funds and other which were transferred because the observable markets in which these instruments were tradedbecame more active. During the same period, a total of ¥25 billion of financial liabilities (excluding derivative
liabilities) were transferred from Level 2 to Level 1. This comprised primarily ¥24 billion of short sales of
equities reported within Trading liabilities which were transferred because the observable markets in which these
instruments were traded became more active.
During the year ended March 31, 2017, a total of ¥550 billion of financial assets (excluding derivative assets)
were transferred from Level 2 to Level 1. This comprised primarily ¥387 billion of equities reported within Trading
assets and private equity investments—Equities which were transferred because the observable markets in whichthese instruments were traded became more active. This also comprised ¥143 billion of Other assets Other and¥13 billion of Investment trust funds and other which were transferred because the observable markets in whichthese instruments were traded became more active. During the same period, a total of ¥483 billion of financial
liabilities (excluding derivative liabilities) were transferred from Level 2 to Level 1. This comprised primarily¥341 billion of short sales of equities reported within Trading liabilities which were transferred because theobservable markets in which these instruments were traded became more active. This also comprised ¥141 billionof Other liabilities which were transferred because the observable markets in which these instruments were tradedbecame more active.
Transfers out of Level 3
During the year ended March 31, 2016, a total of ¥42 billion of financial assets (excluding derivative assets)
were transferred out of Level 3. This comprised primarily ¥23 billion of Bank and corporate debt securities andloans for trading purposes which were transferred because certain credit spreads and recovery rates became
observable. During the same period, a total of ¥111 billion of financial liabilities (excluding derivative liabilities)
were transferred out of Level 3. This comprised primarily ¥17 billion of Short-term borrowings, and ¥91 billionof Long-term borrowings, which were transferred because certain volatility and correlation valuation inputs
became observable or less significant.
During the year ended March 31, 2016, a total amount of net derivative liabilities which were transferred outof Level 3 was not significant.
During the year ended March 31, 2017, a total of ¥62 billion of financial assets (excluding derivative assets)
were transferred out of Level 3. This comprised primarily ¥27 billion of Bank and corporate debt securities and
F-55

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
loans for trading purposes, which were transferred because certain credit spreads and recovery rates became
observable or less significant. During the same period, a total of ¥134 billion of financial liabilities (excluding
derivative liabilities) were transferred out of Level 3. This comprised primarily ¥125 billion of Long term
borrowings, principally structured notes, which were transferred because certain volatility and correlation
valuation inputs became observable or less significant.
During the year ended March 31, 2017, the total amount of ¥16 billion of net derivative assets were transferredout of Level 3. This comprised primarily ¥11 billion of net equity derivative liabilities which were transferredbecause certain dividend yield, volatility and correlation valuation inputs became observable or less significant.
Transfers into Level 3
During the year ended March 31, 2016, a total of ¥111 billion of financial assets (excluding derivative
assets) were transferred into Level 3. This comprised primarily ¥60 billion of Bank and corporate debt securities
and loans for trading purposes, which were transferred because certain credit spread and recovery rate valuation
inputs became unobservable, ¥13 billion of Real estate-backed securities which were transferred because certain
yield and loss severity valuation inputs became unobservable and ¥16 billion of Collateralized debt obligations(“CDOs”) and other, which were transferred because certain yield, prepayment rate, default probability and loss
severity valuation inputs became unobservable. The amount of gains and losses on these transfer reported in
Bank and corporate debt securities and loans for trading purposes, Real estate-backed securities andCollateralized debt obligations (“CDOs”) and other which were recognized in the quarter when the transfer into
Level 3 occurred were not significant. During the same period, a total of ¥125 billion of financial liabilities(excluding derivative liabilities) were transferred into Level 3. This comprised primarily ¥114 billion of Longterm borrowings, principally structured notes, which were transferred because certain volatility and correlation
valuation inputs became unobservable or more significant. The amount of gains and losses on these transfers
reported in Long-term borrowings which were recognized in the quarter when the transfer into Level 3 occurred
was not significant.
During the year ended March 31, 2016, a total amount of net derivative liabilities which were transferred
into Level 3 was not significant. The amount of gains and losses which were recognized in the quarter when thetransfer into Level 3 occurred was also not significant.
During the year ended March 31, 2017, a total of ¥118 billion of financial assets (excluding derivative assets)
were transferred into Level 3. This comprised primarily ¥62 billion of Bank and corporate debt securities and loans
for trading purposes which were transferred because certain credit spread and recovery rate valuation inputs became
unobservable or more significant, ¥16 billion of Collateralized debt obligations (“CDOs”) and other which weretransferred because certain yields, prepayment rates, default probabilities and loss severities became unobservable
or more significant and ¥14 billion of Loans and receivables which were transferred because certain credit Spreads
became unobservable or more significant. The amount of gains and losses on these transfers reported in Bank andcorporate debt securities and loans for trading purposes, Collateralized debt obligations (“CDOs”) and other andLoans and receivables were recognized in the quarter when the transfer into Level 3 occurred were not significant.
During the same period, a total of ¥143 billion of financial liabilities (excluding derivative liabilities) weretransferred into Level 3. This comprised primarily ¥132 billion of Long-term borrowings, principally structured
notes, which were transferred because certain volatility and correlation valuation inputs became unobservable ormore significant. The amount of gains and losses on these transfers reported in Long-term borrowings which wererecognized in the quarter when the transfer into Level 3 occurred was not significant.
During the year ended March 31, 2017, a total amount of net derivative liabilities which were transferred
into Level 3 was not significant. The amount of gains and losses which were recognized in the quarter when thetransfer into Level 3 occurred was also not significant.
F-56

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investments in investment funds that calculate NAV per share
In the normal course of business, Nomura invests in non-consolidated funds which meet the definition of
investment companies or are similar in nature and which do not have readily determinable fair values. For certainof these investments, Nomura uses NAV per share as the basis for valuation as a practical expedient. Some ofthese investments are redeemable at different amounts fromNAV per share.
The following tables present information on these investments where NAV per share is calculated ordisclosed as of March 31, 2016 and 2017. Investments are presented by major category relevant to the nature of
Nomura’s business and risks.

Fair value

Unfundedcommitments(1)Hedge funds . . . . . . . . . . . . . . . . . . . . . . . . .
Venture capital funds . . . . . . . . . . . . . . . . . .
Private equity funds . . . . . . . . . . . . . . . . . . .
Real estate funds . . . . . . . . . . . . . . . . . . . . .

¥ 56
2
23
1

¥

0
1
18
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 82

¥ 19

Fair value

Hedge funds . . . . . . . . . . . . . . . . . . . . . . . . .
Venture capital funds . . . . . . . . . . . . . . . . . .
Private equity funds . . . . . . . . . . . . . . . . . . .
Real estate funds . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unfundedcommitments(1)

¥ 37
3
26
4
¥ 70

¥

0
1
14
—
¥ 15

Billions of yen
March 31, 2016
Redemption frequency(if currently eligible)(2)Redemption notice(3)Monthly———

Same day-90 days———

Billions of yen
March 31, 2017
Redemption frequency(if currently eligible)(2)Redemption notice(3)Monthly———

Same day-90 days———

(1) The contractual amount of any unfunded commitments Nomura is required to make to the entities in which
the investment is held.
(2) The range in frequency with which Nomura can redeem investments.
(3) The range in notice period required to be provided before redemption is possible.
(4) In accordance with ASU 2015-07, certain investments that are measured at fair value using net asset value
per share as a practical expedient have not been classified in the fair value hierarchy. Certain
reclassifications of previously reported amounts have been made to conform to the current year
presentation.
Hedge funds:
These investments include funds of funds that invest in multiple asset classes. The fair values of theseinvestments are determined using NAV per share. Although most of these funds can be redeemed within six
months, certain funds cannot be redeemed within six months due to contractual, liquidity or gating issues. The
redemption period cannot be estimated for certain suspended or liquidating funds. Some of these investments
contain restrictions against transfers of the investments to third parties.

F-57

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Venture capital funds:
These investments include primarily start-up funds. The fair values of these investments are determinedusing NAV per share. Most of these funds cannot be redeemed within six months. The redemption period cannot
be estimated for certain suspended or liquidating funds. These investments contain restrictions against transfersof the investments to third parties.
Private equity funds:
These investments are made mainly in various sectors in Europe, United States and Japan. The fair values ofthese investments are determined using NAV per share. Redemption is restricted for most of these investments.
Some of these investments contain restrictions against transfers of the investments to third parties.
Real estate funds:
These are investments in commercial and other types of real estate. The fair values of these investments are
determined using NAV per share. Redemption is restricted for most of these investments. These investments
contain restrictions against transfers of the investments to third parties.
Fair value option for financial assets and financial liabilities
Nomura carries certain eligible financial assets and liabilities at fair value through the election of the fairvalue option permitted by ASC 815 and ASC 825. When Nomura elects the fair value option for an eligible item,changes in that item’s fair value are recognized through earnings. Election of the fair value option is generally
irrevocable unless an event occurs that gives rise to a new basis of accounting for that instrument.
The financial assets and financial liabilities primarily elected for the fair value option by Nomura, and thereasons for the election, are as follows:•

Equity method investments reported within Trading assets and private equity investments and Other
assets held for capital appreciation or current income purposes which Nomura generally has an intention
to exit rather than hold indefinitely. Nomura elects the fair value option to more appropriately represent
the purpose of these investments in these consolidated financial statements.

•

Loans reported within Loans and receivables which are risk managed on a fair value basis and loan
commitments related to loans receivable for which the fair value option will be elected upon funding.
Nomura elects the fair value option to mitigate volatility through earnings caused by the difference inmeasurement basis that otherwise would arise between loans and the derivatives used to risk manage
those instruments.

•

Reverse repurchase and repurchase agreements reported within Collateralized agreements andCollateralized financing which are risk managed on a fair value basis. Nomura elects the fair value
option to mitigate volatility through earnings caused by the difference in measurement basis that
otherwise would arise between the reverse repurchase and repurchase agreements and the derivatives
used to risk manage those instruments.

•

All structured notes issued on or after April 1, 2008 reported within Short-term borrowings and Longterm borrowings. Nomura elects the fair value option for those structured notes primarily to mitigate thevolatility through earnings caused by differences in the measurement basis for structured notes and thederivatives Nomura uses to risk manage those positions. Nomura also elects the fair value option forcertain notes issued by consolidated VIEs for the same purpose and for certain structured notes issued
prior to April 1, 2008.
F-58

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)•

Financial liabilities reported within Long-term borrowings recognized in transactions which areaccounted for as secured financing transactions under ASC 860. Nomura elects the fair value option forthese financial liabilities to mitigate volatility through earnings that otherwise would arise had thiselection not been made. Even though Nomura usually has little or no continuing economic exposure to
the transferred financial assets, they remain on the consolidated balance sheets and continue to be
carried at fair value, with changes in fair value recognized through earnings.

Interest and dividends arising from financial instruments for which the fair value option has been elected arerecognized within Interest and dividends, Interest expense or Net gain on trading.
The following table presents gains (losses) due to changes in fair value for financial instruments measured atfair value using the fair value option for the years ended March 31, 2015, 2016 and 2017.
Billions of yen
Year ended March 31
2015
2016
2017
Gains/(Losses)(1)

Assets:Trading assets and private equity investments(2)Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized agreements(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 0
1
4
4
6

¥ 1
1
5
2
(22)

¥ 1
0
1
6
10

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥15

¥(13)

¥ 18

Liabilities:
Short-term borrowings(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized financing(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥11
(2)
(7)
0

¥ 14
6
79
(2)

¥(42)
(1)
7
0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2

¥ 97

¥(36)

(1) Includes gains and losses reported primarily within Net gain on trading, Gain on private equity investments
and Revenue—Other in the consolidated statements of income.
(2) Includes equity investments that would have been accounted for under the equity method had Nomura notchosen to elect the fair value option.
(3) Includes reverse repurchase and repurchase agreements.
(4) Includes structured notes and other financial liabilities.
(5) Includes secured financing transactions arising from transfers of financial assets which did not meet thecriteria for sales accounting.
(6) Includes unfunded written loan commitments.
Nomura carried its investment in the common stock of Ashikaga Holdings Co., Ltd. (“Ashikaga Holdings”)
at fair value through election of the fair value option. Nomura held 37.1% of the common stock as of March 31,
2015, 36.9% as of March 31, 2016. This investment was reported within Other assets—Other in the consolidatedbalance sheets.

F-59

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On October 1, 2016, Ashikaga Holdings merged with Joyo Bank, Ltd. through a share exchange and created
Mebuki Financial Group, Inc. As a result, Nomura does not have significant influence over Mebuki Financial
Group, Inc. Nomura’s investment in the common stock of Mebuki Financial Group, Inc. continues to be carriedat fair value after the share exchange.
In May 2016, Nomura completed the purchase of a non-controlling stake in the common stock of American
Century Companies, Inc. (“American Century”). As of March 31, 2017, Nomura held an economic interest of
39.70% in American Century. The investment is carried at fair value on a recurring basis through election of thefair value option and is reported within Other assets—Other in the consolidated balance sheets.
See Note 19 “Affiliated companies and other equity-method investees” for further information regarding
significant affiliated companies of Nomura, including those elected for the fair value option.
Nomura calculates the impact of changes in its own creditworthiness on certain financial liabilities forwhich the fair value option is elected by DCF valuation techniques using a rate which incorporates observablechanges in its credit spread.
Changes in the fair value of financial liabilities for which the fair value option was elected, attributable to thechange in its creditworthiness were decrease of ¥2 billion for the year ended March 31, 2015, mainly due to thewidening of Nomura’s credit spread. Changes in the fair value of financial liabilities for which the fair value option
was elected, attributable to the change in its creditworthiness were decrease of ¥23 billion for the year ended
March 31, 2016, mainly due to the widening of Nomura’s credit spread. Changes in the fair value of financial
liabilities for which the fair value option was elected, attributable to the change in its creditworthiness were increaseof ¥15 billion for the year ended March 31, 2017, mainly due to the tightening of Nomura’s credit spread. Thesechanges in the fair value are reported in other comprehensive income from the year ended March 31, 2017.
There was no significant impact on financial assets for which the fair value option was elected attributable
to instrument-specific credit risk.
As of March 31, 2016, the fair value of the aggregate unpaid principal balance (which is contractuallyprincipally protected) of loans and receivables for which the fair value option was elected was ¥1 billion morethan the principal balance of such loans and receivables. The fair value of the aggregate unpaid principal balance(which is contractually principally protected) of long-term borrowings for which the fair value option waselected was ¥2 billion less than the principal balance of such long-term borrowings. There were no loans andreceivables for which the fair value option was elected that were 90 days or more past due.
As of March 31, 2017, the fair value of the aggregate unpaid principal balance (which is contractuallyprincipally protected) of loans and receivables for which the fair value option was elected was ¥0 billion morethan the principal balance of such loans and receivables. The fair value of the aggregate unpaid principal balance(which is contractually principally protected) of long-term borrowings for which the fair value option waselected was ¥41 billion less than the principal balance of such long-term borrowings. There were no loans andreceivables for which the fair value option was elected that were 90 days or more past due.
Concentrations of credit risk
Concentrations of credit risk may arise from trading, securities financing transactions and underwriting
activities, and may be impacted by changes in political or economic factors. Nomura has credit risk
concentrations on bonds issued by the Japanese Government, U.S. Government, Governments within theEuropean Union (“EU”), their states and municipalities, and their agencies. These concentrations generally arise
F-60

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
from taking trading positions and are reported within Trading assets in the consolidated balance sheets.
Government, agency and municipal securities, including Securities pledged as collateral, represented 20% of
total assets as of March 31, 2016 and 15% as of March 31, 2017.
The following tables present geographic allocations of Nomura’s trading assets related to government,
agency and municipal securities as of March 31, 2016 and 2017. See Note 3 “Derivative instruments and hedging
activities” for further information regarding the concentration of credit risk for derivatives.

Japan

Government, agency and municipal securities . . . . . . . . . . . . . . . . . .

¥3,188Billions of yen
March 31, 2016
U.S.
EU
Other

¥2,445¥2,197

Total(1)¥418¥8,248March 31, 2017
U.S.
EU
Other

Total(1)Billions of yen
JapanGovernment, agency and municipal securities . . . . . . . . . . . . . . . . . .

¥2,494¥2,047¥1,315¥479¥6,335(1) Other than above, there were ¥577 billion and ¥544 billion of government, agency and municipal securities
reported within Other assets—Non-trading debt securities in the consolidated balance sheets as ofMarch 31, 2016 and 2017, respectively. These securities are primarily Japanese government, agency andmunicipal securities.
Estimated fair value of financial instruments not carried at fair value
Certain financial instruments are not carried at fair value on a recurring basis in the consolidated balance
sheets since they are neither held for trading purposes nor are elected for the fair value option. These are typicallycarried at contractual amounts due or amortized cost.
The carrying value of the majority of the financial instruments detailed below will approximate fair value
since they are short-term in nature and contain minimal credit risk. These financial instruments include financial
assets reported within Cash and cash equivalents, Time deposits, Deposits with stock exchanges and other
segregated cash, Receivables from customers, Receivables from other than customers, Securities purchased
under agreements to resell and Securities borrowed and financial liabilities reported within Short-termborrowings, Payables to customers, Payables to other than customers, Deposits received at banks, Securities
sold under agreements to repurchase, Securities loaned and Other secured borrowings in the consolidatedbalance sheets. These would be generally classified in either Level 1 or Level 2 within the fair value hierarchy.
The estimated fair values of other financial instruments which are longer-term in nature or may containmore than minimal credit risk may be different to their carrying value. Financial assets of this type primarily
include certain loans which are reported within Loans receivable while financial liabilities primarily include
long-term borrowings which are reported within Long-term borrowings. The estimated fair value of loans
receivable which are not elected for the fair value option is generally estimated in the same way as other loans
carried at fair value on a recurring basis . Where quoted market prices are available, such market prices are
utilized to estimate fair value. The fair value of long-term borrowings which are not elected for the fair value
option is generally estimated in the same way as other borrowings carried at fair value on a recurring basis using
quoted market prices where available or by DCF valuation techniques. All of these financial assets and financial
liabilities would be generally classified in Level 2 or Level 3 within the fair value hierarchy using the same
methodology as is applied to these instruments when they are elected for the fair value option.
F-61

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present carrying values, fair values and classification within the fair value hierarchy forcertain classes of financial instrument of which a portion of the ending balance was carried at fair value as ofMarch 31, 2016 and 2017.
Billions of yen
March 31, 2016(1)Fair value by level
Carrying
value

Fair value

Level 1

Level 2

Level 3

Assets:Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 3,476 ¥ 3,476 ¥3,476 ¥ —Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
197
197
—
197
Deposits with stock exchanges and other segregated cash . . .
226
226
—
226
Loans receivable(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,605
1,605
—
1,180
Securities purchased under agreements to resell . . . . . . . . . .
9,205
9,205
—
9,205
Securities borrowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,872
5,872
—
5,872
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥20,581 ¥20,581 ¥3,476 ¥16,680

¥—
—
—
425
—
—
¥425

Liabilities:
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 663 ¥ 663 ¥1 ¥ 641
Deposits received at banks . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,223
2,223
—
2,223
Securities sold under agreements to repurchase . . . . . . . . . . . 14,192 14,192—
14,192
Securities loaned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,937
1,936
—
1,936
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,130
8,128
104
7,692
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥27,145 ¥27,142 ¥ 105 ¥26,684

¥ 21
0
—
—
332
¥353

Billions of yen
March 31, 2017(1)Fair value by level
Carrying
value

Fair value

Level 2

Level 3

Assets:Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 2,537 ¥ 2,537 ¥2,537 ¥ —Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
208
208
—
208
Deposits with stock exchanges and other segregated cash . . .
227
227
—
227
Loans receivable(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,874
1,875
—
1,405
Securities purchased under agreements to resell . . . . . . . . . . 11,457 11,457—
11,452
Securities borrowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,273
7,272
—
7,272
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,576 ¥23,576 ¥2,537 ¥20,564

¥—
—
—
470
5
—
¥475

Liabilities:
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 543 ¥ 543 ¥ — ¥ 473
Deposits received at banks . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,133
1,133
—
1,132
Securities sold under agreements to repurchase . . . . . . . . . . . 17,096 17,096—
17,093
Securities loaned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,627
1,626
—
1,626
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,195
7,218
109
6,697
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥27,594 ¥27,616 ¥ 109 ¥27,021

¥ 70
1
3
—
412
¥486

(1) Includes financial instruments which are carried at fair value on a recurring basis.
(2) Carrying values are shown after deducting relevant allowances for credit losses.

F-62

Level 1NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For the estimated fair value of liabilities relating to investment contracts underwritten by Nomura’s
insurance subsidiary, see Note 9 “Other assets—Other / Other liabilities” in our consolidated financial
statements included in this annual report.
Assets and liabilities measured at fair value on a nonrecurring basis
In addition to financial instruments carried at fair value on a recurring basis, Nomura also measures otherfinancial and non-financial assets and liabilities at fair value on a nonrecurring basis, where the primarymeasurement basis is not fair value. Fair value is only used in specific circumstances after initial recognition suchas to measure impairment.
As of March 31, 2015, there were no significant amount of assets and liabilities which were measured at fairvalue on a nonrecurring basis.
During the year ended March 31, 2016, Nomura recognized other-than-temporary impairment losses of¥2 billion within Non-interest expenses—Other in the consolidated statements of operations against certain listed
equity method investees. The carrying amount of these investments, which is reported within Other assets—
Investments in and advances to affiliated companies in the consolidated balance sheets, was written down to theirfair value of ¥3 billion. Fair value was determined in accordance with ASC 820 using unadjusted quoted market
prices. Consequently, these nonrecurring fair value measurements have been determined using valuation inputs
which would be classified as Level 1 in the fair value hierarchy.
As of March 31, 2017, there were no significant amount of assets and liabilities which were measured at fairvalue on a nonrecurring basis.
3. Derivative instruments and hedging activities:
Nomura uses a variety of derivative financial instruments, including futures, forwards, options and swaps,
for both trading and non-trading purposes.
Derivatives used for trading purposes
In the normal course of business, Nomura enters into transactions involving derivative financial instruments
to meet client needs, for trading purposes, and to reduce its own exposure to loss due to adverse fluctuations ininterest rates, currency exchange rates and market prices of securities. These financial instruments include
contractual agreements such as commitments to swap interest payment streams, exchange currencies or purchaseor sell securities and other financial instruments on specific terms at specific future dates.
Nomura maintains active trading positions in a variety of derivative financial instruments. Most of
Nomura’s trading activities are client oriented. Nomura utilizes a variety of derivative financial instruments as ameans of bridging clients’ specific financial needs and investors’demands in the securities markets. Nomura also
actively trades securities and various derivatives to assist its clients in adjusting their risk profiles as marketschange. In performing these activities, Nomura carries an inventory of capital markets instruments and maintains
its access to market liquidity by quoting bid and offer prices to and trading with other market makers. These
activities are essential to provide clients with securities and other capital market products at competitive prices.
Futures and forward contracts are commitments to either purchase or sell securities, foreign currency orother capital market instruments at a specific future date for a specified price and may be settled in cash or
F-63

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
through delivery. Foreign exchange contracts include spot and forward contracts and involve the exchange of twocurrencies at a rate agreed by the contracting parties. Risks arise from the possible inability of counterparties tomeet the terms of their contracts and from movements in market prices. Futures contracts are executed throughregulated exchanges which clear and guarantee performance of counterparties. Accordingly, credit risk
associated with futures contracts is considered minimal. In contrast, forward contracts are generally negotiatedbetween two counterparties and, therefore, are subject to the performance of the related counterparties.
Options are contracts that grant the purchaser, for a premium payment, the right to either purchase or sell afinancial instrument at a specified price within a specified period of time or on a specified date from or to thewriter of the option. The writer of options receives premiums and bears the risk of unfavorable changes in themarket price of the financial instruments underlying the options.
Swaps are contractual agreements in which two counterparties agree to exchange certain cash flows, at
specified future dates, based on an agreed contract. Certain agreements may result in combined interest rate andforeign currency exposures. Entering into swap agreements may involve the risk of credit losses in the event ofcounterparty default.
To the extent these derivative financial instruments are economically hedging financial instruments or
securities positions of Nomura, the overall risk of loss may be fully or partly mitigated by the hedged position.
Nomura seeks to minimize its exposure to market risk arising from its use of these derivative financial
instruments through various control policies and procedures, including position limits, monitoring procedures andhedging strategies whereby Nomura enters into offsetting or other positions in a variety of financial instruments.
Derivatives used for non-trading purposes
Nomura’s principal objectives in using derivatives for non-trading purposes are to manage interest rate risk,
to modify the interest rate characteristics of certain financial liabilities, to manage foreign exchange risk ofcertain foreign currency denominated debt securities, to manage net investment exposure to fluctuations inforeign exchange rates arising from certain foreign operations and to mitigate equity price risk arising fromcertain stock-based compensation awards given to employees.
Credit risk associated with derivatives utilized for non-trading purposes is controlled and managed in thesame way as credit risk associated with derivatives utilized for trading purposes.
Nomura designates certain derivative financial instruments as fair value hedges of interest rate risk arisingfrom specific financial liabilities and foreign currency risk arising from specific foreign currency denominateddebt securities. These derivatives are effective in reducing the risk associated with the exposure being hedged
and are highly correlated with changes in the fair value and foreign currency rates of the underlying hedged
items, both at inception and throughout the life of the hedge contract. Changes in fair value of the hedging
derivatives are reported together with those of the hedged assets and liabilities through the consolidated
statements of income within Interest expense or Revenue—Other.
Derivative financial instruments designated as hedges of the net investment in foreign operations relate tospecific subsidiaries with non-Japanese Yen functional currencies. When determining the effectiveness of net
investment hedges, the effective portion of the change in fair value of the hedging derivative is determined bychanges in spot exchange rates and is reported through NHI shareholders’ equity within Accumulated othercomprehensive income (loss). Changes in fair value of the hedging derivatives attributable to changes in the
difference between the forward rate and spot rate are excluded from the measure of hedge effectiveness and arereported in the consolidated statements of income within Revenue—Other.
F-64

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Concentrations of credit risk for derivatives
The following tables present Nomura’s significant concentration of exposures to credit risk in OTC
derivatives with financial institutions including transactions cleared through central counterparties as ofMarch 31, 2016 and 2017. The gross fair value of derivative assets represents the maximum amount of loss due
to credit risk that Nomura would incur if the counterparties of Nomura failed to perform in accordance with theterms of the instruments and any collateral or other security Nomura held in relation to those instruments proved
to be of no value.

