RULES CONCERNING APPROPRIATE IMPLEMENTATION,ETC. OF SEPARATE MANAGEMENT OF CUSTOMER ASSETS(November 21, 2001)(Purpose)
Article 1 The purpose of the Rules Concerning Appropriate Implementation of Separate Management of
Customer Assets (hereinafter referred to as “Rules”) is to define standards, procedures, and other matterswhen Regular Members and Specified Business Members undergo a separate management audit regarding
separate management (which means the separate management set forth in Article 43-2 of the Financial
Instruments and Exchange Act (hereinafter referred to as “FIEA”); the same shall apply hereinafter) andsegregated management (which means the segregated management set forth in Article 43-2-2 of the FIEA;
the same shall apply hereinafter) conducted by Regular Members and Specified Business Members, thereby
ensuring an appropriate implementation of the separate management and segregated management ofcustomer assets by the Regular Member or Specified Business Member.
(Separate Management Audit by Certified Accountant, Etc.)
Article 2 A Regular Member must prepare a management report on the compliance with laws concerning
separate management of customer assets that describes the following matters (hereinafter referred to as the“Management Report”) and undergo a separate management audit in the assurance engagements inconnection with the compliance with laws concerning the separate management (hereinafter the “SeparateManagement Audit”) by a certified public accountant or an audit firm (hereinafter referred to as the“Certified Accountant, etc.”) under “Assurance Engagement Practice Note 3802 - ‘Practical Guidelines onAssurance Engagements Relating to Compliance with Laws Concerning Separate Management ofCustomer Assets by Financial Instruments Business Operator’” issued by the Japanese Institute of CertifiedPublic Accountants, at least once a year on a regular basis, for the purpose of checking the condition of
separate management of customer assets prescribed in Article 43-2, Paragraphs 1 and 2 of the FIEA
pursuant to the same Article, Paragraph 3 of the FIEA.
(1) The fact that the management assumes responsibility to comply with laws concerning separatemanagement;(2) The fact that the management assumes responsibility to establish and exercise effective internal
control for compliance with laws concerning separate management;(3) The fact that the management assumes responsibility for trusting the customer segregated fundand separately managing customers' securities as of the audit base date (hereinafter referred toas the “Base Date”);(4) The fact that the management has implemented a procedure to confirm that the Regular
Member separately managed customer assets pursuant to laws;(5) As a result of the procedure set forth in the preceding Item, whether the Regular Member
separately managed customer assets as of the Base Date pursuant to laws; and(6) After the Base Date and during the period until the submission date of the Management Report,
in the case any event occurs that may materially impact on the compliance with laws
concerning separate management of customer assets, the details of such event.
2.
When preparing the Management Report as prescribed in the preceding Paragraph, a Regular Member
must conduct a procedure that ensures that effective internal control has been established and exercised forcomplying with laws concerning separate management, and that customer assets have been separatelymanaged in compliance with laws.
3.
A Regular Member must prepare a record that includes the matters found in the procedure set forthin the preceding Paragraph and the result of the procedure.

14.
When the Separate Management Audit by the Certified Accountant, etc. begins, and when aRegular Member receives a report relating to the results of Separate Management Audit (hereinafter referredto as the “Separate Management Audit Report”), the Regular Member must immediately submit to theAssociation the “Report of Separate Management Audit by the Certified Accountant, etc.” that is separatelydefined.
5.
When a Regular Member receives the Separate Management Audit Report, it must publicize acopy of such Separate Management Audit Report and a copy of the Management Report by a proper method
such as placing them in all the branch and business offices for review by the public (including a method thatenables showing them on a display of a computer installed in each of such branch and business office), orlisting them on its website, by the date when the next reports on the Separate Management Audit arepublicized.
6.
In the case where the Association determines that, by checking the Separate Management Audit
Report, a Regular Member meets either of the conditions set forth in each of the following Items, theAssociation may immediately instruct the Regular Member to take measures that are necessary to correct
the applicable matters:(1)

The Regular Member violates laws and regulations, a disciplinary action taken by anadministrative government office pursuant to laws and regulations, or the Articles ofAssociation and other rules.

(2)

The separate management of customer assets is not implemented appropriately.

7.
A Regular Member who has received the instruction for correction prescribed in the preceding
Paragraph must submit a report for correction on the instructed matters to the Association.
(Measures for Ensuring, Etc. the Effectiveness of Separate Management)
Article 3 In the case where the Association has found that a Regular Member meets any of the Items
below and the Association determines it necessary and appropriate for the public interest or protecting
investors, the Association shall take measures prescribed in each of the Items and other necessary measuresdirected to the Regular Member to the necessary extent:(1)

In the case where the Capital-to-Risk Ratio of the Regular Member becomes less than 120%;
The Association shall require the Regular Member to submit a report describing the condition,etc. of the separate management and segregated management.

