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Framework for New Growth Market July 29, 2008

1. Purpose of the new market

An examination of the current capital raising environment for growing Japanese and Asian companies reveals a major gap that is not being met in existing Japanese or Asian markets. Japanese companies： Japan’s economy includes a class of companies that have solid business models and a strong need for risk

capital, the needs of which have not been met by existing markets. In addition, the existing markets are not necessarily markets in which investment is made based on an assessment of enterprise value from a medium to long-term perspective, and even if a company successfully conducts an IPO, it may subsequently have difficulty procuring funds through secondary and subsequent offerings in line with its growth stage.

Asian companies： Asia is experiencing remarkable economic development and has many companies with strong needs to procure financing in the form of risk equity capital. Many of these companies have operational connections with Japan (Japanese customers, business partners, technology providers, etc.) or have received funding from Japan, and have a strong desire to attract Japanese investors and capital. Other Asian securities markets have not been able to fully meet the needs of these companies.

Tokyo Stock Exchange Group (“TSE”) and London Stock Exchange Group (“LSE”) believe that this funding gap can be reduced by the creation of a new market. As a result, major business opportunities are expected to emerge for issuers, investors, securities companies, legal specialists, accounting specialists and other stakeholders. This new market will generate revenues for all these businesses and contribute to the further economic development of Japan and Asia.

2. Creation of a new exchange The two exchanges will establish a joint venture to operate the new market under a new exchange, which will be domiciled in Japan.

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The new market will operate within the new legal framework introduced in Japan, pursuant to the Amendment law of the Financial Instruments and Exchange Act, as a market for professionals. The new market will be based on the AIM regulatory framework and Nomad system, tailored where appropriate to suit the needs of the Japanese and Asian markets, as described further in Appendix 1. The two exchange groups firmly believe that through this new market they can attract Japanese and Asian companies and international investors. TSE will bring to the new market its expertise and capabilities in operating markets in Japan and Asia, while LSE will bring its expertise and capabilities in operating growth markets, gained from its operation of AIM, the most successful growth market in the world.

3. Legal Framework (a) Background to the creation of the new legal framework

• Under the existing law, the legal framework for stock markets does not make distinctions by type of investors, and the direct participation of retail investors is possible. The only exceptions to this are the rules relating to private placements, which only allow the distribution of stock to accredited institutional investors, similar to the 144A market in the U.S. Consequently, Japan’s markets (including TSE Mothers), are subject to regulatory systems based on strong requirements for retail investor protection. These requirements have in recent times become more pronounced (internal controls reporting has been in force from April 2008 and quarterly disclosure is now mandatory).

• This position contrasts with a number of other countries, where highly flexible markets are being developed targeting particularly professional investors. Japan also recognizes a strong need to develop a market that distinguishes between professional investors and retail investors. Therefore, at the end of 2007, the First Subcommittee of the Sectional Committee on the Financial System of the Financial System Council recommended the development of a framework for a professionals-only market.

• The Financial Services Agency (“FSA”) included this recommendation in its Plan for Strengthening the Competitiveness of Japan’s

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Financial and Capital Markets and the Amendment Law of the Financial Instruments and Exchange Act, which is based on the plan, was passed in June 2008 and is expected to be in force by the end of the year.

(b) Key features of the legal framework

A new disclosure regime (for both admission and ongoing disclosure) will be adopted for securities listed on the new market, and such securities will only be available for distribution to “specified investors”, as defined below:

• Accredited institutional investors • Listed companies • Joint-stock corporations with capital of ¥500 million or more • Other approved corporations* • Approved individuals with net assets and financial assets of ¥300 million or more, and one year or more of trading experience*

(*N.B. Any such corporation or individual would need to apply for and receive prior approval)

Under this new principles-based regulatory regime, the format and language of listing information, corporate disclosures, accounting standards, and other requirements will not be prescribed in law. Furthermore, submission of disclosure documents to the FSA, the financial authority, will not be required

However, to preserve market integrity, with regard to matters such as fraudulent disclosure, regulation of insider trading, the

reporting of substantial shareholdings and takeover requirements, regulations and systems will apply as with existing listed securities

4. Reference materials Further detail is set out in the following: ・The J-Nomad System and System for Listing on New Market are outlined in Appendix 1

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・The trading system and the clearing and settlement system are outlined in Appendix 2 ・The system for trading participants is outlined in Appendix 3 5. Schedule for commencement of new market The Amendment Law of the Financial Instruments and Exchange Act, is scheduled to be enforced within six months of being passed on June 13, 2008, meaning that it should be effective by December 12, 2008 at the latest. The new exchange will promptly apply for authorization after the Amendment Law of the Financial Instruments and Exchange Act is enforced and, subject to the receipt of regulatory approval, will then commence operations. Comments on this outline are welcomed from all market participants and should be sent to http://www.tse.or.jp/english/rules/newmarket/index.html by August 29th 2008.