Gross fair value ofderivative assets

Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . .

¥35,166

Gross fair value ofderivative assets

Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . .

¥21,829

Billions of yen
March 31, 2016
Impact ofmaster netting Impact ofagreements
collateral¥(33,104)

Net exposure tocredit risk¥(1,560)

Billions of yen
March 31, 2017
Impact ofmaster netting Impact ofagreements
collateral¥(19,905)¥502

Net exposure tocredit risk¥(1,590)¥334

Derivative activities
The following tables quantify the volume of Nomura’s derivative activity as of March 31, 2016 and 2017
through a disclosure of notional amounts, in comparison with the fair value of those derivatives. All amounts aredisclosed on a gross basis, prior to counterparty netting of derivative assets and liabilities and cash collateral
netting against net derivatives.

Total Notional(1)Derivatives used for trading and non-trading purposes(2)(3):
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Billions of yen
March 31, 2016
Derivative
Derivative
assetsliabilities
Fair value Fair value(1)¥34,4792,256,401
47,262
343,565
10,421¥ 1,285
28,765679
6,900
1¥ 1,541
28,494806
6,650
8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,692,128¥37,630¥37,499

Derivatives designated as hedging instruments:
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

1,506
393

¥

60
7

¥

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

1,899

¥

67

¥

Total derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,694,027

F-65¥37,697—4
4¥37,503

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Total Notional(1)Derivatives used for trading and non-trading purposes(2)(3):
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Billions of yen
March 31, 2017
Derivative
Derivative
assetsliabilities
Fair value Fair value(1)¥35,7322,656,681
38,735369,4212,229¥ 1,032
15,355497
6,437
1¥ 1,250
15,193641
6,093
4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,102,798¥23,322¥23,181

Derivatives designated as hedging instruments:
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

1,338
417

¥

36
1

¥

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

1,755

¥

37

¥

Total derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,104,553¥23,359—3
3¥23,184(1) Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
(2) Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rates
contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or otherfactors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives
referencing corporate and government securities.
(3) As of March 31, 2016 and 2017, the amounts reported include derivatives used for non-trading purposes
which are not designated as fair value or net investment hedges. These amounts have not been separately
presented since such amounts were not significant.
Changes in fair value are recognized either through earnings or other comprehensive income depending on
the purpose for which the derivatives are used.
Offsetting of derivatives
Counterparty credit risk associated with derivative financial instruments is controlled by Nomura throughcredit approvals, limits and monitoring procedures. To reduce the risk of loss, Nomura requires collateral,principally cash collateral and government securities, for certain derivative transactions. In certain cases, Nomura
may agree for such collateral to be posted to a third-party custodian under a control agreement that enables
Nomura to take control of such collateral in the event of counterparty default. From an economic standpoint,
Nomura evaluates default risk exposure net of related collateral. Furthermore, OTC derivative transactions are
typically documented under industry standard master netting agreements which reduce Nomura’s credit exposure
to counterparties as they permit the close-out and offset of transactions and collateral amounts in the event ofdefault of the counterparty. For certain OTC centrally-cleared and exchange-traded derivatives, the clearing or
membership agreements entered into by Nomura provide similar rights to Nomura in the event of default of therelevant central clearing party or exchange. In order to support the enforceability of the close-out and offsetting
rights within these agreements, Nomura generally seeks to obtain an external legal opinion.
For certain types of counterparties and in certain jurisdictions, Nomura may enter into derivativetransactions which are not documented under a master netting agreement. Similarly, even when derivatives are
documented under such agreements, Nomura may not have yet sought evidence, or may not be able to obtain
F-66

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
evidence to determine with sufficient certainty that close-out and offsetting rights are legally enforceable. Thismay be the case where relevant local laws specifically prohibit such close-out and offsetting rights, or where
local laws are complex, ambiguous or silent on the enforceability of such rights. This may include derivativetransactions executed with certain foreign governments, agencies, municipalities, central clearing counterparties,
exchanges and pension funds.
Nomura considers the enforceability of a master netting agreement in determining how credit risk arisingfrom transactions with a specific counterparty is hedged, how counterparty credit exposures are calculated andapplied to credit limits and the extent and nature of collateral requirements from the counterparty.
Derivative assets and liabilities with the same counterparty documented under a master netting agreement
are offset in the consolidated balance sheets where the specific criteria defined by ASC 210-20 and ASC 815 aremet. These criteria include requirements around the legal enforceability of such close-out and offset rights underthe master netting agreement. In addition, fair value amounts recognized for the right to reclaim cash collateral (areceivable) and the obligation to return cash collateral (a payable) are also offset against net derivative liabilities
and net derivative assets, respectively where certain additional criteria are met.
The following table presents information about offsetting of derivatives and related collateral amounts in the
consolidated balance sheets as of March 31, 2016 and 2017 by type of derivative contract, together with theextent to which master netting agreements entered into with counterparties, central clearing counterparties or
exchanges permit additional offsetting of derivatives and collateral in the event of counterparty default.
Derivative transactions which are not documented under a master netting agreement or are documented under amaster netting agreement for which Nomura does not have sufficient evidence of enforceability are not offset in
the following table.

Equity contracts
OTC settled bilaterally . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange-traded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts
OTC settled bilaterally . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTC centrally-cleared . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange-traded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts
OTC settled bilaterally . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTC centrally-cleared . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange-traded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts
OTC settled bilaterally . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTC centrally-cleared . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange-traded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts
OTC settled bilaterally . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange-traded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gross derivative balances(2) . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-67

Billions of yen
March 31, 2016
Derivative Derivative
assetsliabilities(1)Billions of yen
March 31, 2017(6)Derivative Derivative
assetsliabilities(1)

¥

¥

945
340

¥ 1,126
415

11,372
17,442
11

11,102
17,387
5

7,777
7,603
11

7,381
7,807
5

577
101
1

709
96
1

376
120
1

512
128
1

6,888
19
—

6,639
15
—

6,354
84
—

5,992
104
—

—

6
2
¥ 37,503—

3
1¥ 23,1841¥ 37,697

808
224

1
¥ 23,359

¥

916
334

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Less: Amounts offset in the consolidated balance sheets(3) . . . . . . .
Total net amounts reported on the face of the consolidated balance
sheets(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Additional amounts not offset in the consolidated balance
sheets(5)Financial instruments and non-cash collateral . . . . . . . . . . . . .
Cash collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Billions of yen
March 31, 2016
Derivative Derivative
assetsliabilities(1)Billions of yen
March 31, 2017(6)Derivative Derivative
assetsliabilities(1)(36,325)(36,456)(22,322)(22,270)¥ 1,372¥ 1,047¥ 1,037¥914(187) ¥
—
850 ¥

(110)
—
804

¥
¥

(457) ¥—
915 ¥(59) ¥(7)981 ¥(1) Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
(2) Includes all gross derivative asset and liability balances irrespective of whether they are transacted under amaster netting agreement or whether Nomura has obtained sufficient evidence of enforceability of themaster netting agreement. As of March 31, 2016, the gross balance of derivative assets and derivative
liabilities which are not documented under master netting agreements or are documented under masternetting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was¥203 billion and ¥326 billion, respectively. As of March 31, 2017, the gross balance of such derivative
assets and derivative liabilities was ¥136 billion and ¥267 billion, respectively.
(3) Represents amounts offset through counterparty netting of derivative assets and liabilities as well as cash
collateral netting against net derivatives under master netting and similar agreements for which Nomura has
obtained sufficient evidence of enforceability in accordance with ASC 815. As of March 31, 2016, Nomura
offset a total of ¥1,885 billion of cash collateral receivables against net derivative liabilities and¥1,754 billion of cash collateral payables against net derivative assets. As of March 31, 2017, Nomura offset
a total of ¥1,642 billion of cash collateral receivables against net derivative liabilities and ¥1,694 billion of
cash collateral payables against net derivative assets.
(4) Net derivative assets and net derivative liabilities are generally reported within Trading assets and private
equity investments—Trading assets and Trading liabilities, respectively in the consolidated balance sheet.
Bifurcated embedded derivatives are reported within Short-term borrowings or Long-term borrowings
depending on the maturity of the underlying host contract.
(5) Represents amounts which are not permitted to be offset on the face of the consolidated balance sheets inaccordance with ASC 210-20 and ASC 815 but which provide Nomura with a legally enforceable right ofoffset in the event of counterparty default. Amounts relating to derivative and collateral agreements where
Nomura has not yet obtained sufficient evidence of enforceability of such offsetting rights are excluded. Asof March 31, 2016, a total of ¥298 billion of cash collateral receivables and ¥466 billion of cash collateralpayables, including amounts reported in the table, have not been offset against net derivatives. As of
March 31, 2017, a total of ¥197 billion of cash collateral receivables and ¥484 billion of cash collateralpayables, including amounts reported in the table, have not been offset against net derivatives.
(6) During the year ended March 31, 2017, the rules of a specific central clearing house were amended such thatdaily variation margin payments and receipts against specific types of derivative now legally represent
partial settlement of the derivative rather than margin. These payments and receipts are accounted for as
partial settlement of the derivative rather than cash collateral. While there was no impact on the amounts
reported in the consolidated balance sheet as of March 31, 2017, lower gross derivative balances andequivalent lower amounts offset in the consolidated balance sheets are included in the above table at suchdate as a result of this change.

F-68

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivatives used for trading purposes
Derivative financial instruments used for trading purposes, including bifurcated embedded derivatives, arecarried at fair value with changes in fair value recognized through the consolidated statements of income within
Revenue—Net gain on trading.
The following table presents amounts recognized in the consolidated statements of income for the years
ended March 31, 2015, 2016, 2017 related to derivatives used for trading and non-trading purposes by type ofunderlying derivative contract.
Billions of yen
Year ended March 31
2015
2016
2017

Derivatives used for trading and non-trading purposes(1)(2):
Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(9) ¥ 372 ¥ 65(105) (142)
180
11
92
(45)
(17)
134
(284)
(2)
(73)
36

¥(122) ¥ 383¥ (48)(1) Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rates
contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or otherfactors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives
referencing corporate and government securities.
(2) Includes net gains (losses) on derivatives used for non-trading purposes which are not designated as fairvalue or net investment hedges. For the years ended March 31, 2015, 2016 and 2017, these amounts havenot been separately presented as net gains (losses) for these non-trading derivatives were not significant.
Fair value hedges
Nomura issues Japanese Yen and foreign currency denominated debt with both fixed and floating interest
rates. Nomura generally enters into swap agreements to convert fixed rate interest payments on its debt
obligations to a floating rate and applies fair value hedge accounting to these instruments.
Also, Nomura’s insurance subsidiary holds foreign currency denominated non-trading debt securities. The
insurance subsidiary generally enters into swap agreements to convert foreign currency denominated principal
amounts of these debt securities into its functional currency and applies fair value hedge accounting to these
instruments.
Derivative financial instruments designated as fair value hedges are carried at fair value. Changes in fairvalue of the hedging derivatives are recognized together with those of the hedged liabilities and hedged debt
securities in the consolidated statements of income within Interest expense and Revenue—Other, respectively.

F-69

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents amounts recognized in the consolidated statements of income for the years
ended March 31, 2015, 2016 and 2017 related to derivatives designated as fair value hedges by type ofunderlying derivative contract and the nature of the hedged item.
Billions of yen
Year ended March 31
2015
2016
2017

Derivatives designated as hedging instruments:
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

29 ¥
(1)

26
8

¥

(8)
2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

28

34

¥

(6)

Hedged items:
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-trading debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(29) ¥
1(26) ¥(8)

8(2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(28) ¥(34) ¥

6¥

Net investment hedges
Nomura designates foreign currency forwards as hedges of certain subsidiaries with significant foreignexchange risks and applies hedge accounting to the instrument. Accordingly, the effective hedging portion of theforeign exchange gains (losses) arising from the derivative contracts and non-derivative financial products
designated as hedges is recognized through the consolidated statements of comprehensive income within Other
comprehensive income (loss)—Change in cumulative translation adjustments, net of tax. This is offset by theforeign exchange adjustments arising from consolidation of the relevant foreign subsidiaries.
The following table presents gains (losses) from derivatives and non-derivatives designated as net
investment hedges recognized in the consolidated statements of comprehensive income for the years ended
March 31, 2015, 2016 and 2017.
Billions of yen
Year ended March 31
2015
2016
2017

Hedging instruments:
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

7

¥

7

¥

6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

7

¥

7

¥

6

(1) The portion of gains (losses) representing the amount of hedge ineffectiveness and the amount excluded
from the assessment of hedge effectiveness are recognized within Revenue—Other in the consolidated
statements of income. The amount of gains (losses) was not significant during the years ended March 31,
2015, 2016 and 2017.

F-70

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivatives containing credit risk related contingent features
Nomura enters into certain OTC derivatives and other agreements containing credit-risk-related contingent
features. These features would require Nomura to post additional collateral or settle the instrument upon occurrenceof a credit event, the most common of which would be a downgrade in the Company’s long-term credit rating.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are ina liability position as of March 31, 2016, was ¥719 billion with related collateral pledged of ¥587 billion. In theevent of a one-notch downgrade to Nomura’s long-term credit rating in effect as of March 31, 2016, theaggregate fair value of assets that would have been required to be posted as additional collateral or that would
have been needed to settle the instruments immediately was ¥15 billion.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are ina liability position as of March 31, 2017, was ¥474 billion with related collateral pledged of ¥387 billion. In theevent of a one-notch downgrade to Nomura’s long-term credit rating in effect as of March 31, 2017, theaggregate fair value of assets that would have been required to be posted as additional collateral or that would
have been needed to settle the instruments immediately was ¥7 billion.
Credit derivatives
Credit derivatives are derivative instruments in which one or more of their underlyings are related to thecredit risk of a specified entity (or group of entities) or an index based on the credit risk of a group of entities that
expose the seller of credit protection to potential loss from credit risk related events specified in the contract.
Written credit derivatives are instruments or embedded features where Nomura assumes third party credit
risk, either as guarantor in a guarantee-type contract, or as the party that provides credit protection in an optiontype contract, credit default swap, or any other credit derivative contract.
Nomura enters into credit derivatives as part of its normal trading activities as both purchaser and seller ofprotection for credit risk mitigation, proprietary trading positions and for client transactions.
The most significant type of credit derivatives used by Nomura are single-name credit default swaps wheresettlement of the derivative is based on the credit risk of a single third party. Nomura also writes credit derivatives
linked to the performance of credit default indices and issues other credit risk related portfolio products.
Nomura would have to perform under a credit derivative contract if a credit event as defined in therespective contract occurs. Typical credit events include bankruptcy, failure to pay and restructuring of
obligations of the reference asset.
Credit derivative contracts written by Nomura are either cash or physically settled. In cash-settled
instruments, once payment is made upon an event of a default, the contract usually terminates with no further
payments due. Nomura generally has no right to assume the reference assets of the counterparty in exchange forpayment, nor does Nomura usually have any direct recourse to the actual issuers of the reference assets torecover the amount paid. In physically settled contracts, upon a default event, Nomura takes delivery of thereference asset in return for payment of the full notional amount of the contract.
Nomura actively monitors and manages its credit derivative exposures. Where protection is sold, risks may
be mitigated by purchasing credit protection from other third parties either on identical underlying reference
assets or on underlying reference assets with the same issuer which would be expected to behave in a correlated
F-71

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
fashion. The most common form of recourse provision to enable Nomura to recover from third parties any
amounts paid under a written credit derivative is therefore not through the derivative itself but rather through theseparate purchase of credit derivatives with identical or correlated underlyings.
Nomura quantifies the value of these purchased contracts in the following tables in the column titled“Purchased Credit Protection”. These amounts represent purchased credit protection with identical underlyings to
the written credit derivative contracts which act as a hedge against Nomura’s exposure. To the extent Nomura isrequired to pay out under the written credit derivative, a similar amount would generally become due to Nomura
under the purchased hedge.
Credit derivatives have a stated notional amount which represents the maximum payment Nomura may berequired to make under the contract. However, this is generally not a true representation of the amount Nomura
will actually pay as in addition to purchased credit protection, other risk mitigating factors reduce the likelihood
and amount of any payment, including:
The probability of default: Nomura values credit derivatives taking into account the probability that theunderlying reference asset will default and that Nomura will be required to make payments under the contract.
Based on historical experience and Nomura’s assessment of the market, Nomura believes that the probability that
all reference assets on which Nomura provides protection will default in a single period is remote. The disclosed
notional amount, therefore, significantly overstates Nomura’s realistic exposure on these contracts.
The recovery value on the underlying asset: In the case of a default, Nomura’s liability on a contract islimited to the difference between the notional amount and the recovery value of the underlying reference asset.
While the recovery value on a defaulted asset may be minimal, this does reduce amounts paid on these contracts.
Nomura holds assets as collateral in relation to written credit derivatives. However, these amounts do notenable Nomura to recover any amounts paid under the credit derivative but rather mitigate the risk of economic
loss arising from a counterparty defaulting against amounts due to Nomura under the contract. Collateralrequirements are determined on a counterparty level rather than individual contract, and also generally cover all
types of derivative contracts rather than just credit derivatives.
The following tables present information about Nomura’s written credit derivatives and purchased credit
protection with identical underlyings as of March 31, 2016 and 2017.

Single-name credit default
swaps . . . . . . . . . . . . . . . . . . .
Credit default indices . . . . . . . .
Other credit risk related
portfolio products . . . . . . . . .
Credit risk related options andswaptions . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . .

Billions of yen
March 31, 2016
Maximum potential payout/NotionalYears to maturity
Less than
1 to 33 to 5More than
1 yearyears
years
5 years

Carrying value(Asset) /Liability(1)

Total

¥131
52

¥15,609
5,797¥3,658
918

12

355

71

248

0

67

—

—

¥195

¥21,828¥4,647¥7,163

F-72¥5,292 ¥5,252
1,623
2,505

Notional
Purchased
creditprotection¥1,407751¥12,796
4,295

24

12

209

67

—

67

¥7,848¥2,170¥17,367

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Single-name credit default
swaps . . . . . . . . . . . . . . . . . . .
Credit default indices . . . . . . . .
Other credit risk related
portfolio products . . . . . . . . .
Credit risk related options andswaptions . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . .

Billions of yen
March 31, 2017
Maximum potential payout/NotionalYears to maturity
Less than
1 to 33 to 5More than
1 yearyears
years
5 years

Notional
Purchased
creditprotection

Carrying value(Asset) /Liability(1)Total¥ (17)(26)¥12,0295,130¥2,908697¥4,497
1,558¥3,414
2,188¥1,210687¥ 9,536
3,265

5

445

166

253

19

7

312

—

—

—

—

—

—

—

¥ (38)¥17,604¥3,771¥6,308¥5,621¥1,904¥13,113(1) Carrying value amounts are shown on a gross basis prior to cash collateral or counterparty netting. Assetbalances represent positive fair value amounts caused by tightening of credit spreads of underlyings since
inception of the credit derivative contracts.
The following tables present information about Nomura’s written credit derivatives by external credit ratingof the underlying asset. Ratings are based on Standard & Poor’s Financial Services LLC (“S&P”), or if not rated
by S&P, based on Moody’s Investors Service, Inc. If ratings from either of these agencies are not available, theratings are based on Fitch Ratings Ltd. or Japan Credit Rating Agency, Ltd. For credit default indices, the rating
is determined by taking the weighted average of the external credit ratings given for each of the underlying
reference entities comprising the portfolio or index.

AAA

AA

Billions of yen
March 31, 2016
Maximum potential payout/Notional
A
BBB
BB
Other(1)Total

Single-name credit default swaps . . . . . . . . . . . ¥1,230 ¥1,305
Credit default indices . . . . . . . . . . . . . . . . . . . .
178
15
Other credit risk related portfolio products . . .
19—
Credit risk related options and swaptions . . . .
——¥4,407 ¥5,428 ¥2,243 ¥ 996 ¥15,609
4,249
939
224
192
5,797
1
3
1
331
355
—
67
—
—
67

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥8,657¥1,427¥1,320AAAAA¥6,437¥2,468¥1,519Billions of yen
March 31, 2017
Maximum potential payout/Notional
A
BBB
BB
Other(1)¥21,828

Total

Single-name credit default swaps . . . . . . . . . . . ¥ 843 ¥1,186
Credit default indices . . . . . . . . . . . . . . . . . . . .
171
27
Other credit risk related portfolio products . . .
19—
Credit risk related options and swaptions . . . .
——¥3,658 ¥4,211 ¥1,486 ¥ 645 ¥12,029
3,284
1,017
474
157
5,130
1
3
119
303
445
—
—
—
—
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥6,943¥1,033¥1,213¥5,231¥2,079¥1,105¥17,604(1) “Other” includes credit derivatives where the credit rating of the underlying reference asset is below
investment grade or where a rating is unavailable.
F-73

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivatives entered into in contemplation of sales of financial assets
Nomura enters into transactions which involve both the transfer of financial assets to a third party
counterparty and a separate agreement with the same counterparty entered into in contemplation of the initialtransfer through which Nomura retains substantially all of the exposure to the economic return on the transferredfinancial assets throughout the term of the transaction. These transactions primarily include sales of securities
with bilateral OTC total return swaps or other derivative agreements which are in-substance total return swaps.
These transactions are accounted for as sales of the securities with the derivative accounted for separately if thecriteria for derecognition of the securities under ASC 860 are met. Where the derecognition criteria are not met,
the transfer and separate derivative are accounted for as a single collateralized financing transaction which isreported within Long-term borrowings—Trading balances of secured borrowings in the consolidated balance
sheets.
As of March 31, 2017 there were no outstanding sales with total return swap or in-substance total returnswap transactions accounted for as sales rather than collateralized financing transactions.
4. Collateralized transactions:
Nomura enters into collateralized transactions, including reverse repurchase agreements, repurchaseagreements, securities borrowing transactions, securities lending transactions, other secured borrowings andsimilar transactions mainly to meet clients’ needs, finance trading inventory positions and obtain securities forsettlements.
Reverse repurchase agreements, repurchase agreements, securities borrowing transactions and securities
lending transactions are typically documented under industry standard master netting agreements which reduce
Nomura’s credit exposure to counterparties as they permit the close-out and offset of transactions and collateralamounts in the event of default of the counterparty. For certain centrally-cleared reverse repurchase andrepurchase agreements, the clearing or membership agreements entered into by Nomura provide similar rights to
Nomura in the event of default of the relevant central clearing counterparty. In order to support the enforceabilityof the close-out and offsetting rights within these agreements, Nomura generally seeks to obtain an external legal
opinion.
For certain types of counterparty and in certain jurisdictions, Nomura may enter into reverse repurchaseagreements, repurchase agreements, securities borrowing and securities lending transactions which are notdocumented under a master netting agreement. Similarly, even when these transactions are documented undersuch agreements, Nomura may not have yet sought evidence, or may not be able to obtain evidence to determinewith sufficient certainty that the close-out and offsetting rights are legally enforceable. This may be the casewhere relevant local laws specifically prohibit such close-out and offsetting rights, or where local laws arecomplex, ambiguous or silent on the enforceability of such rights. This may include reverse repurchaseagreements, repurchase agreements, securities borrowing and securities lending transactions executed withcertain foreign governments, agencies, municipalities, central clearing counterparties, agent banks and pension
funds.
Nomura considers the enforceability of a master netting agreement in determining how credit risk arisingfrom transactions with a specific counterparty is hedged, how counterparty credit exposures are calculated andapplied to credit limits and the extent and nature of collateral requirements from the counterparty.
In all of these transactions, Nomura either receives or provides collateral, including Japanese andnon-Japanese government, agency, mortgage-backed, bank and corporate debt securities and equities. In most
F-74

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
cases, Nomura is permitted to use the securities received to enter into repurchase agreements, enter into securities
lending transactions or to cover short positions with counterparties. In repurchase and reverse repurchaseagreements, the value of collateral typically exceeds the amount of cash transferred. Collateral is generally in theform of securities. Securities borrowing transactions generally require Nomura to provide the counterparty withcollateral in the form of cash or other securities. For securities lending transactions, Nomura generally receives
collateral in the form of cash or other securities. Nomura monitors the market value of the securities either
received from or provided to the counterparty. Additional cash or securities are exchanged as necessary, toensure that such transactions are adequately collateralized throughout the life of the transactions.
Offsetting of certain collateralized transactions
Reverse repurchase agreements and repurchase agreements, securities borrowing and lending transactions
with the same counterparty documented under a master netting agreement are offset in the consolidated balance
sheets where the specific criteria defined by ASC 210-20 are met. These criteria include requirements around thematurity of the transactions, the underlying systems on which the collateral is settled, associated banking
arrangements and the legal enforceability of close-out and offsetting rights under the master netting agreement.
The following tables present information about offsetting of these transactions in the consolidated balance
sheets as of March 31, 2016 and 2017, together with the extent to which master netting agreements entered intowith counterparties and central clearing parties permit additional offsetting in the event of counterparty default.
Transactions which are not documented under a master netting agreement or are documented under a masternetting agreement for which Nomura does not have sufficient evidence of enforceability are not offset in thefollowing table.
Billions of yen
March 31, 2016
Assets
ReverseSecurities
repurchaseborrowing
agreements transactions

Liabilities
Securities
Repurchaselendingagreements transactions

Total gross balance(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Amounts offset in the consolidated balance sheets(2) . . . .

