# Towards Enhanced Market Integrity

The Securities and Exchange Surveillance Commission (hereinafter referred to as “SESC”) is engaged in market surveillance under a mission of ensuring the integrity of capital markets and protecting investors.

The SESC for the 8th term was established in December 2013, and it announced “Towards Enhanced Market Integrity” as a medium-term policy statement (hereinafter referred to as “Policy Statement”; See Appendix 2-1) in January 2014. Under the Policy Statement, the SESC formulated three policy directions consisting of: (1) Market oversight with prompt and strategic actions; (2) Enhanced surveillance in response to the globalization of markets; and (3) Efforts for enhanced market integrity. Pursuant to these three policy directions, the SESC continues to strive to secure effective and efficient market surveillance with strong emphasis on prioritized items: (1) Proactive market oversight through enhanced information-collecting ability; (2) Strict action against severe and malignant market misconduct and false disclosure statements; (3) Timely and efficient inspections in response to disclosure violations; (4) Use of administrative monetary penalty system against market misconduct, etc.; (5) Efficient and effective inspections corresponding to the characteristics of firms to be inspected; (6) Responding to malicious businesses engaged in fraudulent operations; (7) Effective dissemination of information; and (8) Enhanced cooperation with self-regulatory organizations.

### 1. Activities in FY2015

During FY2015 (April 1, 2015 to March 31, 2016), which is the period covered by this publication, the SESC was, under the Strategic Directions and Priorities 2015-2016, engaged in market surveillance as described below and strategically utilized the powers and human resources with which it has been vested.

With respect to the enhancement of market discipline, the SESC has worked with financial instruments exchanges and financial instruments firms associations, etc., to share their respective awareness of problems through periodic exchanges of information. In addition, the SESC has stepped up its efforts to engage in dialogue with market participants and continued to actively disseminate information to the market for the purpose of encouraging each market participant to make voluntary efforts. In addition, the SESC held a meeting at the Kinki Finance Bureau—the meeting which the first time held outside the Tokyo metropolitan area—and exchanged opinions with relevant organizations in the area in an effort to increase the presence and raise awareness that “the SESC is watching”. The SESC contributes articles to various publications and the mass media, and uses the SESC Email Magazine to disseminate details of its activities, its awareness of problems and other information in a timely manner. The SESC has focused on expanding and enhancing the information content so that significance, characteristics and causes of recommendations for administrative disciplinary actions or filing of criminal charges could be correctly understood.

With respect to routine market surveillance, the SESC continued its efforts, including accepting information from ordinary investors, etc., conducting market oversight targeting primary and secondary markets, cooperating with overseas regulators in view of the