Appendix 1

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J-Nomad System and System for Listing on New Market 1. J-Nomad System

Item Details Reference

・A company applying to list and any company listed on the new market (“listed company/ies”) must retain a J-Nomad (provisional name; hereafter the same), which will advise and guide it on fulfilling its responsibilities as set forth under the listing system ・The J-Nomad must perform, as a minimum, the high-level duties set forth under the J-Nomad rules, but has discretion as to how these should be fulfilled

・The new exchange will appoint as J-Nomads advisers that fully understand the reason for the establishment of the new market, its concept and the future direction of its development, and that have a strong reputation and sense of responsibility

(1) Main role of J-Nomad ・The J-Nomad must fulfill the following roles, and if it deems it

necessary, must require a listed company for which it acts as J-Nomad to evolve and develop in terms of systems and controls, governance and other matters, so they are appropriate for the new market ・The J-Nomad must be independent from its listed companies, and there should be no conflicts of interest

・To enable the J-Nomad to fulfill this role, a company applying to list and a listed company must report necessary information to the J-Nomad and fulfill their obligation to seek the advice of the J-Nomad

(a) Role vis-à-vis companies

applying to list ・The J-Nomad must fulfill the following roles for company it is applying to list

(a) Evaluate whether the company and the securities to be listed are appropriate for listing on the new market, based on requirements for listing which the new exchange stipulates

(b) Lead the company through the listing process, including assisting it to prepare its listing application document

Appendix 1

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(c) Submit to the new exchange a Declaration of Appropriateness for Listing (provisional name) if it decides that the securities to be listed are appropriate for listing on the new market

(b) Role vis-à-vis listed companies

・The J-Nomad must fulfil the following continuing roles for a company already listed and for which it has been retained as J-Nomad:

(a) Work to ensure that the requirements for ongoing listing continue to be met and that the company fulfills its duties after listing, in order to maintain its appropriateness for listing

・For instance, the J-Nomad must assess whether a company remains appropriate if it undertakes a material change, such as, for example, a change in directors, a corporate acquisition or reorganization

(b) Maintain regular contact with the company, assigning a senior contact person to ensure that there is always an appropriate J-Nomad representative available to advise it

・Liaison and communication between the new exchange and the listed company will be conducted through the J-Nomad

(c) Advise the company on its ongoing disclosure obligations and other obligations under the new market rules, including reviewing in advance corporate announcements to ensure compliance with the disclosure obligations set out in the rules of the new market

・ The new exchange may seek clarification from the J-Nomad of corporate information about the listed company if it considers it necessary. In such cases, the J-Nomad must provide appropriate clarification ・Contracts and so forth must be prepared to ensure forthright sharing

Appendix 1

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of information between the listed company and the J-Nomad, and forthright provision of information by the listed company and the J-Nomad to the new exchange

(d) Submit to the new exchange documentation required about corporate actions and other events pertaining to its listed company

(e) In conjunction with an appropriate broker, ensure orderly trading of the company’s stock and make efforts to ensure that analysts’ reports are issued

・ We will further consider what obligations are necessary to ensure orderly trading of listed company stock. ・It is highly desirable that analysts’ reports are published at times of material corporate actions such as capital increases and on a regular basis.

Appendix 1

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・“Make efforts to ensure that analysts’ reports are issued” means that the J-Nomad makes efforts to encourage its listed company to hold meetings and so forth for analysts and provide support for such events, and to encourage the issuing of reports by third parties such as research companies

(2) Being a J-Nomad (a) Application to become J-Nomad

・Advisers intending to become J-Nomads must apply to the new exchange for approval

・The J-Nomad does not need to be a financial instruments business as prescribed in the Financial Instruments and Exchange Act, but it must have relevant experience and expertise.

(b) Eligibility screening ・ The new exchange will review applications and decide whether to approve the adviser as a J-Nomad based on the following criteria including whether:

(a) The adviser has a track record in corporate finance advice in the past two years

(b) The adviser has the requisite number of J-Qualified Executives (J-QEs; provisional name) approved by the new exchange

・The status of J-QE will be granted to individuals whilst at the J-Nomad ・ J-QEs will be required to have

Appendix 1

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adequate and relevant expertise and experience to be a J-QE ・The exchange expects J-QEs to have experience in leading the overall process of IPOs, and as part of that to have provided high-level advice to senior management of the issuing company, and understand the aims of the new exchange and be able to contribute to its development. The new exchange will confirm further details in due course. ・AIM in the U.K. requires that QEs: (1)

be full-time employees of the Nomad; (2) have taken charge of business relating to corporate finance in the past three years; and (3) have played a principal role in at least three financing deals of a given size in the said three years

(c) The adviser has adequate systems and controls in place to ensure compliance with the J-Nomad obligations (d) Whether the adviser has the motivation and capability to contribute to the development of the market, as a partner in operating the new market together with the new exchange

Appendix 1

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(c) Remaining eligible on ongoing basis

・The J-Nomad must always continue to satisfy all of the requirements listed above

・ The new exchange will hold interviews with J-Nomads as necessary, and will require submission of necessary documents for review by the new exchange