¥ 25,834(16,629)¥ 5,868(5)¥ 30,821(16,629)¥ 2,260(5)Total net amounts of reported on the face of the consolidatedbalance sheets(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 9,205¥ 5,863¥ 14,192¥ 2,255

Less: Additional amounts not offset in the consolidatedbalance sheets(4)Financial instruments and non-cash collateral . . . . . . . . . .
Cash collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7,052)0(4,553)—(11,503)0(1,713)—

Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2,153¥ 1,310¥ 2,689

¥

F-75

542

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Billions of yen
March 31, 2017
Assets
ReverseSecurities
repurchaseborrowing
agreements transactions

Liabilities
Securities
Repurchaselendingagreements transactions

Total gross balance(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Amounts offset in the consolidated balance sheets(2) . . . .
Total net amounts of reported on the face of the consolidatedbalance sheets(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 30,116(18,659)¥ 7,422(173)¥ 35,755(18,659)¥ 2,248(173)¥ 11,457¥ 7,249¥ 17,096¥ 2,075

Less: Additional amounts not offset in the consolidatedbalance sheets(4)Financial instruments and non-cash collateral . . . . . . . . . .
Cash collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9,251)(73)¥ 2,133(5,499)—¥ 1,750(13,328)(18)¥ 3,750(1,666)—¥ 409(1) Includes all recognized balances irrespective of whether they are transacted under a master netting
agreement or whether Nomura has obtained sufficient evidence of enforceability of the master netting
agreement. Amounts include transactions carried at fair value through election of the fair value option. As of
March 31, 2016, the gross balance of reverse repurchase agreements and repurchase agreements which were
not transacted under master netting agreements or are documented under master netting agreements forwhich Nomura has not yet obtained sufficient evidence of enforceability was ¥940 billion and¥2,176 billion, respectively. As of March 31, 2016, the gross balance of securities borrowing transactions
and securities lending transactions which were not transacted under master netting agreements or are
documented under master netting agreements for which Nomura has not yet obtained sufficient evidence ofenforceability was ¥1,162 billion and ¥186 billion, respectively. As of March 31, 2017, the gross balance ofreverse repurchase agreements and repurchase agreements which were not transacted under master netting
agreements or are documented under master netting agreements for which Nomura has not yet obtained
sufficient evidence of enforceability was ¥881 billion and ¥2,596 billion, respectively. As of March 31,
2017, the gross balance of securities borrowing transactions and securities lending transactions which were
not transacted under master netting agreements or are documented under master netting agreements forwhich Nomura has not yet obtained sufficient evidence of enforceability was ¥1,494 billion and¥205 billion, respectively.
(2) Represents amounts offset through counterparty netting under master netting and similar agreements forwhich Nomura has obtained sufficient evidence of enforceability in accordance with ASC 210-20. Amounts
offset include transactions carried at fair value through election of the fair value option.
(3) Reverse repurchase agreements and securities borrowing transactions are reported within Collateralized
agreements—Securities purchased under agreements to resell and Collateralized agreements—Securities
borrowed in the consolidated balance sheets, respectively. Repurchase agreements and securities lendingtransactions are reported within Collateralized financing—Securities sold under agreements to repurchase
and Collateralized financing—Securities loaned in the consolidated balance sheets, respectively. Amounts
reported under securities lending transactions also include transactions where Nomura lends securities andreceives securities that can be sold or pledged as collateral. Nomura recognizes the securities received at fairvalue and a liability for the same amount, representing the obligation to return those securities. The liability
is reported within Other liabilities in the consolidated balance sheets.
(4) Represents amounts which are not permitted to be offset on the face of the balance sheet in accordance withASC 210-20 but which provide Nomura with the right of offset in the event of counterparty default.
Amounts relating to agreements where Nomura has not yet obtained sufficient evidence of enforceability ofsuch offsetting rights are excluded.
F-76

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Maturity analysis of repurchase agreements and securities lending transactions
The following table presents an analysis of the total carrying value of liabilities recognized in the
consolidated balance sheets for repurchase agreements and securities lending transactions by remaining
contractual maturity of the agreement as of March 31, 2017. Amounts reported are shown prior to counterparty
netting in accordance with ASC 210-20.

Overnight
and open(1)Up to
30 days

Billions of yen
March 31, 201730 - 90
90 days days
1 year

Repurchase agreements . . . . . . . . . . . . . . . . . . . .
Securities lending transactions . . . . . . . . . . . . . .

¥15,225
1,399¥17,257
463¥1,550206

Total gross recognized liabilities(2) . . . . . . . . . . .

¥16,624¥17,720¥1,756

Greaterthan 1 year

Total

¥1,228
168

¥495
12

¥35,755
2,248¥1,396¥507¥38,003(1) Open transactions do not have an explicit contractual maturity date and are terminable on demand by
Nomura or the counterparty.
(2) Repurchase agreements and securities lending transactions are reported within Collateralized financing—
Securities sold under agreements to repurchase and Collateralized financing—Securities loaned in the
consolidated balance sheets, respectively. Amounts reported for securities lending transactions also include
transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral.
Nomura recognizes the securities received at fair value and a liability for the same amount, representing theobligation to return those securities. The liability is reported within Other liabilities in the consolidatedbalance sheets. The total gross recognized liabilities reported for repurchase agreements and securities
lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.
Securities transferred in repurchase agreements and securities lending transactions
The following table presents an analysis of the total carrying value of liabilities recognized in the
consolidated balance sheets for repurchase agreements and securities lending transactions by class of securities
transferred by Nomura to counterparties as of March 31, 2017. Amounts reported are shown prior to counterparty
netting in accordance with ASC 210-20.
Billions of yen
March 31, 2017
Securities
Repurchaselendingagreements transactions

Total

Equities and convertible securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese government, agency and municipal securities . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal securities . . . . . . . . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial mortgage-backed securities (“CMBS”) . . . . . . . . . . . . . . . . . . . .
Residential mortgage-backed securities (“RMBS”)(1) . . . . . . . . . . . . . . . . . . .
Collateralized debt obligations (“CDOs”) and other . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

108
987
28,197
1,717
1
4,666
70
9

¥1,935
173
54
16
—
—
—
70

¥ 2,043
1,160
28,251
1,733
1
4,666
70
79

Total gross recognized liabilities(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥35,755¥2,248¥38,003(1) Includes ¥4,548 billion of U.S. government sponsored agency mortgage pass-through securities andcollateralized mortgage obligations.
F-77

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(2) Repurchase agreements and securities lending transactions are reported within Collateralized financing—
Securities sold under agreements to repurchase and Collateralized financing—Securities loaned in the
consolidated balance sheets, respectively. Amounts reported for securities lending transactions also include
transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral.
Nomura recognizes the securities received at fair value and a liability for the same amount, representing theobligation to return those securities. The liability is reported within Other liabilities in the consolidatedbalance sheets. The total gross recognized liabilities reported for repurchase agreements and securities
lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.
Collateral received by Nomura
The following table presents the fair value of securities received as collateral, securities borrowed withcollateral and securities borrowed without collateral, which Nomura is permitted to sell or repledge, and the
portion that has been sold or repledged as of March 31, 2016 and 2017.
Billions of yen
March 312016
2017

The fair value of securities received as collateral, securities borrowed as collateral andsecurities borrowed without collateral where Nomura is permitted by contract or
custom to sell or repledge the securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The portion of the above that has been sold (reported within Trading liabilities in the
consolidated balance sheets) or repledged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥40,714¥45,82134,172

39,119Collateral pledged by Nomura
Nomura pledges firm-owned securities to collateralize repurchase transactions, other secured financings andderivative transactions. Pledged securities that can be sold or repledged by the transferee, including Gensaki
Repo transactions, are reported in parentheses as Securities pledged as collateral within Trading assets in the
consolidated balance sheets.
The following table presents the carrying amounts of financial assets recognized in the consolidated balance
sheets which have been pledged as collateral, primarily to stock exchanges and clearing organizations, without
allowing the secured party the right to sell or repledge them by type of asset as of March 31, 2016 and 2017.
Millions of yen
March 312016
2017

Trading assets:
Equities and convertible securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 104,642 ¥ 206,640
Government and government agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
731,430
1,062,008
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,029137,328
Commercial mortgage-backed securities (“CMBS”) . . . . . . . . . . . . . . . . . . . . . . .
6,031—
Residential mortgage-backed securities (“RMBS”) . . . . . . . . . . . . . . . . . . . . . . . .
2,684,186
3,426,205
Collateralized debt obligations (“CDOs”) and other(1) . . . . . . . . . . . . . . . . . . . . . .
32,34818,676
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78,158
8,976¥3,704,824
Deposits with stock exchanges and other segregated cash . . . . . . . . . . . . . . . . . . . . . . . ¥Non-trading debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in and advances to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,000 ¥
24,05732,907 ¥(1) Includes CLOs and ABS such as those secured on credit card loans, auto loans and student loans.
F-78¥4,859,833—
23,74429,336

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the carrying amount of financial and non-financial assets recognized in the
consolidated balance sheets, other than those disclosed above, which are subject to lien as of March 31, 2016
and 2017.
Millions of yen
March 3120162017

Loans and receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
249 ¥
4,268
Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,755,260
1,580,765
Office buildings, land, equipment and facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,355
12,635
Non-trading debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
191,545
222,970
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
25¥1,952,439¥1,820,663

Assets in the above table were primarily pledged for secured borrowings, including other secured
borrowings, collateralized borrowings of consolidated VIEs, trading balances of secured borrowings, andderivative transactions. See Note 10 “Borrowings” for further information regarding trading balances of secured
borrowings.
5. Non-trading securities:
The following tables present information regarding the cost and/or amortized cost, gross unrealized gains
and losses and fair value of non-trading securities held by Nomura’s insurance subsidiary as of March 31, 2016
and 2017.

Cost and/or
amortized cost

Japanese government, agency andmunicipal securities . . . . . . . . . . . . . . . .
Foreign government, agency andmunicipal securities . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen
March 31, 2016
Unrealized gains and losses
Gross unrealized gains Gross unrealized losses

Fair value¥ 93,982¥ 5,708¥ 440¥ 99,250

32,901
119,728
42,132

3,394
9,022
24,101

261
712
233

36,034
128,038
66,000¥288,743¥42,225¥1,646¥329,322

F-79

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Millions of yen
March 31, 2017
Unrealized gains and losses
Gross unrealized gains Gross unrealized losses

Cost and/or
amortized cost

Japanese government, agency andmunicipal securities . . . . . . . . . . . . . . . .
Foreign government, agency andmunicipal securities . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value¥ 89,851¥ 3,953¥ 585¥ 93,219¥ 25,326
117,140
42,947¥ 2,434
6,942
21,826

¥ 198
930
22

¥ 27,562
123,152
64,751¥275,264¥35,155¥1,735¥308,684

For the year ended March 31, 2016, non-trading securities of ¥63,752 million were disposed of resulting in¥3,841 million of realized gains and ¥631 million of realized losses. Total proceeds received from these disposals
were ¥66,962 million. For the year ended March 31, 2017, non-trading securities of ¥63,100 million were
disposed of resulting in ¥4,696 million of realized gains and ¥1,304 million of realized losses. Total proceeds
received from these disposals were ¥66,492 million. Related gains and losses were computed using the averagemethod. There were no transfers of non-trading securities to trading assets for the year ended March 31, 2016 and2017.
The following table presents an analysis of the fair value of non-trading debt securities by residual
contractual maturity as of March 31, 2017. Actual maturities may differ from contractual maturities as certain
securities contain features that allow redemption of the securities prior to their contractual maturity.

Non-trading debt securities . . . . . . . . . . .

Total

Less than 1 year

¥243,933¥43,950

Millions of yen
March 31, 2017
Years to maturity
1 to 5 years 5 to 10 years¥120,059¥59,020

More than 10 years¥20,904

The following tables present the fair value and gross unrealized losses of non-trading securities aggregatedby the length of time that individual securities have been in a continuous unrealized loss position as of March 31,
2016 and 2017.

Japanese government, agency and municipal
securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal
securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less than 12 months
Grossunrealized
Fair value
lossesMillions of yen
March 31, 2016
More than 12 months
Grossunrealized
Fair value
lossesFair valueGrossunrealized
losses¥12,835¥ 437¥13,6733¥26,508

¥ 440

6,911
20,471
4,113

261
712
233

—
—
—

—
—
—

6,911
20,471
4,113

261
712
233

¥44,330¥1,643¥13,6733¥58,003¥1,646

F-80

¥

¥

Total

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Less than 12 months
Grossunrealized
Fair value
lossesJapanese government, agency and municipal
securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign government, agency and municipal
securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥27,318

¥ 585

3,366
28,398
1,394

198
930
22

¥60,476¥1,735

Millions of yen
March 31, 2017
More than 12 months
Grossunrealized
Fair value
losses

¥

0

¥

—
—
—
¥

0

¥

Total

Fair valueGrossunrealized
losses0¥27,318

¥ 585

—
—
—

3,366
28,398
1,394

198
930
22

0

¥60,476¥1,735

As of March 31, 2016, the total number of non-trading securities in unrealized loss positions was 52. As of
March 31, 2017, the total number of non-trading securities in unrealized loss positions was 41.
For the year ended March 31, 2016, other-than-temporary impairment losses recognized for non-trading
equity securities and reported within Revenue—Other were ¥486 million. For the year ended March 31, 2016,
credit loss component of other-than-temporary impairment losses recognized for non-trading debt securities was
not significant.
For the year ended March 31, 2016, the non-credit loss component of other-than-temporary impairment
losses recognized for non-trading debt securities and reported within Other comprehensive income (loss) were¥(28) million. Other gross unrealized losses of non-trading securities were considered temporary.
For the year ended March 31, 2017, other-than-temporary impairment losses recognized for non-trading
equity securities and reported within Revenue—Other were ¥1,080 million. For the year ended March 31, 2017,
credit loss component of other-than-temporary impairment losses recognized for non-trading debt securities was¥226 million.
For the year ended March 31, 2017, the non-credit loss component of other-than-temporary impairment
losses recognized for non-trading debt securities and reported within Other comprehensive income (loss) were
not significant. Other gross unrealized losses of non-trading securities were considered temporary.
6. Securitizations and Variable Interest Entities:
Securitizations
Nomura utilizes special purpose entities (“SPEs”) to securitize commercial and residential mortgage loans,government agency and corporate securities and other types of financial assets. Those SPEs are incorporated as
stock companies, Tokumei kumiai (silent partnerships), Cayman special purpose companies (“SPCs”) or trust
accounts. Nomura’s involvement with SPEs includes structuring SPEs, underwriting, distributing and selling debt
instruments and beneficial interests issued by SPEs to investors. Nomura accounts for the transfer of financial
assets in accordance with ASC 860. This statement requires that Nomura accounts for the transfer of financial
assets as a sale when Nomura relinquishes control over the assets. ASC 860 deems control to be relinquishedwhen the following conditions are met: (a) the assets have been isolated from the transferor (even in bankruptcy
or other receivership), (b) the transferee has the right to pledge or exchange the assets received, or if thetransferee is an entity whose sole purpose is to engage in securitization or asset-backed financing activities, the
F-81

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
holders of its beneficial interests have the right to pledge or exchange the beneficial interests, and (c) thetransferor has not maintained effective control over the transferred assets. Nomura may retain an interest in thefinancial assets, including residual interests in the SPEs. Any such interests are accounted for at fair value andreported within Trading assets in Nomura’s consolidated balance sheets, with the change in fair value reported
within Revenue-Net gain on trading. Fair value for retained interests in securitized financial assets is determinedby using observable prices; or in cases where observable prices are not available for certain retained interests,
Nomura estimates fair value based on the present value of expected future cash flows using its best estimates of
the key assumptions, including forecasted credit losses, prepayment rates, forward yield curves and discountrates commensurate with the risks involved. Nomura may also enter into derivative transactions in relation to theassets transferred to an SPE.
As noted above, Nomura may have continuing involvement with SPEs to which Nomura transferred assets.
For the years ended March 31, 2016 and 2017, Nomura received cash proceeds from SPEs in new securitizationsof ¥382 billion and ¥187 billion, respectively, and the associated gain (loss) on sale was not significant. For theyears ended March 31, 2016 and 2017, Nomura received debt securities issued by these SPEs with an initial fairvalue of ¥1,867 billion and ¥2,574 billion, respectively, and cash inflows from third parties on the sale of thosedebt securities of ¥1,412 billion and ¥1,833 billion, respectively. The cumulative balance of financial assets
transferred to SPEs with which Nomura has continuing involvement was ¥6,533 billion and ¥5,364 billion as ofMarch 31, 2016 and 2017, respectively. Nomura’s retained interests were ¥200 billion and ¥308 billion as ofMarch 31, 2016 and 2017, respectively. For the years ended March 31, 2016 and 2017, Nomura received cash
flows of ¥51 billion and ¥94 billion, respectively, from the SPEs on the retained interests held in the SPEs.
Nomura had outstanding collateral service agreements and written credit default swap agreements in the amountof ¥2 billion and ¥2 billion as of March 31, 2016 and 2017, respectively. Nomura does not provide financial
support to SPEs beyond its contractual obligations.
The following tables present the fair value of retained interests which Nomura has continuing involvementin SPEs and their classification in the fair value hierarchy, categorized by the type of transferred assets as ofMarch 31, 2016 and 2017.
Billions of yen
March 31, 2016

Government, agency and municipal securities . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . .
CMBS and RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Level 1

Level 2

Level 3

Total

Investment
grade

Other

¥—
—
—
¥—

¥197
—
3
¥200

¥—
0
0
¥ 0

¥197
0
3
¥200

¥197
—
0
¥197

¥—
0
3
¥ 3

Billions of yen
March 31, 2017

Government, agency and municipal securities . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . .
CMBS and RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-82

Level 1

Level 2

Level 3

Total

Investment
grade

Other

¥—
—
—
¥—

¥308
—
—
¥308

¥—
—
0
¥ 0

¥308
—
0
¥308

¥308
—
—
¥308

¥—
—
0
¥ 0

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the key economic assumptions used to determine the fair value of the retainedinterests and the sensitivity of this fair value to immediate adverse changes of 10% and 20% in those assumptions
as of March 31, 2016 and 2017.
Billions of yen, except percentages
Material retained interests held(1)as of March 31
2016
2017

Fair value of retained interests(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average life (Years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Constant prepayment rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of 10% adverse change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of 20% adverse change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of 10% adverse change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of 20% adverse change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥171
5.4
5.4%
(1.4)
(2.4)
2.4%
(0.9)
(1.6)

¥285
7.3
2.8%
(1.5)
(3.0)
3.4%
(1.7)
(3.3)

(1) The sensitivity analysis covers the material retained interests held of ¥171 billion out of ¥200 billion as ofMarch 31, 2016 and ¥285 billion out of ¥308 billion as of March 31, 2017. Nomura considers the amount or
the probability of anticipated credit loss from the retained interests which Nomura continuously holds would
be minimal.
Changes in fair value based on 10% or 20% adverse changes generally cannot be extrapolated since therelationship of the change in assumption to the change in fair value may not be linear. The impact of a change ina particular assumption is calculated holding all other assumptions constant. For this reason, concurrent changes
in assumptions may magnify or counteract the sensitivities disclosed above. The sensitivity analyses arehypothetical and do not reflect Nomura’s risk management practices that may be undertaken under those stressscenarios.
The following table presents the type and carrying value of financial assets included within Trading assets
which have been transferred to SPEs but which do not meet the criteria for derecognition under ASC 860 as ofMarch 31, 2016 and 2017. These transfers are accounted for as secured financing transactions and generally
reported within Long-term borrowings. The assets are pledged as collateral of the associated liabilities andcannot be removed unilaterally by Nomura and the liabilities are non-recourse to Nomura.
Billions of yen
March 31
2016
2017

AssetsTrading assets
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMBS and RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 22
24
20
—

¥ 6
20
7
3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 66

¥36

Liabilities
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥127

¥36

F-83

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Variable Interest Entities (“VIEs”)
In the normal course of business, Nomura acts as a transferor of financial assets to VIEs, and underwriter,
distributor, and seller of repackaged financial instruments issued by VIEs in connection with its securitizationand equity derivative activities. Nomura retains, purchases and sells variable interests in VIEs in connection withits market-making, investing and structuring activities.
If Nomura has an interest in a VIE that provides Nomura with control over the most significant activities of
the VIE and the right to receive benefits or the obligation to absorb losses that could be significant to the VIE,
Nomura is the primary beneficiary of the VIE and must consolidate the entity, provided that Nomura does notmeet separate tests confirming that it is acting as a fiduciary for other interest holders. Nomura’s consolidated
VIEs include those that were created to market structured securities to investors by repackaging corporate
convertible securities, mortgages and mortgage-backed securities. Certain VIEs used in connection with
Nomura’s aircraft leasing business as well as other purposes are consolidated. Nomura also consolidates certain
investment funds, which are VIEs, and for which Nomura is the primary beneficiary.
The power to make the most significant decisions may take a number of different forms in different types of
VIEs. For transactions such as securitizations, investment funds, and CDOs, Nomura considers collateralmanagement and servicing to represent the power to make the most significant decisions. Accordingly, Nomura
does not consolidate such types of VIEs for which it does not act as collateral manager or servicer unless Nomura
has the right to replace the collateral manager or servicer or to require liquidation of the entity.
For many transactions, such as where VIEs are used for re-securitizations of residential mortgage-backed
securities, there are no significant economic decisions made on an ongoing basis and no single investor has theunilateral ability to liquidate the VIE. In these cases, Nomura focuses its analysis on decisions made prior to theinitial closing of the transaction, and considers factors such as the nature of the underlying assets held by the
VIE, the involvement of third party investors in the design of the VIE, the size of initial third party investment
and the amount and level of any subordination of beneficial interests issued by the VIE which will be held by
Nomura and third party investors. Nomura has sponsored numerous re-securitization transactions and in manycases has determined that it is not the primary beneficiary on the basis that control over the most significant
decisions relating to these entities are shared with third party investors. In some cases, however, Nomura has
consolidated such VIEs, for example, where it was determined that third party investors were not involved in thedesign of the VIEs, including where the size of third party investment was not significant at inception of thetransaction.
As a result of adopting ASU 2015-02 as of April 1, 2016, certain investment funds are now consolidated andincluded in the balance of March 31, 2017. See Note 1 “Summary of accounting policies” for further information
about the adoption of ASU 2015-02.