(2)

In the case where the Capital-to-Risk Ratio of the Regular Member becomes less than 100%;
The Association shall require the Regular Member to supplement the necessary amount tomaintain the sufficient amount for the customer segregated fund or the management of thecommodity customer segregated fund and take other necessary measures that ensure theimplementation of separate management of customer assets.

(3)

In the case the Regular Member may go into default in light of its business or financial
condition;
The Association shall implement the special inspection prescribed in Article 4, Item 2 of theInspection Rules with respect to the separate management and segregated management.

2.
When conducting the special inspection prescribed in the preceding Paragraph, Item 3, theprincipal inspector (an inspector designated by the Association in advance) has the authority prescribed in
Article 6 of the Inspection Rules, and in the case where the principal inspector determines it necessary tourgently take measures for the purpose of appropriate implementation of separate management or segregatedmanagement of customer assets, the principal inspector may instruct the Regular Member to take such2measures.
3.
In the case where the Regular Member has received the instruction pursuant to the preceding
Paragraph, the Regular Member must comply with such instruction.
4.
When the Association determines that it is necessary and appropriate for the public interest orprotecting investors, it may exchange opinions with the Certified Accountant, etc. who conducts theSeparate Management Audit prescribed in Article 2, Paragraph 1 to the necessary extent.
5.
When the Association takes measures prescribed in Paragraph 1, or issues the instruction
prescribed in Paragraph 2, the Association shall immediately report it to the Financial Services Agency andthe Japan Investor Protection Fund (including the Specified Consignor Protection Fund set forth in Article
4, Paragraph 1 of the Supplementary Provisions of the Act for Partial Revision of the Financial Instruments
and Exchange Act, etc. (Act No. 86 of 2012) in the case when the Regular Member taking measures pursuant
to Paragraph 1 or issuing the instruction pursuant to Paragraph 2 is a Specified Member of the SpecifiedConsignor Protection Fund as set forth in the same provision in the Act for Partial Revision of the Financial
Instruments and Exchange Act, etc. above).
(Application Mutatis Mutandis to Specified Business Members)
Article 4 The provisions of Articles 2 and 3 (excluding the provisions of Article 3, Paragraph 1, Items 1and 2) shall apply mutatis mutandis to Specified Business Members (limited to Specified Business Membersthat conduct business listed in Article 5, Item 2 (b) of the Articles of Association; the same shall apply
hereinafter within this paragraph). In this case, the term “Regular Member” in these provisions shall bechanged to read “Specified Business Member,” the term “Article 43-2, Paragraphs 1 and 2 of the FIEA” inArticle 2 shall be changed to read “Article 43-2, Paragraph 2 of the FIEA,” and the term “the FinancialServices Agency and the Japan Investor Protection Fund” in Article 3, Paragraph 5 shall be changed to read“the Financial Services Agency.”2.
The provision of Article 3 (excluding Article 3 Paragraph 4) shall apply mutatis mutandis toSpecified Business Members (limited to Specified Business Members that conduct business listed in Article
5, Item 2 (c) of the Articles of Association; the same shall apply hereinafter within this paragraph). In thiscase, the term “Regular Member” used in the provision shall be replaced with the term “Specified BusinessMember.”(Revision of the Rules)
Article 5 In the case where the Association intends to revise the Rules, it shall consult with the Financial
Services Agency and the Japanese Institute of Certified Public Accountants.
(Others)
Article 6 The Association may prescribe matters that are necessary for the implementation of theSeparate Management Audit in addition to those prescribed in the Rules.

SUPPLEMENTARY PROVISIONS [Omitted]
1
The revised Rules shall be enforced as of March 31, 2017. Provided, however, the provision inArticle 2, Paragraph 5 shall apply to the publication of the result of Separate Management Audit conductedon the Base Date that is on and after April 1, 2018.
2

A Regular Member that underwent the separate management audit relating to the agreed upon3

procedures pursuant to Article 2, Paragraph 1 of the old Rules before the enforcement date of the revised
Rules is allowed to continue the previous procedure and method for the Separate Management Audit that isconducted on the Base Date that is on and before March 31, 2018.
(Note) This amendment comes into effect as of February 17, 2022, the date of application of the“Assurance Engagement Practice Note 3802 - ‘Practical Guidelines on Assurance Engagements Relating
to Compliance with Laws Concerning Separate Management of Customer Assets by Financial Instruments
Business Operator’” issued by the Japanese Institute of Certified Public Accountants.
This translation is solely for the convenience of those interested therein, and accordingly all questions thatmay arise with regard to the meaning of the words or expressions herein shall be dealt with in accordancewith the original Japanese text.

4