prices artificially by placing a large amount of market purchase orders before the opening of the morning session.

Moreover, the SESC filed charges, in cooperation with the police, against a representative director of a listed company for submission of an annual securities report containing false disclosure statements by recording fictitious assets, which constituted a large part of the net assets.

Furthermore, in order to enhance the transparency of market surveillance administration and to encourage the self-discipline of market participants, the SESC published an edition of the Casebook on the Administrative Monetary Penalties under the FIEA (Market Misconduct and Violation of Disclosure Requirements) in August 2015, which were compilations of preceding cases recommended to the commissioner of the FSA for administrative monetary penalties.

### 2. Future Challenges and policy

As described above, the SESC has been engaged in effective and efficient market surveillance for the past year.

On the other hand, given the dynamically changing environment surrounding the Japanese market, as seen in situations where revisions of the FIEA and where innovative financial instruments and trades have advanced with the aid of information technology, the SESC’s market surveillance needs to address these changes appropriately. New trading methods, like algorithmic trading, are increasing as information technology advances, while material facts regarding insider trading are diversified. In terms of listed companies’ violations of disclosure requirements, a leading Japanese global company was found to have committed inappropriate accounting practices on a large scale, and there have been cases in which globally operating companies failed to establish adequate systems to manage their overseas subsidiaries.

In view of such circumstances, the SESC needs to enhance its methods for inspection and investigation in order to step up its market oversight from a forward-looking viewpoint based on the collection and analyses of macroeconomic information and address the increasingly diverse, complex and cunning nature of problem cases. The SESC also needs to examine the appropriateness of information disclosure by large listed companies, in addition to existing efforts to expose problem companies.

In conducting inspections of financial instruments business operators, the SESC believes it is essential to further enhance its ability to identify potential problems with consideration given to each characteristic of diverse business types of financial instruments business operators, customers, and increasingly complex and diverse financial instruments and transactions. Also, the SESC will strengthen its capabilities to collect and analyze information accordingly.

Furthermore, with regard to violations involving cross-border transactions, the SESC is required to continue to respond harshly to market misconduct by both Japanese and foreign professional investors, while enhancing surveillance on frequently conducted cross-border trading in cooperation with overseas regulators.

The SESC will continue to do its best to handle these challenges appropriately, perform more effective and efficient market surveillance, and sustain investors' confidence in the market to secure the protection of investors.