F-84

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the classification of consolidated VIEs’ assets and liabilities in these
consolidated financial statements as of March 31, 2016 and 2017. Most of these assets and liabilities are related
to consolidated SPEs which securitize corporate convertible securities, mortgages and mortgage-backed
securities. The assets of a consolidated VIE may only be used to settle obligations of that VIE. Creditors do not
typically have any recourse to Nomura beyond the assets held in the VIEs.
Billions of yen
March 312016
2017

Consolidated VIE assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading assets
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMBS and RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office buildings, land, equipment and facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

3

¥

4

530
756
22
—
1
1
3
7

679
682
11
11
15
2
15
44

¥1,323¥1,463

Consolidated VIE liabilities
Trading liabilities
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

18

65
744
2

103
851
2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 814

¥ 974

Nomura continuously reassesses its initial evaluation of whether it is the primary beneficiary of a VIE basedon current facts and circumstances as long as it has any continuing involvement with the VIE. This determination
is based upon an analysis of the design of the VIE, including the VIE’s structure and activities, the power tomake significant economic decisions held by Nomura and by other parties, and the variable interests owned by
Nomura and other parties.
Nomura also holds variable interests in VIEs where Nomura is not the primary beneficiary. Nomura’s
variable interests in such VIEs include senior and subordinated debt, residual interests, and equity interests
associated with commercial and residential mortgage-backed and other asset-backed securitizations andstructured financings, equity interests in VIEs which were formed primarily to acquire high yield leveraged loans
and other lower investment grade debt obligations, residual interests in operating leases for aircraft held by VIEs,
and loans and investments in VIEs that acquire operating businesses.

F-85

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the carrying amount of variable interests of unconsolidated VIEs andmaximum exposure to loss associated with these variable interests as of March 31, 2016 and 2017. Maximum
exposure to loss does not reflect Nomura’s estimate of the actual losses that could result from adverse changes,
nor does it reflect the economic hedges Nomura enters into to reduce its exposure. The risks associated with VIEs
in which Nomura is involved are limited to the amount recorded in the consolidated balance sheets, the amountof commitments and financial guarantees and the notional amount of the derivative instruments. Nomura believes
the notional amount of derivative instruments generally exceeds the amount of actual risk.
Billions of yen
March 31, 2016
Carrying amount of variable interests
AssetsLiabilities

Trading assets and liabilities
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMBS and RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments to extend credit and other guarantees . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum exposure
to loss tounconsolidated VIEs

¥

87
118
3,067
413
0
14
423
4
—

¥—
—
—
—
—
—
—
—
—

¥

87
118
3,067
413
2
14
423
4
42

¥4,126¥—¥4,170Billions of yen
March 31, 2017
Carrying amount of variable interests
AssetsLiabilities

Trading assets and liabilities
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CMBS and RMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments to extend credit and other guarantees . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum exposure
to loss tounconsolidated VIEs

¥

65
109
3,754
146
0
24
388
10
—

¥—
—
—
—
—
—
—
—
—

¥

65
109
3,754
146
2
24
388
10
59

¥4,496¥—¥4,557

7. Financing receivables:
In the normal course of business, Nomura extends financing to clients primarily in the form of loans andcollateralized agreements such as reverse repurchase agreements and securities borrowing transactions. These
financing receivables are recognized as assets on Nomura’s consolidated balance sheets and provide a contractual
right to receive money either on demand or on future fixed or determinable dates.
F-86

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Collateralized agreements
Collateralized agreements consist of reverse repurchase agreements reported as Securities purchased underagreements to resell and securities borrowing transactions reported as Securities borrowed in the consolidatedbalance sheets, including those executed under Gensaki Repo agreements. Reverse repurchase agreements andsecurities borrowing transactions principally involve the buying of government and government agency securities
from customers under agreements that also require Nomura to resell these securities to those customers, orborrowing these securities with cash collateral. Nomura monitors the value of the underlying securities on a daily
basis to the related receivables, including accrued interest, and requests or returns additional collateral whenappropriate. Reverse repurchase agreements are generally recognized in the consolidated balance sheets at theamount for which the securities were originally acquired with applicable accrued interest. Securities borrowing
transactions are generally recognized in the consolidated balance sheets at the amount of cash collateraladvanced. No allowance for credit losses is generally recognized against these transactions due to the strict
collateralization requirements.
Loans receivable
The key types of loans receivable recognized by Nomura are loans at banks, short-term secured marginloans, inter-bank money market loans and corporate loans.
Loans at banks include both retail and commercial secured and unsecured loans extended by licensed
banking entities within Nomura such as The Nomura Trust & Banking Co., Ltd. and Nomura Bank International
plc. For both retail and commercial loans secured by real estate or securities, Nomura is exposed to the risk of adecline in the value of the underlying collateral. Loans at banks also include unsecured commercial loans
provided to investment banking clients for relationship purposes. Nomura is exposed to risk of default of thecounterparty, although these counterparties usually have high credit ratings. Where loans are secured byguarantees, Nomura is also exposed to the risk of default by the guarantor.
Short-term secured margin loans are loans provided to clients in connection with securities brokeragebusiness. These loans provide funding for clients in order to purchase securities. Nomura requests initial margin
in the form of acceptable collateral securities or deposits against these loans and holds the purchased securities as
collateral through the life of the loans. If the value of the securities declines by more than specified amounts,
Nomura can make additional margin calls in order to maintain a specified ratio of loan-to-value (“LTV”) ratio.
For these reasons, the risk to Nomura of providing these loans is limited.
Inter-bank money market loans are loans to financial institutions in the inter-bank money market, where
overnight and intra-day financings are traded through money market dealers. The risk to Nomura of making theseloans is not significant as only qualified financial institutions can participate in these markets and these loans areusually overnight or short-term in nature.
Corporate loans are primarily commercial loans provided to corporate clients extended by non-licensed
banking entities within Nomura. Corporate loans include loans secured by real estate or securities, as well as
unsecured commercial loans provided to investment banking clients for relationship purposes. The risk to
Nomura of making these loans is similar to those risks arising from commercial loans reported in loans at banks.
In addition to the loans above, Nomura has advances to affiliated companies which are loans provided torelated parties of Nomura. As these loans are generally not secured, Nomura is exposed to the risk of default of
the counterparty.

F-87

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present a summary of loans receivable reported within Loans receivable or Investments
in and advances to affiliated companies in the consolidated balance sheets as of March 31, 2016, and 2017 byportfolio segment.
Millions of yen
March 31, 2016
Carried at
Carried atamortized cost fair value(1)TotalLoans receivable
Loans at banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term secured margin loans . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inter-bank money market loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 364,976
377,437
9,751
551,673¥———
301,766¥ 364,976
377,437
9,751
853,439

Total loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,303,837¥301,766¥1,605,603

Advances to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

300

—

300

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,304,137¥301,766¥1,605,903

Millions of yen
March 31, 2017
Carried at
Carried atamortized cost fair value(1)TotalLoans receivable
Loans at banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term secured margin loans . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inter-bank money market loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 386,127
358,572
1,040
592,425¥———537,664¥ 386,127
358,572
1,040
1,130,089

Total loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,338,164¥537,664¥1,875,828

Advances to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

300

—

300

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,338,464¥537,664¥1,876,128(1) Includes loans receivable and loan commitments carried at fair value through election of the fair value
option.
The amount of significant purchases of corporate loans during the year ended March 31, 2016 was¥124,161 million. There were no significant sales of corporate loans during the year ended March 31, 2016.
During the same period, there were no significant reclassifications of loans receivable to Trading assets.
There were no significant purchases nor sales of corporate loans during the year ended March 31, 2017.
During the same period, there were no significant reclassifications of loans receivable to Trading assets.

F-88

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Allowance for credit losses
Management establishes an allowance for credit losses against loans carried at amortized cost which reflects
management’s best estimate of probable losses incurred. The allowance for credit losses against loans, which isreported in the consolidated balance sheets within Allowance for doubtful accounts, comprises two components:•

A specific component for loans which have been individually evaluated for impairment; and•A general component for loans which, while not individually evaluated for impairment, have beencollectively evaluated for impairment based on historical loss experience.

The specific component of the allowance reflects probable losses incurred within loans which have been
individually evaluated for impairment. A loan is defined as being impaired when, based on current informationand events, it is probable that all amounts due according to the contractual terms of the loan agreement will not
be collected. Factors considered by management in determining impairment include an assessment of the abilityof borrowers to pay by considering various factors such as the nature of the loan, prior credit loss experience,current economic conditions, the current financial situation of the borrower and the fair value of any underlying
collateral. Loans that experience insignificant payment delays or insignificant payment shortfalls are notclassified as impaired. Impairment is measured on a loan by loan basis by adjusting the carrying value of the loan
to either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s
observable market price, or the fair value of the collateral if the loan is collateral dependent.
The general component of the allowance is for loans not individually evaluated for impairment and includes
judgment about collectability based on available information at the balance sheet date and the uncertainties
inherent in those underlying assumptions. The allowance is based on historical loss experience adjusted for
qualitative factors such as current economic conditions.
While management has based its estimate of the allowance for credit losses against loans on the best
information available, future adjustments to the allowance may be necessary as a result of changes in theeconomic environment or variances between actual results and original assumptions.
Loans are charged-off when Nomura determines that the loans are uncollectible. This determination is basedon factors such as the occurrence of significant changes in the borrower’s financial position such that theborrower can no longer pay the obligation or that the proceeds from collateral will not be sufficient to pay theloans.

F-89

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present changes in the total allowance for credit losses for the years ended March 31,
2015, 2016 and 2017.
Millions of yen
Year ended March 31, 2015
Allowance
for credit
Allowance for credit losses against loans
lossesShort-term
againstTotal
securedInter-bank
Advances toreceivables allowanceLoansmarginmoney
Corporate affiliatedother than for doubtful
at banksloans
market loans
loanscompanies Subtotalloans
accounts

Opening balance . . . . . . . . . . ¥678
Provision for credit
losses . . . . . . . . . . . . .
61
Charge-offs . . . . . . . . . . —Other(1) . . . . . . . . . . . . . —Ending balance . . . . . . . . . . . ¥739

¥ 87

¥—

¥ 82

¥

1

¥ 848

¥2,161¥3,009

53
—
2
¥142

—
—
—
¥—

(3)
—
0
¥ 79

0
—
—
¥ 1

111
—
2
¥ 961

254
(189)
66
¥2,292

365
(189)
68
¥3,253

Millions of yen
Year ended March 31, 2016
Allowance
for credit
Allowance for credit losses against loans
lossesShort-term
againstTotal
securedInter-bank
Advances toreceivables allowanceLoansmarginmoney
Corporate affiliatedother than for doubtful
at banksloans
market loans
loanscompanies Subtotalloans
accounts

Opening balance . . . . . . . . . . ¥739
Provision for credit
losses . . . . . . . . . . . . . 173
Charge-offs . . . . . . . . . . —Other(1) . . . . . . . . . . . . . —Ending balance . . . . . . . . . . . ¥912

¥142

¥—

¥ 79

¥

1

(75)
—
(1)
¥ 66

7
—
—
¥ 7

(71)
—
0
¥ 8

(1)
—
—
¥ 0

¥ 961

¥2,292¥3,253

33
287
—
—
(1)
(95)
¥ 993 ¥2,484

320
—
(96)
¥3,477

Millions of yen
Year ended March 31, 2017
Allowance
for credit
Allowance for credit losses against loans
lossesShort-term
againstTotal
securedInter-bank
Advances toreceivables allowanceLoansmarginmoney
Corporate affiliatedother than for doubtful
at banksloans
market loans
loanscompanies Subtotalloans
accounts

Opening balance . . . . . . . . . . ¥912
Provision for credit
losses . . . . . . . . . . . . .
72
Charge-offs . . . . . . . . . .
(16)
Other(1) . . . . . . . . . . . . . —Ending balance . . . . . . . . . . . ¥968

¥ 66

¥

7

5
(5)
(66)
¥—

(7)
—
—
¥—

(1) Includes the effect of foreign exchange movements.

F-90

¥

8

465
—
0
¥473

¥

0

—
0
—
¥ 0

¥ 993

¥2,484¥3,477

535
(12)
(21)
—
(66)
(362)
¥1,441 ¥2,110

523
(21)
(428)
¥3,551NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the allowance for credit losses against loans and loans by impairment
methodology and type of loans as of March 31, 2016 and 2017.
Millions of yen
March 31, 2016

Loans atbanks

Allowance by impairment methodology
Evaluated individually . . . . . . . . . . . . ¥Evaluated collectively . . . . . . . . . . . .
Total allowance for credit losses . . . . . . . . ¥

—
912
912

Loans by impairment methodology
Evaluated individually . . . . . . . . . . . . ¥ 4,513
Evaluated collectively . . . . . . . . . . . . 360,463
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . ¥364,976

Advances
Short-term
Inter-banktosecured margin
money
Corporate affiliatedloansmarket loans
loanscompanies

¥

—
66
66

¥ —

¥139,183
238,254¥377,437¥1,371
8,380¥9,751

¥

¥

¥

7
7

Total

7
1
8

¥ —

¥
0
0

¥

¥543,050
8,623¥551,673

¥ —
300
¥ 300

¥

¥

7
986
993

¥ 688,117
616,020¥1,304,137

Millions of yen
March 31, 2017

Loans atbanks

Allowance by impairment methodology
Evaluated individually . . . . . . . . . . . . ¥Evaluated collectively . . . . . . . . . . . .
Total allowance for credit losses . . . . . . . . ¥

1
967
968

Loans by impairment methodology
Evaluated individually . . . . . . . . . . . . ¥ 4,722
Evaluated collectively . . . . . . . . . . . . 381,405
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . ¥386,127

Advances
Short-term
Inter-banktosecured margin
money
Corporate affiliatedloansmarket loans
loanscompanies

¥

Total

—
—
—

¥ —
—
¥ —

¥

446
27
473

¥ —

¥
0
0

¥

¥164,084
194,488¥358,572¥1,040—¥1,040¥579,290
13,135¥592,425

¥ —
300
¥ 300

¥

¥

¥

447
994
1,441

¥ 749,136
589,328¥1,338,464

Nonaccrual and past due loans
Loans which are individually evaluated as impaired are assessed for nonaccrual status in accordance with
Nomura’s policy. When it is determined to suspend interest accrual as a result of an assessment, any accrued but
unpaid interest is reversed. Loans are generally only returned to an accrual status if the loan is brought
contractually current, i.e. all overdue principal and interest amounts are paid. In limited circumstances, a loan
which has not been brought contractually current will also be returned to an accrual status if all principal andinterest amounts contractually due are reasonably assured of repayment within a reasonable period of time orthere has been a sustained period of repayment performance by the borrower.
As of March 31, 2016, the amount of loans which were on a nonaccrual status was not significant. The
amount of loans which were 90 days past due with accruing interests was not significant.
As of March 31, 2017, the amount of loans which were on a nonaccrual status was not significant. The
amount of loans which were 90 days past due with accruing interests was not significant.
F-91

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Once a loan is impaired and placed on a nonaccrual status, interest income is subsequently recognized using
the cash basis method.
Loan impairment and troubled debt restructurings
In the ordinary course of business, Nomura may choose to recognize impairment and also restructure a loanclassified as held for investment either because of financial difficulties of the borrower, or simply as a result ofmarket conditions or relationship reasons. A troubled debt restructuring (“TDR”) occurs when Nomura (aslender) for economic or legal reasons related to the borrower’s financial difficulties grants a concession to theborrower that Nomura would not otherwise consider.
Any loan being restructured under a TDR will generally already be identified as impaired with an applicableallowance for credit losses recognized. If not (for example if the loan is collectively assessed for impairment withother loans), the restructuring of the loan under a TDR will immediately result in the loan as being classified as
impaired. An impairment loss for a loan restructuring under a TDR which only involves modification of theloan’s terms (rather than receipt of assets in full or partial settlement) is calculated in the same way as any other
impaired loan. Assets received in full or partial satisfaction of a loan in a TDR are recognized at fair value.
As of March 31, 2016, the amount of loans which were classified as impaired but against which noallowance for credit losses had been recognized was not significant. For impaired loans with a related allowance,
the amounts of recorded investment, the total unpaid principal balance and the related allowance were notsignificant.
As of March 31, 2017, the amount of loans which were classified as impaired but against which noallowance for credit losses had been recognized was not significant. For impaired loans with a related allowance,
the amount of recorded investment, the total unpaid principal balance and the related allowance were notsignificant.
The amount of TDRs which occurred during the years ended March 31, 2016 and 2017 was not significant.
Credit quality indicators
Nomura is exposed to credit risks deriving from a decline in the value of loans or a default caused bydeterioration of creditworthiness or bankruptcy of the obligor. Nomura’s risk management framework for suchcredit risks is based on a risk assessment through an internal rating process, in depth pre-financing credit analysis
of each individual loan and continuous post-financing monitoring of obligor’s creditworthiness.

F-92

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present an analysis of each class of loans not carried at fair value using Nomura’sinternal ratings or equivalent credit quality indicators applied by subsidiaries as of March 31, 2016 and 2017.

AAA-BBB

Millions of yen
March 31, 2016
BB-CCC
CC-D
Others(1)Total

Secured loans at banks . . . . . . . . . . . . . . . . . . . . . . . . . ¥125,371 ¥ 75,853 ¥0 ¥ 39,281 ¥ 240,505
Unsecured loans at banks . . . . . . . . . . . . . . . . . . . . . . .
122,4112,059
1—
124,471
Short-term secured margin loans . . . . . . . . . . . . . . . . .
———377,437
377,437
Secured inter-bank money market loans . . . . . . . . . . . .
—
—
—
—
—
Unsecured inter-bank money market loans . . . . . . . . . .
9,751
—
—
—
9,751
Secured corporate loans . . . . . . . . . . . . . . . . . . . . . . . .
268,206
264,323
3,974
4,119
540,622
Unsecured corporate loans . . . . . . . . . . . . . . . . . . . . . .
2,957
1,123
—
6,971
11,051
Advances to affiliated companies . . . . . . . . . . . . . . . . .
300
—
—
—
300
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥528,996¥343,358¥3,975¥427,808

AAA-BBB

Millions of yen
March 31, 2017
BB-CCC
CC-D
Others(1)¥1,304,137

Total

Secured loans at banks . . . . . . . . . . . . . . . . . . . . . . . . . ¥124,997 ¥ 89,022 ¥ —Unsecured loans at banks . . . . . . . . . . . . . . . . . . . . . . .
134,141
1,559
1
Short-term secured margin loans . . . . . . . . . . . . . . . . .
———Secured inter-bank money market loans . . . . . . . . . . . .
———Unsecured inter-bank money market loans . . . . . . . . . .
1,040
—
—
Secured corporate loans . . . . . . . . . . . . . . . . . . . . . . . .
286,384
287,469—
Unsecured corporate loans . . . . . . . . . . . . . . . . . . . . . .
1,859
284
—
Advances to affiliated companies . . . . . . . . . . . . . . . . .
300——¥ 36,406 ¥ 250,425
1
135,702358,574
358,574
—
—
—
1,040
5,702
579,555
10,727
12,870—300

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥411,410¥548,721¥378,334¥

1¥1,338,466(1) Relate to collateralized exposures where a specified ratio of LTV is maintained.
The following table below presents a definition of each of the internal ratings used in the Nomura Group.
Rating Range

Definition

AAA

Highest credit quality. An obligor or facility has extremely strong capacity to meet its financial
commitments. ‘AAA’ is the highest credit rating assigned by Nomura. Extremely low probabilityof default.

AA

Very high credit quality category. An obligor or facility has very strong capacity to meet its
financial commitments. Very low probability of default but above that of ‘AAA’.

AHigh credit quality category. An obligor or facility has strong capacity to meet its financial
commitments but is somewhat more susceptible to the adverse effects of changes in circumstancesand economic conditions than those in higher-rated categories. Low probability of default but
higher than that of ‘AA range’.

F-93

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Rating Range

Definition

BBB

Good credit quality category. An obligor or facility has adequate capacity to meet its financial
commitments. However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity to meet its financial commitments. Medium probability of default
but higher than that of ‘A range’.

BBSpeculative credit quality category. An obligor or facility is less vulnerable in the near term thanother lower-ratings. However, it faces major ongoing uncertainties and exposure to adverse
business, financial, or economic conditions which could lead to the inadequate capacity to meet its
financial commitments. Medium to high probability of default but higher than that of ‘BBB range’.

B

Highly speculative credit quality category. An obligor or facility is more vulnerable than those
rated ‘BB range’, but the obligor currently has the capacity to meet its financial commitments.
Adverse business, financial, or economic conditions will likely impair the issuer’s or obligor’s
capacity or willingness to meet its financial commitments. High probability of default—more thanthat of ‘BB range’.

CCC

Substantial credit risk. An obligor or facility is currently vulnerable, and is dependent uponfavorable business, financial, and economic conditions to meet its financial commitments. Strong
probability of default—more than that of “B range”.

CCAn obligor or facility is currently highly vulnerable to nonpayment (default category).

C

An obligor or facility is currently extremely vulnerable to nonpayment (default category).

D

Failure of an obligor to make payments in full and on time of any financial obligations, markedly
disadvantageous modification to a contractual term compared with the existing obligation,
bankruptcy filings, administration, receivership, liquidation or other winding-up or cessation ofbusiness of an obligor or other similar situations.

Nomura reviews internal ratings at least once a year by using available credit information of obligors
including financial statements and other information. Internal ratings are also reviewed more frequently for highrisk obligors or problematic exposures and any significant credit event of obligors will trigger an immediate
credit review process.
8. Leases:
Nomura as lessor
Nomura leases office buildings and aircraft in Japan and overseas. These leases are classified as operatingleases and the related assets are stated at cost, net of accumulated depreciation, except for land, which is stated atcost in the consolidated balance sheets and reported within Other assets—Office buildings, land, equipment andfacilities.

F-94

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the types of assets which Nomura leases under operating leases as of March 31,
2016 and 2017.
Millions of yen
March 31

Cost

2016
Accumulated
depreciation

Net carrying
amount¥3,093
4,655¥(1,502)(1,177)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥7,748¥(2,679)

Real estate(1) . . . . . . . . . . . . . . . . . . . . .
Aircraft . . . . . . . . . . . . . . . . . . . . . . . . .

Cost

2017
Accumulated
depreciation

Net carrying
amount¥1,591
3,478¥ 3,090
15,110¥(1,612)(56)¥ 1,478
15,054¥5,069¥18,200¥(1,668)¥16,532(1) Cost, accumulated depreciation and net carrying amounts include amounts relating to real estate space
utilized by Nomura.
Nomura recognized rental income of ¥1,659 million, ¥1,229 million and ¥717 million for the years ended
March 31, 2015, 2016 and 2017, respectively in the consolidated statements of income within Revenue—Other.
The future minimum lease payments to be received on noncancellable operating leases as of March 31, 2017
were ¥15,502 million and these future minimum lease payments to be received are scheduled as below:

4 to 5years

More than
5 years

Minimum lease payments to be received . . . . . . . . ¥15,502 ¥1,483 ¥1,480 ¥1,480 ¥1,480 ¥1,480¥8,099Total

Less than
1 yearMillions of yen
Years of receipt
1 to 2
2 to 33 to 4
years
years
years

Nomura as lessee
Nomura leases its office spaces, certain employees’ residential facilities and other facilities in Japan andoverseas primarily under cancelable operating lease agreements which are customarily renewed upon expiration.
Nomura also leases certain equipment and facilities in Japan and overseas under noncancellable operating leaseagreements. Rental expenses, net of sublease rental income, for the years ended March 31, 2015, 2016 and 2017
were ¥47,217 million, ¥49,000 million and ¥42,919 million, respectively.
The following table presents the future minimum lease payments under noncancellable operating leases withremaining terms exceeding one year as of March 31, 2017:
Millions of yen
March 312017

Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Sublease rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥127,818(13,046)

Net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥114,772

F-95

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The future minimum lease payments above are scheduled as below as of March 31, 2017:

Minimum lease payments . . . . . . . . . .

Total

Less than
1 year¥127,818¥17,075

Millions of yen
Years of payment
1 to 2
2 to 33 to 4
years
years
years

¥15,102¥11,852¥10,058

4 to 5years

More than
5 years¥7,877¥65,854

Nomura leases certain equipment and facilities in Japan and overseas under capital lease agreements. If thelease is classified as a capital lease, Nomura recognizes the real estate at the lower of its fair value or present
value of minimum lease payments, which is reported within Other Assets—Office buildings, land, equipment andfacilities in the consolidated balance sheets. The amounts of capital lease assets as of March 31, 2016 and 2017
were ¥31,030 million and ¥27,067 million, respectively and accumulated depreciations on such capital leaseassets as of March 31, 2016 and 2017 were ¥6,784 million and ¥7,225 million, respectively.
The following table presents the future minimum lease payments under capital leases as of March 31, 2017:
Millions of yen
March 312017

Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Amount representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 46,579(26,890)

Present value of net lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 19,689

The future minimum lease payments above are scheduled as below as of March 31, 2017:

Minimum lease payments . . . . . . . . . .

Total

Less than
1 year

¥ 46,579¥ 3,666

Millions of yen
Years of payment
1 to 2
2 to 33 to 4
years
years
years

¥ 3,502¥ 3,583¥ 3,638

4 to 5years

More than
5 years¥3,641¥28,549

Certain leases contain renewal options or escalation clauses providing for increased rental payments based
upon maintenance, utilities and tax increases.

F-96

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
9. Other assets—Other / Other liabilities:
The following table presents components of Other assets—Other and Other liabilities in the consolidatedbalance sheets as of March 31, 2016 and 2017.
Millions of yen
March 312016
2017

Other assets—Other:
Securities received as collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 318,112 ¥ 447,272
Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110,532
104,821
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,13021,825Investments in equity securities for other than operating purposes(1) . . . . . . . . . . . . . . .
130,357
245,600
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,997
10,699Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
348,383
338,589
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 974,511¥1,168,806

Other liabilities:
Obligation to return securities received as collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 318,112 ¥ 447,272
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32,947
24,213
Other accrued expenses and provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
389,338
397,605
Other(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
460,250
439,420
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,200,647¥1,308,510(1) Includes marketable and non-marketable equity securities held for other than trading or operating purposes.
These investments were comprised of listed equity securities and unlisted equity securities of¥109,887 million and ¥20,470 million respectively, as of March 31, 2016, and ¥117,476 million and¥128,124 million respectively, as of March 31, 2017. These securities are carried at fair value, with changes
in fair value recognized within Revenue—Other in the consolidated statements of income.
(2) Includes liabilities relating to investment contracts underwritten by Nomura’s insurance subsidiary. As of
March 31, 2016 and 2017, carrying values were ¥242,496 million and ¥224,418 million, respectively, andestimated fair values were ¥244,246 million and ¥225,563 million, respectively. Fair value was estimatedusing DCF valuation techniques and using valuation inputs which would be generally classified in Level 3of the fair value hierarchy.
Goodwill is recognized upon completion of a business combination as the difference between the purchaseprice and the fair value of the net assets acquired. Subsequent to initial recognition, goodwill is not amortized but
is tested for impairment during the fourth quarter of each fiscal year, or more often if events or circumstances,such as adverse changes in the business climate, indicate there may be impairment.

F-97

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in goodwill, which are reported in the consolidated balance sheets
within Other assets—Other for the years ended March 31, 2016 and 2017.
Millions of yen
Year ended March 31, 2016
Changes during year

Beginning of year
Grosscarrying
amountEnd of year
Grosscarrying
amountAccumulated Net carrying
Impairment
amountImpairment

Other(1)Wholesale . . . . . . . ¥ 97,529
Other . . . . . . . . . .
6,612¥(11,817)(6,134)¥85,712
478

¥

—
—

¥(5,419) ¥92,110(8)
470¥(11,817)—¥80,293
470

Total . . . . . . . . . . . ¥104,141¥(17,951)¥86,190¥—¥(5,427) ¥92,580¥(11,817)¥80,763

Millions of yen
Year ended March 31, 2017
Changes during year

Beginning of year
Grosscarrying
amountAccumulated Net carrying
Impairment
amountEnd of year
Grosscarrying
amountAccumulated Net carrying
Impairment
amountImpairment

Other(1)

Accumulated Net carrying
Impairment
amountWholesale . . . . . . . ¥ 92,110
Other . . . . . . . . . .
470¥(11,817)—¥80,293
470

¥

—
—

¥ (357) ¥91,753
1471¥(11,817)—¥79,936471

Total . . . . . . . . . . . ¥ 92,580¥(11,817)¥80,763¥—¥ (356) ¥92,224¥(11,817)¥80,407(1) Includes currency translation adjustments.
The following table presents finite-lived intangible assets by type as of March 31, 2016 and 2017.
Millions of yen
March 31, 2016
Gross
carrying
amountAccumulated
amortization

Client relationships . . . . . . . . . . . . . . . ¥68,239
Other . . . . . . . . . . . . . . . . . . . . . . . . . .
503
Total . . . . . . . . . . . . . . . . . . . . . . . . . . ¥68,742

March 31, 2017
Net carrying
amountGrosscarrying
amountAccumulated
amortization

Net carrying
amount¥(47,655)(315)¥20,584
188¥67,942
493¥(52,628)(360)¥15,314133¥(47,970)¥20,772¥68,435¥(52,988)¥15,447

Amortization expenses for the years ended March 31, 2015, 2016 and 2017 were ¥4,979 million,¥5,181 million and ¥4,535 million, respectively. Estimated amortization expenses for the next five years areshown below.
Millions of yen
Estimated
amortization expense

Year ending March 31

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-98¥5,123
3,518
2,402
2,402
2,002

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The amounts of indefinite-lived intangibles, which primarily includes trademarks, were ¥8,997 million and¥8,967 million as of March 31, 2016 and 2017, respectively.
10. Borrowings:
The following table presents short-term and long-term borrowings of Nomura as of March 31, 2016 and2017.
Millions of yen
March 312016
2017

Short-term borrowings(1):Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 177,906 ¥2,562Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149,775
130,676
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
335,221409,811
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 662,902

Long-term borrowings:
Long-term borrowings from banks and other financial institutions(2) . . . . . . . . . . ¥3,197,303
Bonds and notes issued(3):Fixed-rate obligations:Japanese yen denominated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,300,872
Non-Japanese yen denominated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
876,088
Floating-rate obligations:Japanese yen denominated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
726,568
Non-Japanese yen denominated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
293,207
Index / Equity-linked obligations:Japanese yen denominated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
802,849
Non-Japanese yen denominated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
805,217¥ 543,049¥2,868,591

1,099,278
782,315825,038
164,397822,746
592,8314,804,801

4,286,605

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,002,104

7,155,196

Trading balances of secured borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

127,455

40,212

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥8,129,559¥7,195,408(1) Includes secured borrowings of ¥82,861 million as of March 31, 2016 and ¥158,156 million as of March 31,
2017.
(2) Includes secured borrowings of ¥226,704 million as of March 31, 2016 and ¥120,322 million as ofMarch 31, 2017.
(3) Includes secured borrowings of ¥744,945 million as of March 31, 2016 and ¥851,239 million as ofMarch 31, 2017.
Trading balances of secured borrowings
These are liabilities recognized when a transfer of a financial asset does not meet the criteria for sales
accounting under ASC 860 and therefore the transaction is accounted for as a secured borrowing. Theseborrowings are part of Nomura’s trading activities intended to generate profits from the distribution of financial
products secured by those financial assets.
F-99

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-term borrowings consisted of the following:
Millions of yen
March 312016
2017

Debt issued by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issued by subsidiaries—guaranteed by the Company . . . . . . . . . . . . . . . . . . . . . .
Debt issued by subsidiaries—not guaranteed by the Company(1) . . . . . . . . . . . . . . . . . .

¥3,624,836
1,973,213
2,531,510¥3,006,669
1,846,119
2,342,620

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥8,129,559¥7,195,408(1) Includes trading balances of secured borrowings.
As of March 31, 2016, fixed-rate long-term borrowings mature between 2016 and 2046 at interest rates
ranging from 0.00% to 14.53%. Excluding perpetual subordinated debts, floating-rate obligations, which are
generally based on LIBOR, mature between 2016 and 2047 at interest rates ranging from 0.00% to 9.01%. Index/ Equity-linked obligations mature between 2016 and 2046 at interest rates ranging from 0.00% to 31.00%.
As of March 31, 2017, fixed-rate long-term borrowings mature between 2017 and 2047 at interest rates
ranging from 0.00% to 14.53%. Excluding perpetual subordinated debts, floating-rate obligations, which are
generally based on LIBOR, mature between 2017 and 2047 at interest rates ranging from 0.00% to 4.50%. Index/ Equity-linked obligations mature between 2017 and 2047 at interest rates ranging from 0.00% to 33.20%.
Certain borrowing agreements contain provisions whereby the borrowings are redeemable at the option of
the borrower at specified dates prior to maturity and include various equity-linked or other index-linked
instruments.
Nomura enters into swap agreements to manage its exposure to interest rates and foreign exchange rates.
Principally, debt securities and notes issued are effectively converted to LIBOR-based floating rate obligations
through such swap agreements. The carrying value of the long-term borrowings includes adjustments to reflect
fair value hedges.
Following table presents the effective weighted-average interest rates of borrowings, including the effect offair value hedges as of March 31, 2016 and 2017.
March 312016
2017

Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-rate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating-rate obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index / Equity-linked obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-100

0.77%
0.88%
1.45%
0.89%
0.36%

1.20%
0.90%
1.03%
1.26%
0.37%

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Maturities of long-term borrowings
The following table presents the aggregate annual maturities of long-term borrowings, including
adjustments related to fair value hedges and liabilities measured at fair value, as of March 31, 2017:
Year ending March 31

Millions of yen

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 478,658
1,164,050
1,173,632
876,145
660,0152,802,696

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,155,196

Trading balances of secured borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40,212

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥7,195,408

Borrowing facilities
As of March 31, 2016 and 2017, Nomura had unutilized borrowing facilities of ¥27,458 million and ¥nil,
respectively. The terms for these unutilized borrowing facilities do not significantly differ from existing
borrowings. Nomura has structured facilities to ensure that the maturity dates of these facilities are distributed
evenly throughout the year in order to prevent excessive maturities of facilities in any given period. Thesefacilities are subject to customary lending conditions and covenants.
Subordinated borrowings
As of March 31, 2016 and 2017, subordinated borrowings were ¥657,463 million and ¥484,854 million,
respectively.
11. Earnings per share:
Basic and diluted earnings per share (“EPS”) are presented on the face of the consolidated statements ofincome. Basic EPS is calculated by dividing net income attributable to NHI shareholders by the weighted average
number of the Company’s common shares outstanding during the year. The calculation of diluted EPS is similar
to basic EPS, except that the weighted average number of the Company’s common shares is adjusted to reflect all
dilutive instruments where the Company’s common shares are potentially deliverable during the year. In
addition, net income attributable to NHI shareholders is adjusted for any change in income or loss that would
result from the assumed conversion of dilutive instruments issued by subsidiaries and affiliates.

F-101

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents a reconciliation of the amounts and the numbers used in the calculation of net
income attributable to NHI shareholders per share (basic and diluted) for the years ended March 31, 2015, 2016
and 2017.
Millions of yen
except per share data presented in yen
Year ended March 31
2015
2016
2017

Basic—Net income attributable to NHI shareholders . . . . . . . .

¥224,785¥

131,550¥Weighted average number of shares outstanding . . . . .

3,645,514,878

Net income attributable to NHI shareholders per
share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

61.66

¥

36.53

¥

67.29

Diluted—
Net income attributable to NHI shareholders . . . . . . . .

¥224,726¥

131,426¥

239,475

Weighted average number of shares outstanding . . . . .

3,743,690,088

Net income attributable to NHI shareholders per
share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

60.03

3,600,701,499

239,6173,560,775,652

3,700,388,050
¥

35.52

3,647,729,909
¥

65.65

Net income attributable to NHI shareholders was adjusted to reflect the decline in Nomura’s equity share of
earnings of subsidiaries and affiliates for the years ended March 31, 2015, 2016 and 2017 arising from options topurchase common shares issued by subsidiaries and affiliates. The weighted average number of shares used in thecalculation of diluted EPS reflects the increase in potential issuance of the Company’s common shares arisingfrom stock-based compensation plans by the Company, which would have minimal impact on EPS for the years
ended March 31, 2015, 2016 and 2017.
Antidilutive stock options to purchase 9,745,800, 10,029,500 and 7,927,900 of the Company’s commonshares were not included in the computation of diluted EPS for the years ended March 31, 2015, 2016 and 2017,
respectively.
Subsequent Events
On April 27, 2017, the Company adopted a resolution to set up a share buyback program. See Note 17“Shareholders’ equity” for further information.
On April 27, 2017, the Company adopted a resolution to issue SARs pursuant to the SAR awards. See Note
13 “Deferred compensation plans” for further information.
12. Employee benefit plans:
Nomura provides various pension plans and other post-retirement benefits which cover certain eligible
employees worldwide. In addition, Nomura provides health care benefits to certain active and retired employees
through its Nomura Securities Health Insurance Society (“NSHIS”).
Defined benefit pension plans—
The Company and certain subsidiaries in Japan (“Japanese entities”) have contributory funded benefit
pension plans for eligible employees. The benefits are paid as annuity payments subsequent to retirement or as
F-102

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
lump-sum payments at the time of retirement based on a combination of years of service, age at retirement andemployee’s choice. The benefits under the plans are calculated based upon position, years of service and reason
for retirement. In addition to the plans described above, certain Japanese entities also have unfunded lump-sum
payment plans. Under these plans, employees with at least two years of service are generally entitled to
lump-sum payments upon termination of employment. The benefits under the plans are calculated based upon
position, years of service and the reason for retirement. Nomura’s funding policy is to contribute annually theamount necessary to satisfy local funding standards. In December 2008, certain contributory funded benefit
pension plans and unfunded lump-sum payment plans were amended and “Cash balance pension plans” wereintroduced. Participants receive an annual benefit in their cash balance pension plan account, which is computed
based on compensation of the participants, adjusted for changes in Japanese government debt securities yields.
Certain overseas subsidiaries have various local defined benefit plans covering certain employees. Nomura
recognized an asset for surplus pension benefits for these plans amounting to ¥9,019 million and ¥9,338 million
as of March 31, 2016 and 2017, respectively.
Net periodic benefit cost
The following table presents the components of net periodic benefit cost for defined benefit plans ofJapanese entities for the years ended March 31, 2015, 2016 and 2017. Nomura’s measurement date is March 31
for defined benefit plans of Japanese entities.
Millions of yen
Year ended March 31
2015
2016
2017

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 7,800 ¥ 8,253 ¥ 8,909
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,090
2,092
1,444
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,732) (6,064) (6,004)
Amortization of net actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,127
1,456
2,867
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,148) (1,148) (1,090)
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 6,137¥ 4,589¥ 6,126

Prior service cost is amortized on a straight-line basis over the average remaining service period of active
participants. Gains and losses in excess of 10% of the greater of the projected benefit obligation or the fair valueof plan assets are amortized over the average remaining service period of active participants, which is 11 years.

F-103

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Benefit obligations and funded status
The following table presents a reconciliation of changes in projected benefit obligation (“PBO”) and the fairvalue of plan assets, as well as a summary of the funded status of Japanese entities’ plans as of, and for the years
ended March 31, 2016 and 2017.
Millions of yen
As of or for the year ended March 31
2016
2017

Change in projected benefit obligation:
Projected benefit obligation at beginning of year . . . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition, divestitures and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥240,858
8,253
2,092
13,121(10,528)(504)¥253,292
8,909
1,444
16,367(10,285)9

Projected benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . .

¥253,292¥269,736

Change in plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥233,837
2,540
4,559
(8,909)¥232,027
6,754
4,124
(8,960)Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . .

¥232,027¥233,945

Funded status at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(21,265)(35,791)

Amounts recognized in the consolidated balance sheets . . . . . . . . . . . . . . . . .

¥ (21,265)¥ (35,791)

The accumulated benefit obligation (“ABO”) was ¥253,292 million and ¥269,736 million as of March 31,
2016 and 2017, respectively.
The following table presents the PBO, ABO and fair value of plan assets for Japanese entities’ plans with
ABO and PBO in excess of plan assets as of March 31, 2016 and 2017.
Millions of yen
March 312016
2017

Plans with ABO in excess of plan assets:
PBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ABO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plans with PBO in excess of plan assets:
PBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ABO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-104¥31,788
31,788—¥36,587
36,587—¥31,788
31,788—¥36,587
36,587—

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents pre-tax amounts of Japanese entities’ plans deferred in Accumulated othercomprehensive income (loss) that have not yet been recognized as components of net periodic benefit cost during
the year ended March 31, 2017.
Millions of yen
For the year ended
March 31, 2017

Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥69,940(7,710)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥62,230Pre-tax amounts of Japanese entities’ plans in accumulated other comprehensive income which are expected
to be recognized as components of net periodic benefit cost over the next fiscal year are as follows.
Millions of yen
For the year ending
March 31, 2018

Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 3,950(1,148)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2,802

Assumptions
The following table presents the weighted-average assumptions used to determine projected benefit
obligations of Japanese entities’ plans as of March 31, 2016 and 2017.
March 312016 2017

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.6% 0.9%
2.5% 2.5%

The following table presents the weighted-average assumptions used to determine the net periodic benefit
cost of Japanese entities’ plans as of March 31, 2015, 2016 and 2017.
Year ended March 31
2015
2016
2017

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.4% 0.9% 0.6%
2.5% 2.5% 2.5%
2.6% 2.6% 2.6%

Nomura generally determines the discount rates for its defined benefit plans by referencing indices for longterm, high-quality debt securities and ensuring that the discount rate does not exceed the yield reported for thoseindices after adjustment for the duration of the plans’ liabilities.
Nomura uses the expected long-term rate of return on plan assets to compute the expected return on assets.
Nomura’s approach in determining the long-term rate of return on plan assets is primarily based on historicalfinancial market relationships that have existed over time with the presumption that this trend will generally
remain constant in the future.
F-105

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Plan assets
Plan assets are managed with an objective to generate sufficient long-term value in order to enable future
pension payouts. While targeting a long-term rate of return on plan assets, Nomura aims to minimize short-term
volatility by managing the portfolio through diversifying risk. Based on this portfolio policy, the plan assets areinvested diversely.
The plan assets of domestic plans target to invest 17% in equities (including private equity investments),
45% in debt securities, 20% in life insurance company general accounts, and 18% in other investments.
Investment allocations are generally reviewed and revised at the time of the actual revaluation that takes place
every five years or when there is a significant change in the portfolio assumptions.
For details of the levels of inputs used to measure the fair value of plan assets, see Note 2 “Fair value
measurements”.
The following tables present information about the fair value of plan assets of Japanese entities’ plans as ofMarch 31, 2016 and March 31, 2017 within the fair value hierarchy.
Millions of yen
March 31, 2016
Balance as ofMarch 31, 2016

Level 1

Level 2

Level 3Pension plan assets:
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese government securities . . . . . . . . . . . . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other(1) . . . . . . . . . . . . . . . . . . . . .
Life insurance company general accounts . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥21,283—
61,803
2,380
—
—
—

¥

—
—
—
2,163
12,934
52,10924,146

¥

—
7,510
—
—
47,699——¥ 21,283
7,510
61,803
4,543
60,633
52,10924,146

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥85,466¥91,352¥55,209¥232,027

Millions of yen
March 31, 2017
Balance as ofMarch 31, 2017

Level 1

Level 2

Level 3Pension plan assets:
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese government securities . . . . . . . . . . . . . . . . . . . . . . .
Bank and corporate debt securities . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other(1) . . . . . . . . . . . . . . . . . . . . .
Life insurance company general accounts . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥24,375—
53,270
2,389
—
—
—

¥

—
—
—
1,932
9,816
53,09831,856

¥

—
6,785
—
—
50,424——¥ 24,375
6,785
53,2704,321
60,24053,09831,856

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥80,034¥96,702¥57,209¥233,945(1) Includes hedge funds and real estate funds.

F-106

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of plan assets of non-Japanese entities’ plans as of March 31, 2016 was ¥3,954 million,¥192 million and ¥35,610 million which were classified in Level 1, Level 2 and Level 3 of the fair value
hierarchy, respectively. The fair value of plan assets of non-Japanese entities’ plans as of March 31, 2017 was¥3,239 million, ¥140 million and ¥37,021 million which were classified in Level 1, Level 2 and Level 3 of thefair value hierarchy, respectively.
Level 1 plan assets primarily include equity securities and government securities. Unadjusted quoted prices
in active markets for identical assets that Nomura has the ability to access at the measurement date are classified
as Level 1. Level 2 plan assets primarily include investment trust funds, corporate debt securities and investments
in life insurance company’s general accounts. Investment trust funds are valued at their net asset values ascalculated by the sponsor of the funds. Investments in life insurance company’s general accounts are valued atconversion value.
The following tables present information about plan assets of Japanese entities’ plans for which Nomura has
utilized significant Level 3 valuation inputs to estimate fair value.
Millions of yen
Year ended March 31, 2016
Balance
Purchases /as ofUnrealized
sales andApril 1,and realized
other
2015
gains / loss
settlement

Balance
as ofMarch 31,2016

Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . .

¥ 6,793
48,545¥ (2,034)(2,018)¥ 2,751
1,172¥ 7,51047,699Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥55,338¥ (4,052)¥ 3,923¥55,209

Millions of yen
Year ended March 31, 2017
Balance
Purchases /as ofUnrealized
sales andApril 1,and realized
other
2016
gains / loss
settlement

Balance
as ofMarch 31,2017

Private equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment trust funds and other . . . . . . . . . . . . . . . . . . . . . . . .

¥ 7,51047,699¥¥(1,078)
1,570¥ 6,785
50,424

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥55,209¥ 1,508¥¥57,209

353
1,155

492

The fair value of Level 3 plan assets of non-Japanese entities’ plans, mainly consisting of annuities, was¥35,610 million and ¥37,021 million as of March 31, 2016 and 2017, respectively. The amount of unrealized
profit (loss) of Level 3 assets was ¥(8,241) million and ¥5,836 million as of March 31, 2016 and 2017,
respectively. The amounts of gains and losses, purchases and sales other than above, transfers between Level 1 orLevel 2 and Level 3 relating to these assets during the years ended March 31, 2016 and 2017 were notsignificant.
Cash Flows
Nomura expects to contribute ¥4,124 million to Japanese entities’ plans in the year ending March 31, 2018.
Nomura policy is to contribute annual amounts based on the relevant local funding requirements of the plans.

F-107

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the expected benefit payments of Japanese entities’ plans during the next fivefiscal years and in aggregate for the five fiscal years thereafter.
Year ending March 31

Millions of yen

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023-2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥12,232
12,19911,806
11,48911,70864,993

Defined contribution pension plans—
In addition to defined benefit pension plans, the Company, NSC and other Japanese and non-Japanesesubsidiaries have defined contribution pension plans.
Nomura contributed ¥3,488 million, ¥3,582 million and ¥3,636 million to defined contribution pension
plans for Japanese entities’ plans for the years ended March 31, 2015, 2016 and 2017, respectively.
The contributions to overseas defined contribution pension plans were ¥10,382 million, ¥10,777 million and¥8,650 million for the years ended March 31, 2015, 2016 and 2017, respectively.
Health care benefits—
The Company and certain subsidiaries provide certain health care benefits to both active and retired
employees through NSHIS. The Company and certain subsidiaries also sponsor certain health care benefits toretired employees (“Special Plan”) and who participate in the Special Plan on a pay-all basis, i.e., by requiring aretiree contribution based on the estimated per capita cost of coverage. The Special Plan is a multi-employer
post-retirement plan because it is jointly administered by NSHIS and the Japanese government, and the funded
status of it is not computed separately. Therefore, although the Company and certain subsidiaries contribute some
portion of the cost of retiree health care benefits not covered through retiree contributions, the Company andcertain subsidiaries do not reserve for future costs. The health care benefit costs, which are equivalent to therequired contribution, amounted to ¥7,116 million, ¥7,147 million and ¥8,138 million for the years ended
March 31, 2015, 2016 and 2017, respectively.
13. Deferred compensation plans:
Nomura issues compensation awards to senior management and other employees, certain of which arelinked to the price of the Company’s common stock, in order to retain and motivate key staff.
These stock-based compensation awards comprise Plan A and Plan B Stock Acquisition Rights (“SARs”),
Notional Stock Units (“NSUs”), and Collared Notional Stock Units (“CSUs”). SAR Plan A awards are awards ofstock options while SAR Plan B awards, NSUs and CSUs are analogous to awards of restricted common stock.
The Company also issues other deferred compensation awards, namely Notional Indexed Units (“NIUs”) which
are linked to a world stock index quoted by Morgan Stanley Capital International.
Certain deferred compensation awards granted since May 2013 include “Full Career Retirement” (“FCR”)
provisions which permit recipients of the awards to continue to vest in the awards upon voluntary termination or
F-108

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
claiming FCR during a pre-defined election window if certain criteria based on corporate title and length ofservice within Nomura are met. The requisite service period for these awards ends on the earlier of thecontractual vesting date and the date that the recipients become eligible for or claim FCR.
SAR Plan A awards
The Company issues SAR Plan A awards linked to the price of the Company’s common stock pursuant toseveral stock option plans. These awards vest and are exercisable into the Company’s common stock
approximately two years after grant date, expire approximately seven years after grant date, and are subject toforfeiture on voluntary termination of employment or involuntary termination for cause. The exercise price isgenerally not less than the fair value of the Company’s common stock on grant date.
The grant date fair value of SAR Plan A awards is estimated using a Black-Scholes option-pricing modeland using the following assumptions:•

Expected volatilities based on historical volatility of the Company’s common stock;•

Expected dividend yield based on the current dividend rate at the time of grant;•

Expected lives of the awards determined based on historical experience; and•Expected risk-free interest rate based on Japanese Yen swap rate with a maturity equal to the expected
lives of the options.

The weighted-average grant date fair value of SAR Plan A awards granted during the years ended March 31,
2015, 2016 and 2017 was ¥201, ¥176 and ¥126 per share, respectively. The weighted-average assumptions usedin each of these years were as follows.
2015

Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividends yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected lives (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended March 31
2016
2017

45.26%
2.39%
7
0.43%

40.87%
2.99%
7
0.27%

40.95%
2.30%
4.5
0.03%

The following table presents activity relating to SAR Plan A awards for the year ended March 31, 2017.
Weighted-averageremaining life
until expiry(years)Outstanding(number of Nomura
shares)

Weighted-average
exercise price

Outstanding as of March 31, 2016 . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,991,100
2,561,000(975,400)(55,200)(2,050,500)

¥640
593
370
707
728

3.6

Outstanding as of March 31, 2017 . . . . . . . . . . . . . . . . . . .

14,471,000

¥634

4.2

Exercisable as of March 31, 2017 . . . . . . . . . . . . . . . . . . .

9,340,600

¥599

3.1

F-109

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The total intrinsic value of SAR Plan A awards exercised during the years ended March 31, 2015, 2016 and2017 was ¥401 million, ¥435 million and ¥330 million, respectively.
The aggregate intrinsic value of SAR Plan A awards outstanding and exercisable as of March 31, 2017 was¥1,608 million and ¥1,355 million, respectively.
As of March 31, 2017, total unrecognized compensation cost relating to SAR Plan A awards was¥405 million which is expected to be recognized over a weighted average period of 1.3 years. The total fair valueof SAR Plan A awards which vested during the years ended March 31, 2015, 2016 and 2017 was ¥1,211 million,
nil and nil, respectively.
SAR Plan B awards
The Company issues SAR Plan B awards linked to the price of the Company’s common stock pursuant toseveral stock unit plans. These awards vest and are exercisable into the Company’s common stock approximately
six months to five years after grant date, expire approximately five and a half years to ten years after grant date
and are subject to forfeiture on voluntary termination of employment or involuntary termination for cause. The
exercise price is a nominal ¥1 per share.
The grant date fair value of SAR Plan B awards is determined using the price of the Company’s common
stock.
The following table presents activity relating to SAR Plan B awards for the year ended March 31, 2017.
Weighted-averageremaining life
until expiry(years)Outstanding(number of Nomura
shares)

Weighted-average
grant date fairvalue per share

Outstanding as of March 31, 2016 . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91,976,200
23,870,500(39,702,000)(1,794,400)(18,700)

¥545
375
554
514
816

5.1

Outstanding as of March 31, 2017 . . . . . . . . . . . . . . . . . . .

74,331,600

¥486

4.8

Exercisable as of March 31, 2017 . . . . . . . . . . . . . . . . . . .

20,666,000

¥512

3.1

The weighted-average grant date fair value per share for the years ended March 31, 2015, 2016 and 2017was ¥483, ¥759 and ¥375, respectively.
The total intrinsic value of SAR Plan B awards exercised during the years ended March 31, 2015, 2016 and2017 was ¥23,673 million, ¥25,059 million and ¥21,014 million, respectively.
The aggregate intrinsic value of SAR Plan B awards outstanding and exercisable as of March 31, 2017 was¥51,356 million and ¥14,278 million, respectively.
As of March 31, 2017, total unrecognized compensation cost relating to SAR Plan B awards was¥1,873 million which is expected to be recognized over a weighted average period of 1.4 years. The total fairvalue of SAR Plan B awards which vested during the years ended March 31, 2015, 2016 and 2017 was¥27,662 million, ¥20,880 million and ¥23,310 million, respectively.
F-110

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Total compensation expense recognized within Non-interest expenses—Compensation and benefits in the
consolidated statements of income relating to SAR Plan A and SAR Plan B awards for the years ended March 31,
2015, 2016 and 2017 was ¥19,364 million, ¥16,890 million and ¥8,960 million, respectively.
Cash received from the exercise of SAR Plan A and SAR Plan B awards during the year ended March 31,2017 was ¥400 million and the tax benefit realized from exercise of these awards was ¥857 million.
Total related tax benefits recognized in the consolidated statements of income for compensation expenses
relating to SAR Plan A awards, SAR Plan B awards for the years ended March 31, 2015, 2016 and 2017 were¥1,422 million, ¥806 million and ¥453 million, respectively. The dilutive effect of outstanding compensationplans is included in the weighted average number of shares outstanding used in diluted EPS computations.
NSU and CSU awards
NSUs and CSUs are cash-settled awards linked to the price of the Company’s common stock. NSUs and
CSUs generally have a graded vesting period of approximately five years from grant date, and are subject toforfeiture on voluntary termination of employment or involuntary termination for cause. NSUs replicate the key
features of SAR Plan B awards described above but are settled in cash rather than exercisable into theCompany’s common stock. CSUs are similar to NSUs but exposure of the employee to movements in the price of
the Company’s common stock is subject to a cap and floor.
The fair value of NSUs and CSUs are determined using the price of the Company’s common stock.
The following table presents activity related to NSUs and CSUs for the year ended March 31, 2017.
NSUs
Outstanding(number of units)

Stock
price

CSUs
Outstanding(number of units)

Stock
price

Outstanding as of March 31, 2016 . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38,582,022
21,048,181(26,622,239)(1,035,157)¥498
29,510,658
463(1) 19,275,538
536(2) (28,894,163)(859,970)¥586
475(1)
526(2)

Outstanding as of March 31, 2017 . . . . . . . . . . . . . . . . . . . . . . .

31,972,807¥679(3)¥603(3)

19,032,063(1) Weighted-average price of the Company’s common stock used to determine number of awards granted.
(2) Weighted-average price of the Company’s common stock used to determine the final cash settlement
amount of the awards.
(3) The price of the Company’s common stock used to remeasure the fair value of the remaining outstanding
unvested awards as of March 31, 2017.
Total compensation expense recognized within Non-interest expenses—Compensation and benefits in the
consolidated statements of income relating to NSUs and CSUs for the years ended March 31, 2015, 2016 and2017 was ¥39,366 million, ¥23,480 million and ¥23,127 million, respectively.
Total unrecognized compensation cost relating to NSUs, based on the fair value of these awards as ofMarch 31, 2017, was ¥2,317 million, which is expected to be recognized through the consolidated statements ofincome over a remaining weighted-average period of 0.8 years.
F-111

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The total fair value of NSUs which vested during the years ended March 31, 2015, 2016 and 2017 was¥20,116 million, ¥19,860 million and ¥14,267 million, respectively.
Total unrecognized compensation cost relating to CSUs, based on the fair value of these awards as ofMarch 31, 2017, was ¥2,009 million, which is expected to be recognized through the consolidated statements ofincome over a remaining weighted-average period of 1.0 years.
The total fair value of CSUs which vested during the years ended March 31, 2015, 2016 and 2017 was¥15,762 million, ¥18,366 million and ¥15,186 million, respectively.
NIU awards
In addition to the stock-based compensation awards described above, Nomura also grants NIUs to certain
senior management and employees. NIUs are cash-settled awards linked to a world stock index quoted by
Morgan Stanley Capital International, have graded vesting period of approximately three years from grant date,
and are subject to forfeiture on voluntary termination of employment or involuntary termination for cause.
The fair value of NIUs is determined using the price of the index.
The following table presents activity relating to NIUs for the year ended March 31, 2017.
Outstanding(number of units)

Index price(1)Outstanding as of March 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22,916,989
11,034,113(20,822,917)(846,847)$4,4394,583(2)4,789(3)Outstanding as of March 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,281,338$5,123(4)

(1)
(2)
(3)
(4)

The price of each unit is determined using 1/1000th of the index price.
Weighted-average index price used to determine number of awards granted.
Weighted-average index price used to determine the final cash settlement amount of the awards.
Index price used to remeasure the total fair value of the remaining outstanding unvested awards as ofMarch 31, 2017.

Total compensation expense recognized within Non-interest expenses—Compensation and benefits in the
consolidated statements of income relating to NIUs for the year ended March 31, 2015, 2016 and March 31, 2017was ¥12,900 million, ¥9,463 million and ¥6,107 million respectively.
Total unrecognized compensation cost relating to NIUs, based on the fair value of these awards as ofMarch 31, 2017, was ¥1,127 million which is expected to be recognized through the consolidated statements ofincome over a remaining weighted-average period of 0.9 years.
The total fair value of NIUs which vested during the years ended March 31, 2015, 2016 and 2017 was¥12,966 million, ¥13,725 million and ¥10,802 million, respectively.
Total tax benefits recognized in the consolidated statements of income for compensation expense relating to
NSUs, CSUs and NIUs for the years ended March 31, 2015, 2016 and 2017 were ¥1,252 million, ¥672 millionand ¥720 million, respectively.
F-112

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Subsequent events
On May 12, 2017, the Company adopted a resolution to issue SAR Plan B awards to senior management andemployees of the Company and its subsidiaries. The Company granted total of 178,407 SAR Plan B awards inJune 9, 2017 which represents a right to acquire 17,840,700 shares of the Company. The exercise price is anominal ¥1 per share, the vesting period of these awards ranges from approximately six months to seven years
from grant date and these awards can be exercised up to five years after vesting date.
In May 2017, Nomura also granted NSUs, CSUs and NIUs to certain senior management and employees.
These awards have a total grant date fair value of ¥40 billion and a vesting period of up to seven years.
14. Restructuring initiatives:
During the year ended March 31, 2016, global markets have experienced extreme volatility and a significant
decline in liquidity, triggered by heightened uncertainty in the global economy. Nomura’s management approved
the restructuring of its Wholesale segment in EMEA and the Americas in March 2016. This restructuring will
involve the closing of certain Wholesale businesses in EMEA and rationalizing existing businesses in theAmericas in order to reduce costs, increase efficiencies and generate sustainable profitability within Nomura’sinternational operations in these regions. During the year ended March 31, 2017, this restructuring initiative isalmost completed.
As a result of this restructuring initiative, Nomura recognized ¥15,603 million of restructuring costs in the
consolidated statements of income during the year ended March 31, 2016 which primarily relate to employee
termination costs reported within Non-interest expenses—Compensation and benefits in the consolidated
statements of income and within Nomura’s Wholesale segment. As of March 31, 2016, these costs are primarily
reported as liabilities within Other liabilities in the consolidated statements of financial position. The amount of
restructuring costs recognized in the consolidated statements of income during the year ended March 31, 2017
was not significant.
15. Income taxes:
The following table presents components of Income tax expense reported in the consolidated statements ofincome for the years ended March 31, 2015, 2016 and 2017.
Millions of yen
Year ended March 31
2015
2016
2017

Current:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 80,760
13,531
94,291¥ 72,272
9,183
81,455¥52,004
5,697
57,701

23,3093,180
26,489¥120,780(66,176) 20,239
7,317
2,289
(58,859) 22,528¥ 22,596 ¥80,229

The income tax benefit recognized from operating losses for the years ended March 31, 2015, 2016 and2017 was ¥3,888 million, ¥5,451 million and ¥868 million, respectively, included within deferred income tax
expense above.
F-113

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company and its wholly-owned domestic subsidiaries have adopted the consolidated tax filing system
permitted under Japanese tax law. The consolidated tax filing system is permitted only for a national tax.
Due to the revisions of domestic tax laws during the fourth quarter ended March 31, 2015 and March 31,
2016, our effective statutory tax rates are 36% for the fiscal year ended March 31, 2015, 33% for the fiscal year
ended at March 31, 2016 and 31% thereafter.
On November 18, 2016, the “Act to partially amend the Act for partial amendment of the Local Tax Act andLocal Allocation Tax Act and for the Drastic Reform of the Taxation System for Ensuring Stable Financial
Resources for Social Security” (Act No.86 of 2016) was enacted. Under this Act, the timing of implementation
for the tax reform which had been scheduled at the fiscal year beginning on or after April 1, 2017, was postponedto the fiscal year beginning on or after October 1, 2019. Though the domestic statutory tax rates to calculatedeferred tax assets and liabilities will not change, due to reclassification between national tax and local tax, netdeferred tax liabilities increased by ¥3,366 million yen and income tax expenses increased by the same amount.
Foreign subsidiaries are subject to income taxes of the countries in which they operate. The relationshipbetween income tax expense and pretax accounting income (loss) is affected by a number of items, including
various tax credits, certain revenues not subject to income taxes, certain expenses not deductible for income tax
purposes, changes in deferred tax valuation allowance and different enacted tax rates applicable to foreignsubsidiaries.
The following table presents a reconciliation of the effective income tax rate reflected in the consolidated
statements of income to Nomura’s effective statutory tax rate for the years ended March 31, 2015, 2016 and 2017.
Year ended March 31
2015
2016
2017

Nomura’s effective statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of:
Changes in deferred tax valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional taxable revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-taxable revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends from foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax effect of undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . .
Different tax rate applicable to income (loss) of foreign subsidiaries . . . . . . .
Effect of changes in domestic tax laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expiration of loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit recognized on the devaluation of investment in subsidiaries andaffiliates(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36.0%

33.0%

31.0%

5.1
0.3
5.9
(4.7)
0.0
0.0
(1.4)
(1.4)
0.0

36.1
0.3
7.8
(7.2)
0.0
0.1
1.1
(0.9)
—

(10.8)
0.1
2.9
(2.6)
0.0
0.0
0.3
1.0
—

—
(5.0)
34.8%

(54.8)
(1.8)
13.7%

1.7
1.3
24.9%

(1) The tax benefit recognized on the devaluation of investment in subsidiaries and affiliates during the year
ended March 31, 2016 of approximately ¥90 billion (which impacts Nomura’s effective statutory tax rate by
54.8%) arises from the recognition of deferred tax assets from the decision of Nomura management toliquidate certain wholly-owned subsidiaries within Nomura during the year. Total valuation allowances of¥24 billion have been recognized against these deferred tax assets, the impact of which are reported inchanges in deferred tax valuation allowance for the same period.
F-114

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the significant components of deferred tax assets and liabilities as of March 31,
2016 and 2017, before offsetting of amounts which relate to the same tax-paying component within a particular
tax jurisdiction.
Millions of yen
March 312016
2017

Deferred tax assets
Depreciation, amortization and valuation of fixed assets . . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses and provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 16,862
112,030
60,776
16,19096,202435,122
5,644¥ 17,988
100,100
65,15821,85484,268406,440
8,408

Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less—Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

742,826(543,489)

704,216(519,492)

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

199,337

184,724Deferred tax liabilities
Investments in subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

121,874
49,873711
19,165
6,822

125,752
46,684947
18,042
5,840

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

198,445

197,265892¥ (12,541)

Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥After offsetting deferred tax assets and liabilities which relate to the same tax-paying component within aparticular tax jurisdiction, net deferred tax assets reported within Other assets—Other in the consolidated balance
sheets were ¥36,130 million and ¥21,825 million as of March 31, 2016 and 2017, respectively and net deferred
tax liabilities reported within Other liabilities in the consolidated balance sheets were ¥35,238 million and¥34,366 million as of March 31, 2016 and 2017, respectively.
As of March 31, 2017, no deferred tax liabilities have been recognized for undistributed earnings of foreignsubsidiaries totaling ¥3,927 million which are not expected to be remitted in the foreseeable future. It is notpracticable to determine the amount of income taxes payable in the event all such foreign earnings are
repatriated.

F-115

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in the total valuation allowance established against deferred tax assets
for the years ended March 31, 2015, 2016 and 2017.

2015

Millions of yen
Year ended March 31
2016

2017

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥490,603
74,500(1)¥565,103¥543,489(21,614)(2)(23,997)(3)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥565,103¥543,489¥519,492(1) Primarily includes ¥85,403 million of additional full valuation allowances established by certain foreignsubsidiaries against additional operating loss carryforwards generated during the period as a result ofadditional taxable losses being incurred by such subsidiaries, offset by a reduction of ¥2,921 million ofvaluation allowances of certain foreign subsidiaries and a reduction of ¥7,982 million related to Japanesesubsidiaries and the Company because of decrease in valuation allowances related to operating loss
carryforwards due to the effect of changes in domestic tax laws. In total, ¥74,500 million of allowances
increased for the year ended March 31, 2015.
(2) Primarily includes ¥7,003 million of additional full valuation allowances established by certain foreignsubsidiaries against additional operating loss carryforwards generated during the period as a result ofadditional taxable losses being incurred by such subsidiaries, offset by a reduction of ¥27,757 million ofvaluation allowances of certain foreign subsidiaries and a reduction of ¥860 million related to Japanesesubsidiaries and the Company because of decrease in valuation allowances related to operating loss
carryforwards due to the effect of changes in domestic tax laws. In total, ¥21,614 million of allowances
decreased for the year ended March 31, 2016.
(3) Primarily includes an increase of ¥2,040 million of valuation allowances of certain foreign subsidiaries
partly because of changes in the expected realization of deferred tax assets, a reduction of ¥35,214 millionof valuation allowances of certain foreign subsidiaries mainly by utilization of operating loss carryforwards,
an increase of ¥5,811 million of valuation allowances related to Japanese subsidiaries and the Company bychanges in the expected realization of deferred tax assets, and an increase of ¥3,366 million related toJapanese subsidiaries and the Company because of increase in valuation allowances related to operating loss
carryforwards due to the effect of changes in domestic tax laws. In total, ¥23,997 million of allowances
decreased for the year ended March 31, 2017.
As of March 31, 2017, total operating loss carryforwards were ¥1,985,408 million, which included¥585,026 million relating to the Company and domestic subsidiaries, ¥717,812 million relating to foreignsubsidiaries in the United Kingdom, ¥411,370 million relating to foreign subsidiaries in the United States,¥200,857 million relating to foreign subsidiaries in Hong Kong, and ¥70,343 million relating to foreignsubsidiaries in other tax jurisdictions. Of this total amount, ¥983,470 million can be carried forward indefinitely,¥656,168 million expires by March 31, 2026 and ¥345,770 million expires in later fiscal years.
In determining the amount of valuation allowances to be established as of March 31, 2017, Nomura
considered all available positive and negative evidence around the likelihood that sufficient future taxable
income will be generated to realize the deferred tax assets in the relevant tax jurisdiction of the Company, its
domestic subsidiaries and foreign subsidiaries.
In Japan and other tax jurisdictions where domestic and foreign subsidiaries have experienced cumulative
operating losses in recent years, these losses provided the most verifiable negative evidence available andoutweigh positive evidence.
F-116

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
While Nomura has considered certain future tax planning strategies as a potential source of future taxable
income, no such strategies have been relied upon as positive evidence resulting in the reduction of valuation
allowances in any major tax jurisdiction in which Nomura operates as of March 31, 2015, 2016 and 2017. In
addition, valuation allowances have not been reduced in any of these periods as a result of changing theweighting applied to positive or negative evidence in any of the major tax jurisdictions in which Nomura
operates.
The total amount of unrecognized tax benefits was not significant as of March 31, 2015, 2016 and 2017.
There were also no significant movements of the gross amounts in unrecognized tax benefits and the amount ofinterest and penalties recognized due to the unrecognized tax benefits during the years ended March 31, 2015,2016 and 2017. Nomura is under continuous examination by the Japanese National Tax Agency and other taxing
authorities in the major jurisdictions in which Nomura operates. Nomura regularly assesses the likelihood ofadditional assessments in each tax jurisdiction and the impact on these consolidated financial statements. It isreasonably possible that there may be a significant increase in unrecognized tax benefits within 12 months ofMarch 31, 2017. Quantification of an estimated range cannot be made at this time due to the uncertainty of thepotential outcomes. However, Nomura does not expect that any change in the gross balance of unrecognized tax
benefits would have a material effect on its financial condition.
Nomura operates in multiple tax jurisdictions, and faces audits from various taxing authorities regarding
many issues including, but not limited to, transfer pricing, the deductibility of certain expenses, foreign tax
credits and other matters.
The table below presents information regarding the earliest year in which Nomura remains subject toexamination in the major jurisdictions in which Nomura operates as of March 31, 2017. Under Hong Kong
Special Administrative Region (“Hong Kong”) tax law, the statute of limitation does not apply if an entity incurs
taxable losses and is therefore not included in the table.
Jurisdiction

Year

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2012(1)2016
2014(1) The earliest year in which Nomura remains subject to examination for transfer pricing issues is 2011.
16. Other comprehensive income (loss):
The following tables present changes in Accumulated other comprehensive income (loss) for the years ended
March 31, 2016 and 2017.
Millions of yen
For the year ended March 31, 2016
Other
comprehensive Reclassifications out of
income (loss)
accumulated otherNet change
beforecomprehensive income during thereclassifications(loss)
year

Balance at
beginningof year

Cumulative translation adjustments . . . . . ¥133,371
Pension liability adjustment . . . . . . . . . . .
(15,404)
Net unrealized gain on non-trading
securities . . . . . . . . . . . . . . . . . . . . . . . .
25,772
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥143,739

Balance at
end of year¥(79,108)(18,097)¥ (845)
176¥(79,953) ¥ 53,418(17,921) (33,325)

363¥(96,842)(1,248)¥(1,917)(885)
24,887¥(98,759) ¥ 44,980

F-117

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Millions of yen
For the year ended March 31, 2017
Other
Cumulative effect comprehensive Reclassifications out of
Balance atof change inincome (loss)
accumulated otherNet change
beginningaccounting
beforecomprehensive income during the Balance atof yearprinciple
reclassifications(loss)
year
end of year

Cumulative translation
adjustments . . . . . . . . . . . ¥ 53,418
Pension liability
adjustment . . . . . . . . . . . . (33,325)
Net unrealized gain on
non-trading securities . . . 24,887
Own credit adjustments . . . .
—Total . . . . . . . . . . . . . . . . . . ¥ 44,980¥—¥ (4,005)¥(1,646)¥ (5,651) ¥ 47,767—(9,147)

1,452(7,695) (41,020)—
19,294(3,948)(12,147)

(595)
(586)

(4,543)
6,561¥19,294¥(29,247)¥(1,375)

20,344
6,561¥(11,328) ¥ 33,652

As a result of early adopting ASU 2016-01 as of April 1, 2016, unrealized changes in the fair value offinancial liabilities elected for the fair value option due to instrument-specific credit risk (“own credit
adjustments”) are now presented through Other comprehensive income (loss). See Note 1 “Summary ofaccounting policies” for further information about the early adoption of ASU 2016-01.
The following tables present significant reclassifications out of Accumulated other comprehensive income(loss) for the years ended March 31, 2016 and 2017.
Millions of yen
For the year ended March 31
2016
2017
Reclassifications out of
Reclassifications out ofaccumulated otheraccumulated otherAffected line items in consolidated
comprehensive income (loss) comprehensive income (loss)
statements of income

Cumulative translation
adjustments:¥845—¥1,646—

Revenue—Other
Income tax expense

845

1,646

Net income——

Net income attributable tononcontrolling interests¥845¥1,646

Net income attributable to
NHI shareholders

F-118

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Millions of yen
For the year ended March 31
2016
2017
Reclassifications out of
Reclassifications out ofaccumulated otheraccumulated otherAffected line items in consolidated
comprehensive income (loss) comprehensive income (loss)
statements of income

Pension liability adjustment¥(255)
79¥(2,118)666

Non-interest expenses—
Compensation and benefits
Income tax expense(176)(1,452)

Net income——

Net income attributable tononcontrolling interests¥(176)¥(1,452)

Net income attributable to
NHI shareholders

Millions of yen
For the year ended March 31
2016
2017
Reclassifications out of
Reclassifications out ofaccumulated otheraccumulated otherAffected line items in consolidated
comprehensive income (loss) comprehensive income (loss)
statements of income

Net unrealized gain on nontrading securities:¥ 2,724(1,081)¥ 2,086(1,306)

1,643

780

Net income

(395)

(185)

Net income attributable tononcontrolling interests595

Net income attributable to
NHI shareholders¥ 1,248¥

Revenue—Other
Income tax expense

See Note 5 “Non-trading Securities” for further information.
17. Shareholders’ equity:
The following table presents changes in shares of the Company’s common stock outstanding for the years
ended March 31, 2015, 2016 and 2017.

2015

Number of SharesYear ended March 31
2016

2017

Common stock outstanding at beginning of year . . . . . . . . . . . .

3,717,630,462

3,598,865,213

3,608,391,999

Common stock held in treasury:
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . .
Sales of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued to employees . . . . . . . . . . . . . . . . .
Other net change in treasury stock . . . . . . . . . . . . . . . . . . .

(155,232,995)
5,251
36,461,000
1,495(24,364,753)
686
33,879,000
11,853(121,010,524)
468
40,677,400
370,108

Common stock outstanding at end of year . . . . . . . . . . . . . . . . .

3,598,865,213

3,608,391,999

3,528,429,451

F-119

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The amount available for dividends and acquisition of treasury stock is subject to restrictions imposed by
the Companies Act. Additional paid-in capital and retained earnings include amounts which the Companies Act
prohibits for the use of dividends and acquisition of treasury stock. As of March 31, 2015, 2016 and 2017, theamounts available for distributions were ¥735,394 million, ¥1,069,296 million and ¥1,193,497 million,
respectively. These amounts are based on the amounts recorded in the Company’s unconsolidated financial
statements maintained in accordance with accounting principles and practices prevailing in Japan. U.S. GAAP
adjustments incorporated in these consolidated financial statements but not recorded in the Company’s
unconsolidated financial statements have no effect on the determination of the amounts available for distributions
under the Companies Act.
Dividends on the Company’s common stock per share were ¥19.0 for the year ended March 31, 2015, ¥13.0
for the year ended March 31, 2016 and ¥20.0 for the year ended March 31, 2017.
The change in common stock held in treasury includes the change in common stock issued to employees
under stock-based compensation plans, common stock sold to enable shareholders to hold round lots of the
100 share minimum tradable quantity (adding-to-holdings requests) or common stock acquired to create roundlots or eliminate odd lots. Common stock held in treasury also includes, as of March 31, 2015, 2016 and 2017,
1,141,686 shares, or ¥2,017 million, 1,129,833 shares, or ¥2,024 million, and 759,725 shares, or ¥758 million,
respectively, held by affiliated companies.
Subsequent Events
On April 27, 2017, the board of directors approved a resolution to set up a share buyback program, pursuant
to the Company’s articles of incorporation set out in accordance with Article 459-1 of the Companies Act asfollows: (a) total number of shares authorized for repurchase is up to 100,000,000 shares, (b) total value of sharesauthorized for repurchase is up to ¥80 billion and (c) the share buyback program will run from May 17, 2017, to
March 30, 2018 (excluding the ten business days following the announcement of quarterly operating results).
18. Regulatory requirements:
In April 2011, the Company has been assigned as Final Designated Parent Company who must calculate aconsolidated capital adequacy ratio and since then, our consolidated capital adequacy ratio has been calculated
based on Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final
Designated Parent Company has been revised in line with Basel 2.5 and Basel III and Nomura has calculated a
Basel III-based consolidated capital adequacy ratio since March 2013.
In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company,
Nomura’s consolidated capital adequacy ratio is calculated based on the amounts of common equity Tier 1
capital, Tier 1 capital, total capital, credit risk-weighted assets, market risk and operational risk. As of March 31,
2016 and March 31, 2017, the Company was in compliance with common equity Tier 1 capital ratio, Tier 1
capital ratio and consolidated capital adequacy ratio requirements set out in the Capital Adequacy Notice on
Final Designated Parent Company, etc. The required level (including applicable minimum consolidated capital
buffer) as of March 31, 2017 was 6.00% for the common equity Tier 1 capital ratio, 7.50% for the Tier 1 capitalratio and 9.50% for the consolidated capital adequacy ratio.
Under the Financial Instruments and Exchange Act (“FIEA”), NSC and NFPS are subject to the capital
adequacy rules of the FSA. These rules requires the maintenance of a capital adequacy ratio, which is defined as
the ratio of adjusted capital to a quantified total of business risk, of not less than 120%. Adjusted capital isdefined as net worth (which includes shareholders’ equity, net unrealized gains and losses on securities held,
F-120

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
reserves and subordinated debt) less illiquid assets. Business risks are divided into three categories: (1) market
risks, (2) counterparty risks, and (3) basic risks. Under these rules, there are no restrictions on the operations of
the companies provided that the resulting net capital adequacy ratio exceeds 120%. As of March 31, 2016 and2017, the capital adequacy ratio of NSC exceeded 120%. Also, as of March 31, 2016 and 2017, the capital
adequacy ratio of NFPS also exceeded 120%.
In connection with providing brokerage, clearing, asset management and wealth management services toclients, Nomura maintains segregated accounts to hold financial assets such as cash and securities on behalf of its
clients. These accounts are typically governed by stringent statutory or regulatory rules in the relevant
jurisdiction where the accounts are maintained in order to protect the clients from loss.
As of March 31, 2016 and 2017, the total amount of segregated client cash recognized as an asset in
Deposits with stock exchanges and other segregated cash in the consolidated balance sheets was ¥96,887 millionand ¥94,483 million, respectively. As of March 31, 2016 and 2017, the total amount of segregated securities
recognized as assets in Trading assets and Collateralized agreements in the consolidated balance sheets was¥526,979 million and ¥768,616 million, respectively.
In the U.S., Nomura Securities International, Inc. (“NSI”) is registered as a broker-dealer under the
Securities Exchange Act of 1934 and as a futures commission merchant with the Commodity Futures Trading
Commission (“CFTC”). NSI is also regulated by self-regulatory organizations, such as the Financial Industry
Regulatory Authority (“FINRA”) and the Chicago Mercantile Exchange Group. NSI is subject to the SEC’s
Uniform Net Capital Rule (“Rule 15c3-1”) and other related rules, which require net capital, as defined under thealternative method, of not less than the greater of $1,000,000 or 2% of aggregate debit items arising from clienttransactions. NSI is also subject to CFTC Regulation 1.17 which requires the maintenance of net capital of 8% of
the total risk margin requirement, as defined, for all positions carried in client accounts and nonclient accounts or$1,000,000, whichever is greater. NSI is required to maintain net capital in accordance with the SEC, CFTC, orother various exchange requirements, whichever is greater. Another U.S. subsidiary, Nomura Global Financial
Products Inc. (“NGFP”) is registered as an OTC Derivatives Dealer under the Securities Exchange Act of 1934.
NGFP is subject to Rule 15c3-1 and applies Appendix F. NGFP is required to maintain net capital of$20,000,000 in accordance with the SEC. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer
registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the
CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule15c3-1 which requires the maintenance of minimum net capital, as defined under the alternative method, equal to
the greater of $1,000,000, 2% of aggregate debit items arising from client transactions, or the CFTC minimum
requirement. Under CFTC rules, ILLC is subject to the greater of the following when determining its minimum
net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the amount ofadjusted net capital required by a futures association of which it is a member; and the amount of net capitalrequired by Rule 15c3-1(a). As of March 31, 2016 and 2017, NSI, NGFP and ILLC were in compliance with
relevant regulatory capital related requirements.
In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the
Prudential Regulation Authority (“U.K. PRA”). The regulatory consolidation is produced in accordance with therequirements established under the Capital Requirements Directive and the Capital Requirements Regulation
which came into effect on January 1, 2014. Nomura International plc (“NIP”), the most significant of NEHS’
subsidiaries, acts as a securities brokerage and dealing business. NIP is regulated by the U.K. PRA and has
minimum capital adequacy requirements imposed on it on a standalone basis. In addition, Nomura BankInternational plc (“NBI”), another subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone basis.
As of March 31, 2016 and 2017, NEHS, NIP and NBI were in compliance with relevant regulatory capital related
requirements.
F-121

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In Asia, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Singapore Ltd (“NSL”) areregulated by their local respective regulatory authorities. NIHK is licensed by the Securities and Futures
Commission in Hong Kong to carry out regulated activities including dealing and clearing in securities andfutures contracts, advising on securities, futures contracts and corporate finance and wealth finance management.
Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial
Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid
capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital iscalculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules.
NSL is a merchant bank with an Asian Currency Unit (“ACU”) license governed by the Monetary Authority ofSingapore (“MAS”). NSL carries out its ACU regulated activities including, among others, securities brokerageand dealing business. NSL is regulated and has minimum capital adequacy requirements imposed on it on astandalone basis by the MAS in Singapore. As of March 31, 2016 and 2017, NIHK and NSL were in compliancewith relevant regulatory capital related requirements.
19. Affiliated companies and other equity-method investees:
Nomura’s significant affiliated companies and other equity-method investees include JAFCO Co., Ltd.
(“JAFCO”), Nomura Research Institute, Ltd. (“NRI”) and Nomura Real Estate Holdings, Inc. (“NREH”).
JAFCO
JAFCO, which is a listed company in Japan, manages various venture capital funds and provides private
equity-related investment services to portfolio companies.
As of March 31, 2017, Nomura’s ownership of JAFCO was 19.5% and there was no remaining equity
method goodwill included in the carrying amount of the investment. Nomura accounts for JAFCO using theequity method because Nomura still has the ability to exercise significant influence over operating and financial
decisions of JAFCO.
NRI
NRI develops and manages computer systems and provides research services and management consulting
services. One of the major clients of NRI is Nomura.
As of March 31, 2017, Nomura’s ownership of NRI was 37.2% and the remaining balance of equity method
goodwill included in the carrying value of the investment was ¥57,115 million.
NREH
NREH is the holding company of the Nomura Real Estate Group which is primarily involved in theresidential property development, leasing, investment management as well as other real estate-related activities.
As of March 31, 2017, Nomura’s ownership of NREH was 34.1% and the remaining balance of equity
method goodwill included in the carrying value of the investment was ¥11,012 million.

F-122

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Summary financial information—
The following tables present summarized financial information for significant affiliated companies of
Nomura (including those elected for the fair value option) as of March 31, 2016 and 2017, and for the years
ended March 31, 2015, 2016 and 2017.
Millions of yen
March 312016(1)
2017

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015(1)

Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to the companies . . . . . . . . . . . . . . . . . . . . . . . . .

¥8,484,222
7,143,940¥2,609,327
1,449,961

Millions of yen
Year ended March 31
2016(1)¥872,967
681,556
136,914¥831,774
673,014
114,7702017¥873,423
694,089
122,123(1) Certain changes to the presentation of previously reported amounts have been made to conform to thecurrent year.
The following tables present a summary of balances and transactions with affiliated companies and other
equity-method investees as of March 31, 2016 and 2017, and for the years ended March 31, 2015, 2016 and2017.
Millions of yen
March 312016
2017

Investments in affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advances to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables from affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other payables to affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥394,984
300
1,372
7,606

¥419,816300
1,577
12,284

Millions of yen
Year ended March 31
2015
2016
2017

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 688 ¥ 1,124 ¥ 1,205
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48,17642,852
38,271
Purchase of software, securities and tangible assets . . . . . . . . . . . . . . . . . . . . . . . .
26,772
20,67923,285
The following table presents the aggregate carrying amount and fair value of investments in affiliatedcompanies and other equity-method investees for which a quoted market price is available as of March 31, 2016
and 2017.
Millions of yen
March 31
2016
2017

Carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-123¥387,825
487,656¥414,563
533,213

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Equity in earnings of equity-method investees, including those above, was income of ¥43,028 million,
income of ¥33,917 million and income of ¥33,000 million for the years ended March 31, 2015, 2016 and 2017,
respectively. Equity in earnings of equity-method investees is reported within Revenue—Other in the
consolidated statements of income. Dividends from equity-method investees for the years ended March 31, 2015,2016 and 2017 were ¥8,256 million, ¥11,031 million and ¥11,941 million, respectively.
20. Commitments, contingencies and guarantees:
Commitments—
Credit and investment commitments
In connection with its banking and financing activities, Nomura provides commitments to extend credit
which generally have fixed expiration dates. In connection with its investment banking activities, Nomura enters
into agreements with clients under which Nomura commits to underwrite securities that may be issued by theclients. The outstanding commitments under these agreements are included below in commitments to extend
credit.
Nomura has commitments to invest in various partnerships and other entities and also has commitments toprovide financing for investments related to these partnerships. The outstanding commitments under these
agreements are included in commitments to invest.
The following table presents a summary of the key types of outstanding commitments provided by Nomura
as of March 31, 2016 and 2017.
Millions of yen
March 312016
2017

Commitments to extend credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments to invest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥782,525
136,204¥1,010,257
15,194(1) Commitments to invest as of March 31, 2016 primarily includes Nomura’s commitment to purchase a
non-controlling interest in American Century Companies, Inc. Nomura has subsequently completed thepurchase on May 19, 2016.
As of March 31, 2017, these commitments had the following maturities:

Commitments to extend credit . . . . . . . . . . . . . . . . .
Commitments to invest . . . . . . . . . . . . . . . . . . . . . . .

Totalcontractual
amountMillions of yen
Years to maturity
Less than
1 to 33 to 5
1 yearyears
years

More than
5 years¥1,010,257
15,194¥388,275
465¥341,169
14,346¥123,303—¥157,510
383

The contractual amounts of these commitments to extend credit represent the amounts at risk but only if thecontracts are fully drawn upon, should the counterparties default, and assuming the value of any existing
collateral becomes worthless. The total contractual amount of these commitments may not represent future cash
requirements since the commitments may expire without being drawn upon. The credit risk associated with thesecommitments varies depending on the clients’ creditworthiness and the value of collateral held. Nomura
evaluates each client’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemednecessary by Nomura upon extension of credit, is based on credit evaluation of the counterparty.
F-124

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other commitments
Purchase obligations for goods or services that include payments for construction-related, advertising, andcomputer and telecommunications maintenance agreements amounted to ¥33,230 million as of March 31, 2016and ¥27,313 million as of March 31, 2017.
Nomura has commitments under resale and repurchase agreements including amounts in connection withcollateralized agreements and collateralized financing. These commitments amounted to ¥1,813 billion for resaleagreements and ¥535 billion for repurchase agreements as of March 31, 2016 and ¥1,830 billion for resaleagreements and ¥968 billion for repurchase agreements as of March 31, 2017.
In Japan, there is a market in which participants lend and borrow debt and equity securities without
collateral to and from financial institutions. Under these arrangements, Nomura had obligations to return debt
and equity securities borrowed without collateral of ¥486 billion and ¥477 billion as of March 31, 2016 and2017, respectively.
As a member of various securities clearing houses and exchanges, Nomura may be required to assume acertain share of the financial obligations of another member who may default on its obligations to the clearing
house or the exchange. These guarantees are generally required under the membership agreements. To mitigate
these risks, exchanges and clearing houses often require members to post collateral. The potential for Nomura to
make payments under such guarantees is deemed remote.
Contingencies
Investigations, lawsuits and other legal proceedings
In the normal course of business as a global financial services entity, Nomura is involved in investigations,lawsuits and other legal proceedings and, as a result, may suffer loss from any fines, penalties or damages
awarded against Nomura, any settlements Nomura chooses to make to resolve a matter, and legal and otheradvisory costs incurred to support and formulate a defense.
The ability to predict the outcome of these actions and proceedings is inherently difficult, particularly whereclaimants are seeking substantial or indeterminate damages, where investigations and legal proceedings are at an
early stage, where the matters present novel legal theories or involve a large number of parties, or which takeplace in foreign jurisdictions with complex or unclear laws.
The Company regularly evaluates each legal proceeding and claim on a case-by-case basis in consultation
with external legal counsel to assess whether an estimate of possible loss or range of loss can be made, if
recognition of a liability is not appropriate. In accordance with ASC 450 “Contingencies” (“ASC 450”), theCompany recognizes a liability for this risk of loss arising on each individual matter when a loss is probable andthe amount of such loss or range of loss can be reasonably estimated. The amount recognized as a liability isreviewed at least quarterly and is revised when further information becomes available. If these criteria are not
met for an individual matter, such as if an estimated loss is only reasonably possible rather than probable, noliability is recognized. However, where a material loss is reasonably possible, the Company will disclose detailsof the legal proceeding or claim below. Under ASC 450 an event is defined as reasonably possible if the chanceof the loss to the Company is more than remote but less than probable.
The most significant actions and proceedings against Nomura are summarized below. The Company
believes that, based on current information available as of the date of these consolidated financial statements, theultimate resolution of these actions and proceedings will not be material to the Company’s financial condition.
However, an adverse outcome in certain of these matters could have a material adverse effect on the consolidated
statements of income or cash flows in a particular quarter or annual period.
F-125

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For certain of the significant actions and proceedings described below, the Company is currently able toestimate the amount of reasonably possible loss, or range of reasonably possible losses, in excess of amounts
recognized as a liability (if any) against such cases. These estimates are based on current information available asof the date of these consolidated financial statements and include, but are not limited to, the specific amount ofdamages or claims against Nomura in each case. As of June 26, 2017, for those cases where an estimate of therange of reasonably possible losses can be made, the Company estimates that the total aggregate reasonably
possible maximum loss in excess of amounts recognized as a liability (if any) against these cases isapproximately ¥47 billion.
For certain other significant actions and proceedings, the Company is unable to provide an estimate of thereasonably possible loss or range of reasonably possible losses because, among other reasons, (i) the proceedings
are at such an early stage there is not enough information available to assess whether the stated grounds for theclaim are viable; (ii) damages have not been identified by the claimant; (iii) damages are unsupported and/or
exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant
legal issues to be resolved that may be dispositive, such as the applicability of statutes of limitations; and/or(vi) there are novel or unsettled legal theories underlying the claims.
In January 2008, Nomura International plc (“NIP”) was served with a tax notice issued by the tax authorities
in Pescara, Italy alleging breaches by NIP of the U.K.-Italy Double Taxation Treaty of 1998 (“Tax Notice”). The
alleged breaches relate to payments to NIP of tax credits on dividends on Italian shares. The Tax Notice not only
denies certain payments to which NIP claims to be entitled but also seeks reimbursement of approximately EUR
33.8 million, plus interest, already refunded. NIP continues vigorously to challenge the Pescara Tax Court’s
decisions in favor of the local tax authorities.
In October 2010 and June 2012, two actions were brought against NIP, seeking recovery of payments
allegedly made to NIP by Fairfield Sentry Ltd. and Fairfield Sigma Ltd. (collectively, “Fairfield Funds”), which
are now in liquidation and were feeder funds to Bernard L. Madoff Investment Securities LLC (in liquidation
pursuant to the Securities Investor Protection Act in the U.S. since December 2008) (“BLMIS”). The first suit
was brought by the liquidators of the Fairfield Funds. It was filed on October 5, 2010 in the Supreme Court of theState of New York, but was subsequently removed to the United States Bankruptcy Court, where it is presently
pending. The second suit was brought by the Trustee for the liquidation of BLMIS (“Madoff Trustee”). NIP wasadded as a defendant in June 2012 when the Madoff Trustee filed an amended complaint in the United States
Bankruptcy Court. In November 2016, the United States Bankruptcy Court granted a motion to dismiss the
Madoff Trustee’s claim. The Madoff Trustee has appealed the decision to the United States Court of Appeals for
the Second Circuit. Both actions seek to recover approximately $35 million.
In April 2011, the Federal Home Loan Bank of Boston (“FHLB-Boston”) commenced proceedings in the
Superior Court of Massachusetts against numerous issuers, sponsors and underwriters of residential mortgagebacked securities (“RMBS”), and their controlling persons, including Nomura Asset Acceptance Corporation(“NAAC”), Nomura Credit & Capital, Inc. (“NCCI”), Nomura Securities International, Inc. (“NSI”) and Nomura
Holding America Inc. (“NHA”). The action alleges that FHLB-Boston purchased RMBS issued by NAAC forwhich the offering materials contained untrue statements or omitted material facts concerning the underwriting
standards used by the original lenders and the characteristics of the loans underlying the securities. FHLB-Boston
seeks rescission of its purchases or compensatory damages pursuant to state law. FHLB-Boston alleges that itpurchased certificates in four offerings issued by NAAC in the original principal amount of approximately$406 million. The case is currently in the discovery phase.
In July 2011, the National Credit Union Administration Board (“NCUA”) commenced proceedings in the
United States District Court for the Central District of California as liquidating agent of Western Corporate
F-126

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Federal Credit Union (“WesCorp”) against various issuers, sponsors and underwriters of RMBS purchased by
WesCorp. The complaint alleged that WesCorp purchased RMBS issued by NAAC and Nomura Home Equity
Loan Inc. (“NHEL”), among others, for which the offering materials contained untrue statements or omitted
material facts concerning the underwriting standards used by the original lenders. The complaint alleged that
WesCorp purchased certificates in two offerings in the original principal amount of approximately $83 million
and sought rescission of its purchases or compensatory damages. On October 28, 2016, the parties entered into a
confidential settlement and the action has been dismissed with prejudice.
In September 2011, the Federal Housing Finance Agency (“FHFA”), as conservator for the government
sponsored enterprises, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation(“GSEs”), commenced proceedings in the United States District Court for the Southern District of New Yorkagainst numerous issuers, sponsors and underwriters of RMBS, and their controlling persons, including NAAC,
NHEL, NCCI, NSI and NHA (the Company’s U.S. subsidiaries). The action alleged that the GSEs purchased
RMBS issued by NAAC and NHEL for which the offering materials contained untrue statements or omitted
material facts concerning the underwriting standards used by the original lenders and the characteristics of theloans underlying the securities. FHFA alleged that the GSEs purchased certificates in seven offerings in theoriginal principal amount of approximately $2,046 million and sought rescission of its purchases. The case wastried before the Court beginning March 16, 2015 and closing arguments were completed on April 9, 2015. On
May 15, 2015, the Court issued a judgment and ordered the defendants to pay $806 million to GSEs upon GSEs’delivery of the certificates at issue to the defendants. The Company’s U.S. subsidiaries have appealed thedecision to the United States Court of Appeals for the Second Circuit. Subject to the outcome of the appeal, thedefendants agreed to a consent judgment for costs and attorneys’ fees recoverable under the blue sky statutes atissue in the maximum amount of $33 million.
In October 2011, the NCUA commenced proceedings in the United States District Court for the District of
Kansas as liquidating agent of U.S. Central Federal Credit Union (“U.S. Central”) against various issuers,
sponsors and underwriters of RMBS purchased by U.S. Central, including NHEL. The complaint alleged that
U.S. Central purchased RMBS issued by NHEL, among others, for which the offering materials contained untrue
statements or omitted material facts concerning the underwriting standards used by the original lenders. The
complaint alleged that U.S. Central purchased a certificate in one offering in the original principal amount ofapproximately $50 million and sought rescission of its purchase or compensatory damages. On October 28, 2016,
the parties entered into a confidential settlement and the action has been dismissed with prejudice.
In November 2011, NIP was served with a claim filed by the Madoff Trustee appointed for the liquidationof BLMIS in the United States Bankruptcy Court Southern District of New York. This is a clawback action
similar to claims filed by the Madoff Trustee against numerous other institutions. The Madoff Trustee allegesthat NIP received redemptions from the BLMIS feeder fund, Harley International (Cayman) Limited in the six
years prior to December 11, 2008 (the date proceedings were commenced against BLMIS) and that these are
avoidable and recoverable under the U.S. Bankruptcy Code and New York law. In November 2016, the UnitedStates Bankruptcy Court granted a motion to dismiss the Madoff Trustee’s claim. The Madoff Trustee has
appealed the decision to the United States Court of Appeals for the Second Circuit. The amount that the Madoff
Trustee is currently seeking to recover from NIP is approximately $21 million.
In March 2013, Banca Monte dei Paschi di Siena SpA (“MPS”) issued a claim in the Italian Courts against(1) two former directors of MPS and (2) NIP. MPS alleged that the former directors improperly caused MPS toenter into certain structured financial transactions with NIP in 2009 (“Transactions”) and that NIP acted
fraudulently and was jointly liable for the unlawful conduct of MPS’s former directors. MPS claimed damages of
not less than EUR 1.142 billion.
F-127

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In March 2013, NIP commenced a claim against MPS in the English Courts. The claim was for declaratory
relief confirming that the Transactions remained valid and contractually binding. MPS filed and served its
defence and counterclaim to these proceedings in March 2014. MPS alleged in its counterclaim that NIP was
liable to make restitution of a net amount of approximately EUR 1.5 billion, and sought declarations regarding
the illegality and invalidity of the Transactions.
On September 23, 2015, NIP entered into a settlement agreement with MPS to terminate the Transactions.
NIP believes that the Transactions were conducted legally and appropriately, and does not accept the allegations
made against it or admit any wrongdoing. Taking into account the views of relevant European financial
authorities and the advice provided by external experts, NIP considered it to be in its best interests to reach asettlement in relation to this matter. As part of the agreement, the Transactions were unwound at a discount of
EUR 440 million in favour of MPS and the civil proceedings between MPS and NIP in Italy and England,
respectively, will no longer be pursued. Pursuant to the settlement agreement MPS and NIP applied to the Italian
Courts to discontinue the proceedings brought by MPS against NIP. In December 2015, the Italian Courts
ordered the discontinuance of all claims against NIP except a claim brought by a former director of MPS. The
financial impact of the settlement on the Company’s consolidated results for the fiscal year ended March 31,
2016 was a loss of approximately ¥34.0 billion and was included in Net gain on trading in the consolidated
statement of income for the fiscal year ended March 31, 2016.
In July 2013, a claim was also issued against the same former directors of MPS, and NIP, by the shareholder
group Fondazione Monte dei Paschi di Siena (“FMPS”). The grounds of the FMPS claim are similar to those on
which the MPS claim was founded. The level of damages sought by FMPS is not less than EUR 315.2 million.
NIP filed and served defences to both the MPS and the FMPS claims.
In April 2013, an investigation was commenced by the Public Prosecutor’s office in Siena, Italy, into
various allegations against MPS and certain of its former directors, including in relation to the Transactions. The
investigation was subsequently transferred to the Public Prosecutor of Milan. On April 3, 2015, the Public
Prosecutor’s office in Milan issued a notice concluding its preliminary investigation. The Public Prosecutor wasseeking to indict MPS, three individuals from MPS’s former management, NIP and two NIP individuals for,among others, the offences of false accounting and market manipulation in relation to MPS’s previous accounts.
The preliminary hearing at which the court considered whether or not to grant the indictment concluded on
October 1, 2016, the Judge ordering the trial of all individuals and banks involved except for MPS (which
entered into a plea bargaining agreement with the Public Prosecutor).
The trial commenced in December 2016 and is currently ongoing.
Additionally, NIP was served by the Commissione Nazionale per le Società e la Borsa (the Italian financial
regulatory authority) with a notice commencing administrative sanction proceedings for market manipulation inconnection with the Transactions. In relation to the Transactions, the notice names MPS, three individuals from
MPS’s former management and two former NIP employees as defendants, whereas NIP is named only in its
capacity as vicariously and jointly liable to pay any fines imposed on the former NIP employees. NIP has filed adefence in the proceedings.
NIP will continue to vigorously defend its position in the ongoing proceedings.
In January 2016, the Municipality of Civitavecchia in Italy (“Municipality”) commenced civil proceedings
against NIP in the local courts in Civitavecchia. The Municipality’s claim relates to derivatives transactions
entered into by the Municipality between 2003 and 2005. The Municipality alleges that NIP failed to comply
with its duties under an advisory agreement and seeks to recover approximately EUR 35 million in damages. NIP
intends to vigorously contest the proceedings.
F-128

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In June 2016, Nomura International (Hong Kong) Limited (“NIHK”) was served with a complaint filed in
the Taipei District Court by Cathay United Bank, Co., Ltd., Taiwan Cooperative Bank Ltd., Chang Hwa
Commercial Bank Ltd., Taiwan Business Bank Ltd., KGI Bank and Hwatai Bank Ltd. (collectively, “Syndicate
Banks”) against NIHK and its affiliated entity. The Syndicate Banks’ complaint relates to a $60 million
syndicated term loan to a subsidiary of Ultrasonic AG that was arranged by NIHK. The Syndicate Banks’
allegations in the complaint include allegations that NIHK failed to comply with its fiduciary duties to thelenders as the arranger of the loan and the Syndicate Banks seek to recover approximately $48 million indamages. NIHK intends to vigorously contest the proceedings.
In March 2017, certain subsidiaries of American International Group, Inc. (“AIG”) commenced proceedingsin the District Court of Harris County, Texas against certain entities and individuals, including NSI, in
connection with a 2012 offering of $750 million of certain project finance notes, of which $92 million allegedly
were purchased by AIG. AIG alleges violations of the Texas Securities Act based on material misrepresentations
and omissions in connection with the marketing, offering, issuance and sale of the notes and seeks rescission of
the purchases or compensatory damages. The case is in the earliest stages.
Various authorities continue to conduct investigations concerning the activities of NIP, other entities in the
Nomura Group and other parties in respect of government, supranational, sub-sovereign and agency bonds. NIP
and other entities in the Nomura Group are also defendants to several class action complaints filed in the UnitedStates District Court for the Southern District of New York alleging violations of U.S. antitrust law and common
law related to the alleged manipulation of the secondary trading market for supranational, sub-sovereign andagency bonds.
Nomura Securities Co., Ltd. (“NSC”) is the leading securities firm in Japan with approximately 5.36 million
client accounts. Accordingly, with a significant number of client transactions, NSC is from time to time party tovarious Japanese civil litigation and other dispute resolution proceedings with clients relating to investment
losses. These include an action commenced in April 2013 by a corporate client seeking ¥10,247 million indamages for losses on currency derivative transactions and the pre-maturity cash out or redemption of 11 seriesof equity-linked structured notes purchased from NSC between 2005 and 2011, and an action commenced in
October 2014 by a corporate client seeking ¥2,143 million in damages for losses on currency derivativetransactions conducted between 2006 and 2012. Although the allegations of the clients involved in such actions
include the allegation that NSC’s explanation was insufficient at the time the contracts were entered into, NSC
believes these allegations are without merit.
The Company supports the position of its subsidiaries in each of these claims.
The United States Department of Justice (“DOJ”), led by the United States Attorney’s Office for the Eastern
District of New York, informed NHA; NAAC; NCCI; NHEL; NSI; Nomura America Mortgage Finance, LLC;
and Nomura Asset Capital Corporation; (the Company’s U.S. subsidiaries) that it was investigating possible civil
claims against the Company’s U.S. subsidiaries under the Financial Institutions Reform, Recovery, andEnforcement Act of 1989 related to RMBS the Company’s U.S. subsidiaries sponsored, issued, underwrote,
managed, or offered during 2006 and 2007. The Company’s U.S. subsidiaries are cooperating fully in response to
the investigation.
The United States Securities and Exchange Commission (“SEC”) and the DOJ have been investigating past
activities of several former employees of NSI in respect of the commercial and residential mortgage-backed
securities transactions. NSI has been cooperating fully in those investigations. NSI considers it probable that the
SEC eventually will institute proceedings focusing on the NSI’s supervision of certain former employees and that
NSI, in connection with such proceedings, will agree to disgorgement and/or restitution relating to some of thetransactions in issue.
F-129

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other mortgage-related contingencies in the U.S.
Certain of the Company’s subsidiaries in the U.S. securitized residential mortgage loans in the form of
RMBS. These subsidiaries did not generally originate mortgage loans, but purchased mortgage loans from thirdparty loan originators (“originators”). In connection with such purchases, these subsidiaries received loan level
representations from the originators. In connection with the securitizations, the relevant subsidiaries provided
loan level representations and warranties of the type generally described below, which mirror the representations
the subsidiaries received from the originators.
The loan level representations made in connection with the securitization of mortgage loans were generally
detailed representations applicable to each loan and addressed characteristics of the borrowers and properties.
The representations included, but were not limited to, information concerning the borrower’s credit status, theloan-to-value ratio, the owner occupancy status of the property, the lien position, the fact that the loan was
originated in accordance with the originator’s guidelines, and the fact that the loan was originated in compliancewith applicable laws. Certain of the RMBS issued by the subsidiaries were structured with credit protection
provided to specified classes of certificates by monoline insurers.
The relevant subsidiaries have received claims demanding the repurchase of certain loans from trustees ofvarious securitization trusts, made at the instance of one or more investors, or from certificate insurers. The total
original principal amount of loans for which repurchase claims were received by the relevant subsidiaries within
six years of each securitization is $3,203 million. The relevant subsidiaries summarily rejected any demand for
repurchase received after the expiration of the statute of limitations applicable to breach of representation claims.
For those claims received within six years, the relevant subsidiaries reviewed each claim received, and rejected
those claims believed to be without merit or agreed to repurchase certain loans for those claims that the relevant
subsidiaries determined to have merit. In several instances, following the rejection of repurchase demands,
investors instituted actions through the trustee alleging breach of contract. The breach of contract claims thatwere brought within the six-year statute of limitations for breach of contract actions have survived motions to
dismiss and are in the discovery phase. These claims involve substantial legal, as well as factual, uncertainty andthe Company cannot provide an estimate of reasonably possible loss at this time, in excess of the existing
reserve.
Guarantees—
In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in
the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.
In addition, Nomura enters into certain derivative contracts that meet the accounting definition of aguarantee, namely derivative contracts that contingently require a guarantor to make payment to a guaranteed
party based on changes in an underlying that relate to an asset, liability or equity security held by a guaranteed
party. Since Nomura does not track whether its clients enter into these derivative contracts for speculative or
hedging purposes, Nomura has disclosed below information about derivative contracts that could meet theaccounting definition of guarantees.
For information about the maximum potential amount of future payments that Nomura could be required tomake under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum
potential payout for certain derivative contracts, such as written interest rate caps and written currency options,cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoreticallyunlimited.

F-130

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Nomura records all derivative contracts at fair value on its consolidated balance sheets. Nomura believes thenotional amounts generally overstate its risk exposure. Since the derivative contracts are accounted for at fairvalue, carrying value is considered the best indication of payment and performance risk for individual contracts.
The following table presents information on Nomura’s derivative contracts that could meet the accounting
definition of a guarantee and standby letters of credit and other guarantees.
Millions of yen
March 312016

Derivative contracts(1)(2) . . . . . . . . . . . . . . . . . . . . . . .
Standby letters of credit and other guarantees(3) . . . . .

2017

Carryingvalue

Maximum
potential
payout /Notional total

Carryingvalue

Maximum
potential
payout /Notional total¥5,710,433
242¥204,781,587
8,422¥4,501,962
900¥209,982,338
8,604(1) Credit derivatives are disclosed in Note 3 “Derivative instruments and hedging activities” and are excluded
from derivative contracts.
(2) Derivative contracts primarily consist of equity, interest rate and foreign exchange contracts.
(3) Collateral held in connection with standby letters of credit and other guarantees as of March 31, 2016 andMarch 31, 2017 was ¥6,115 million and ¥5,656 million, respectively.
The following table presents maturity information on Nomura’s derivative contracts that could meet theaccounting definition of a guarantee and standby letters of credit and other guarantees as of March 31, 2017.

Derivative contracts . . .
Standby letters ofcredit and otherguarantees . . . . . . . .

Millions of yen
Maximum potential payout/NotionalYears to Maturity
Less than
1 year1 to 3 years
3 to 5 years

Carrying
value

Total

More than
5 years¥4,501,962¥209,982,338¥68,194,141¥55,660,060¥25,428,588¥60,699,549

900

8,604

15

3

688

7,898

21. Segment and geographic information:
Operating segments—
Nomura’s operating management and management reporting are prepared based on the Retail, the AssetManagement, and the Wholesale segments. Nomura structures its business segments based upon the nature of its
main products and services, its client base and its management structure.
The accounting policies for segment information follow U.S. GAAP, except for the impact of unrealized
gains/losses on investments in equity securities held for operating purposes, which under U.S. GAAP are
included in Income (loss) before income taxes, but excluded from segment information.
Revenues and expenses directly associated with each business segment are included in the operating resultsof each respective segment. Revenues and expenses that are not directly attributable to a particular segment areallocated to each respective business segment or included in “Other”, based upon Nomura’s allocation
methodologies as used by management to assess each segment’s performance.
F-131

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Business segments’ results are shown in the following tables. Net interest revenue is disclosed because
management views interest revenue net of interest expense for its operating decisions. Business segments’
information on total assets is not disclosed because management does not utilize such information for its
operating decisions and therefore, it is not reported to management.
Millions of yen
RetailAsset
Management

Wholesale

Other(Incl. elimination)

Total

Year ended March 31, 2015
Non-interest revenue . . . . . . . . . . . . . . . . . . .
Net interest revenue . . . . . . . . . . . . . . . . . . .

¥471,565
4,940¥88,8023,552¥626,228
163,639¥282,542(61,777)¥1,469,137
110,354

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . .

476,505
314,675

92,35460,256

789,867
707,671

220,765
174,815

1,579,491
1,257,417

Income before income taxes . . . . . . . . . . . . .

¥161,830¥32,098¥ 82,196¥ 45,950¥ 322,074

Year ended March 31, 2016
Non-interest revenue . . . . . . . . . . . . . . . . . . .
Net interest revenue . . . . . . . . . . . . . . . . . . .

¥429,948
5,686¥91,0144,395¥571,322
148,955¥211,453(46,401)¥1,303,737
112,635

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . .

435,634
308,003

95,40958,743

720,277
704,872

165,052
158,905

1,416,372
1,230,523

Income before income taxes . . . . . . . . . . . . .

¥127,631¥36,666¥ 15,405¥

6,147¥ 185,849

Year ended March 31, 2017
Non-interest revenue . . . . . . . . . . . . . . . . . . .
Net interest revenue . . . . . . . . . . . . . . . . . . .

¥369,503
4,931¥90,0259,402¥564,877
174,379¥243,459(59,995)¥1,267,864
128,717

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-interest expenses . . . . . . . . . . . . . . . . . .

374,434
299,642

99,42757,094739,256
577,809

183,464
145,857

1,396,581
1,080,402

Income before income taxes . . . . . . . . . . . . .

¥ 74,792¥42,333¥161,447¥ 37,607¥ 316,179

Transactions between operating segments are recorded within segment results on commercial terms andconditions and are eliminated in “Other”.
The following table presents the major components of Income (loss) before income taxes in “Other” for theyears ended March 31, 2015, 2016 and 2017.

2015

Net gain (loss) related to economic hedging transactions . . . . . . . . . . . .
Realized gain on investments in equity securities held for operating
purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(1) Includes the impact of Nomura’s own creditworthiness.
F-132

Millions of yen
Year ended March 31
201615,120 ¥4,725
42,235(20,119)
3,989
45,950 ¥

6,370 ¥
187
32,727(52,314)
19,177
6,147 ¥

2017(7,279)1,092
32,342(6,439)17,89137,607

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table below presents reconciliations of the combined business segments’ results included in thepreceding table to Nomura’s reported Net revenue, Non-interest expenses and Income before income taxes in the
consolidated statements of income for the years ended March 31, 2015, 2016 and 2017.

2015

Millions of yen
Year ended March 31
2016

2017

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,579,491 ¥ 1,416,372 ¥ 1,396,581
Unrealized gain (loss) on investments in equity securities held for
operating purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,685(20,691)
6,616
Consolidated net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,604,176 ¥ 1,395,681 ¥ 1,403,197
Non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,257,417
Unrealized gain (loss) on investments in equity securities held for
operating purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—¥1,230,523¥1,080,402——

Consolidated non-interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,257,417 ¥ 1,230,523 ¥ 1,080,402
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥Unrealized gain (loss) on investments in equity securities held for
operating purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

322,074 ¥

185,849 ¥

316,179

24,685(20,691)

6,616

Consolidated income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . ¥346,759 ¥

165,158 ¥

322,795

Geographic information—
Nomura’s identifiable assets, revenues and expenses are generally allocated based on the country of
domicile of the legal entity providing the service. However, because of the integration of the global capital
markets and the corresponding global nature of Nomura’s activities and services, it is not always possible to
make a precise separation by location. As a result, various assumptions, which are consistent among years, havebeen made in presenting the following geographic data.

F-133

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The tables below present a geographic allocation of Net revenue and Income (loss) before income taxes fromoperations by geographic areas for the years ended March 31, 2015, 2016 and 2017 and Long-lived assets
associated with Nomura’s operations as of March 31, 2015, 2016 and 2017. Net revenue in “Americas” and“Europe” substantially represents Nomura’s operations in the U.S. and the U.K., respectively. Net revenue andLong-lived assets have been allocated based on transactions with external customers while Income (loss) before
income taxes has been allocated based on the inclusion of intersegment transactions.

2015

Millions of yen
Year ended March 31
2016

2017

Net revenue(1):Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia and Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 207,859
201,278
86,746¥ 219,857
145,808
78,700¥ 263,587
159,474
67,278Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

495,883
1,108,293

444,365
951,316

490,339
912,858

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,604,176¥1,395,681¥1,403,197

Income (loss) before income taxes:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia and Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (27,575) ¥ (32,042) ¥(23,455)(67,384)
34,59419,80649,962
14,401
23,746

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(16,436)
363,195(79,620)
244,778

88,109234,686

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 346,759¥ 165,158¥ 322,795

2015

March 31
2016

2017

Long-lived assets:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia and Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 146,758
88,92814,891¥ 129,308
76,58913,485¥ 125,222
66,167
13,043

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

250,577
274,202219,382
247,425

204,432
251,242

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 524,779¥ 466,807¥ 455,674(1) There is no revenue derived from transactions with a single major external customer.
22. Supplementary subsidiary guarantee information required under SEC rules:
The Company provides several guarantees of debt of its subsidiaries. The Company has fully andunconditionally guaranteed the securities issued by Nomura America Finance LLC, which is an indirect, wholly
owned finance subsidiary of the Company.

F-134

SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this annual report on its behalf.
NOMURA HOLDINGS, INC.
By: /s/ KOJI NAGAI
Name: Koji Nagai
Title: Representative Executive Officer,
President and Group Chief Executive
OfficerDate: June 26, 2017

INDEX OF EXHIBITS
Exhibit
NumberDescription

Articles of Incorporation of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as
an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein byreference)
Share Handling Regulations of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015
1.2
as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated hereinby reference)
Regulations of the Board of Directors of Nomura Holdings, Inc. (English translation) (filed on
1.3
June 23, 2016 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) andincorporated herein by reference)
Regulations of the Nomination Committee of Nomura Holdings, Inc. (English translation) (filed on
1.4
June 23, 2016 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) andincorporated herein by reference)
Regulations of the Audit Committee of Nomura Holdings, Inc. (English translation) (filed on
1.5
June 23, 2016 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) andincorporated herein by reference)
Regulations of the Compensation Committee of Nomura Holdings, Inc. (English translation) (filed on
1.6
June 27, 2012 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) andincorporated herein by reference)
Form of Deposit Agreement among Nomura Holdings, Inc., The Bank of New York Mellon as
2.1
depositary and all owners and holders from time to time of American Depositary Receipts,
including the form of American Depositary Receipt (filed on April 28, 2010 as an exhibit to theRegistration Statement on Form F-6 (File No. 333-166346) and incorporated herein by reference)
Limitationof Liability Agreement (English translation) (filed on June 30, 2011 as an exhibit to the
4.1
Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)(1)Limitation of Liability Agreement (filed on June 30, 2011 as an exhibit to the Annual Report on
4.2
Form 20-F (File No. 001-15270) and incorporated herein by reference)(2)Limitation of Liability Agreement (English translation) (filed on June 25, 2015 as an exhibit to the
4.3
Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)(3)Subsidiaries
of Nomura Holdings, Inc.—See Item 4.C. “Organizational Structure” in this annual report.
8.1
Code of Ethics of Nomura Group (English translation) (filed on June 23, 2016 as an exhibit to the
11.1
Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
Certificationof the principal executive officer required by 17 C.F.R. 240. 13a-14(a)12.1
Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)12.2
Certification of the chief executive officer required by 18 U.S.C. Section 1350
13.1
Certification of the chief financial officer required by 18 U.S.C. Section 1350
13.2
Consent of Ernst & Young ShinNihon LLC with respect to its report on the audit of the financial
15.1
statements included in this annual report
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Linkbase
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase
1.1(1) The Company and each of Takao Kusakari and Toshinori Kanemoto entered into a Limitation of Liability
Agreement substantially in the form of this exhibit.
(2) The Company and Michael Lim Choo San entered into a Limitation of Liability Agreement substantially inthe form of this exhibit.
(3) The Company and each of Hiroshi Kimura, Noriaki Shimazaki, Hisato Miyashita and Mari Sono enteredinto a Limitation of Liability Agreement substantially in the form of this exhibit.
The Company has not included as exhibits certain instruments with respect to our long-term debt. The
amount of debt authorized under each such debt instrument does not exceed 10% or our total assets. We will
furnish a copy of any such instrument to the SEC upon request.

Exhibit 12.1
Certification
I, Koji Nagai, certify that:
1. I have reviewed this annual report on Form 20-F of Nomura Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in thisreport, fairly present in all material respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for thecompany and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under our supervision, to ensure that material information relating to thecompany, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the company’s internal control over financial reportingthat occurred during the period covered by the annual report that has materially affected, or isreasonably likely to materially affect, the company’s internal control over financial reporting; and5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the company’s auditors and the audit committee of thecompany’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the company’s ability torecord, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the company’s internal control over financial reporting.
Date: June 26, 2017/s/ KOJI NAGAI
Koji Nagai
Representative Executive Officer,
President and Group Chief Executive Officer

Exhibit 12.2
Certification
I, Takumi Kitamura, certify that:
1. I have reviewed this annual report on Form 20-F of Nomura Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in thisreport, fairly present in all material respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for thecompany and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under our supervision, to ensure that material information relating to thecompany, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the company’s internal control over financial reportingthat occurred during the period covered by the annual report that has materially affected, or isreasonably likely to materially affect, the company’s internal control over financial reporting; and5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the company’s auditors and the audit committee of thecompany’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the company’s ability torecord, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the company’s internal control over financial reporting.
Date: June 26, 2017/s/ TAKUMI KITAMURA
Takumi Kitamura
Chief Financial Officer

Exhibit 13.1
Certification
Pursuant to 18 U.S.C. §1350, the undersigned officer of Nomura Holdings, Inc. (the “Company”) hereby
certifies, to such officer’s knowledge, that the Company’s annual report on Form 20-F for the year ended
March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of
the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in allmaterial respects, the financial condition and results of operations of the Company.
Date: June 26, 2017/s/ KOJI NAGAI
Koji Nagai
Representative Executive Officer,
President and Group Chief Executive Officer

Exhibit 13.2
Certification
Pursuant to 18 U.S.C. §1350, the undersigned officer of Nomura Holdings, Inc. (the “Company”) hereby
certifies, to such officer’s knowledge, that the Company’s annual report on Form 20-F for the year ended
March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of
the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in allmaterial respects, the financial condition and results of operations of the Company.
Date: June 26, 2017/s/ TAKUMI KITAMURA
Takumi Kitamura
Chief Financial Officer

Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements (Form F-3 No. 333-209596 andForm S-8 No. 333-180506, No. 333-187585, No. 333-195004, No. 333-203049, No. 333-210471 andNo. 333-214267) and related Prospectus of Nomura Holdings, Inc. of our reports dated June 26, 2017, withrespect to the consolidated financial statements of Nomura Holdings, Inc., and the effectiveness of internal
control over financial reporting of Nomura Holdings, Inc., included in this Annual Report (Form 20-F) for theyear ended March 31, 2017.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
June 26, 2017