(d) Revocation of eligibility of J-Nomads

・If a J-Nomad no longer meets the eligibility requirements or if the new exchange assesses that the J-Nomad is not suitable to be a J-Nomad, the new exchange may revoke the J-Nomad’s eligibility to serve as a J-Nomad

・For instance, if a J-Nomad does not have an adequate number of J-QEs, its J-Nomad status may be suspended or possibly revoked ・ The new exchange may take measures, such as providing advice and direction to the J-Nomad, with respect to revocation of eligibility or other matters

(3) Applicable fees payable by J-Nomads

・The J-Nomad will pay to the new exchange fees on application to become a J-Nomad and ongoing registration fees whilst a J-Nomad

2. LISTING SYSTEM


(1) New listing

(a) Requirements for listing ・The requirements for listing securities on the new market are as follows:

Appendix 1

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(a) The applicant company formally retains a J-Nomad

・The listing system of the new market will not prescribe requirements with respect to matters such as the number of shareholders, shares available in the secondary market, the total market value of listed shares, the number of consecutive years of prior business activity, net assets, income or total market value. Furthermore, no requirements will be prescribed with respect to the growth capacity of a company. These elements are considered and evaluated by the J-Nomad, with respect to investor’s needs

(b) The listing application document does not contain falsehoods

・The content of the listing application documents is almost the same as that of an Annual Securities Report, and the listing application documents is published at the time of admission for listing ・ The language of the listing application document is the same as below. See（3）c.

Appendix 1

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(c) The report of the independent auditor, etc. accompanying the company’s financial statements for the last business year must be included as a minimum

・The report must be an unqualified opinion report ・If it is possible to submit not only the report for the last fiscal year but also the reports for the year before that and the one before that, at maximum the reports for these last three years must be included

(d) Restrictions have not been placed on transfer of the securities for which listing application is being made

(e) A Transfer Agent has been appointed or will be appointed by the time of listing

(f) An agreement relating to handling at the designated custody and transfer agent has been concluded or will be concluded by the time of listing

(g) The listing application documents must be prepared in conjunction with the J-Nomad, and also those documents must be scrutinized by legal specialists

・The J-Nomad must exert every effort to select appropriate legal and accounting specialists to assist in the preparation of the listing application documents

(h) The company will respect secondary market functions and shareholders’ rights

(i) The company will perform its business fairly and in good faith

Appendix 1

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(j) The company has appropriate corporate governance and internal control systems in place, and they are functioning effectively

・In assessing corporate governance, the matters checked will be the appropriateness of the Board of Directors of the company applying to list, whether the Board of Directors is functioning effectively, and whether directors (both executive and non-executive) and senior executives are appropriate given that the company intends to become listed

(k) The company adopts an accepted accounting standard ・“An accepted accounting standard” means: * Japanese GAAP * International Accounting Standard (IAS) * U.S. GAAP or * Other standards agreed between the J-Nomad and an accounting specialist to be equivalent to the standards above, provided that a reconciliation to Japanese GAAP, IAS or U.S. GAAP is also included

(l) The company has capacity to effect timely disclosure in a proper manner

Appendix 1

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(m) The company meets all other requirements stipulated by the new exchange

(b) Application for listing ・Applicant companies must apply to the new exchange in order to list securities on the new market as follows: ・A company applying to list must submit a listing notice to the new exchange a minimum of 10 business days (provisional deadline) prior to the scheduled listing date. ・A company applying to list must submit the listing application document (including the Declaration of Appropriateness for Listing by the J-Nomad) to the new exchange a minimum of 3 business days (provisional deadline) prior to the scheduled listing date

・Application for listing must be made through the J-Nomad ・ The provisional deadlines in the column on the left are the deadlines specified in the rules of AIM. The deadlines for the new market will be decided later with reference to the AIM rules, based on the capability of the related parties to respond. ・The J－Nomad can consult with the new exchange regarding a company applying to list prior to the deadlines.

(c) Admission for listing ・The new exchange will check that the application documents

submitted are in order and will admit the company to listing based on the evaluation and declaration of the J-Nomad . ・ If the new exchange becomes aware that the company applying to list may damage the reputation or integrity of the new market or its smooth operation, it may refuse the company’s listing

・ Admission of listing will be announced by the new exchange

Appendix 1

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(2) Requirements for ongoing listing

(a) Retaining a J-Nomad

・The listed company must formally retain the services of a J-Nomad at all times ・If the company has lost the services of its J-Nomad, it must retain a new J-Nomad within one month

・ If the listed company is a non-Japanese company, it does not need to appoint an attorney at law・If a J-Nomad cannot be retained, the company will be delisted

(b) Being able to conduct business on an ongoing basis

・The listed company must be able to conduct business on an ongoing basis

・Not being able to conduct business on an ongoing basis means, for instance, if it has become necessary for the company to undergo bankruptcy, rehabilitation or similar proceedings, or if bank transactions have been or will be suspended

（3）Duties after listing (a) Timely disclosure ・The listed company must effect thorough disclosure without

delay of corporate information in an appropriate and fair manner, taking into account the perspective of investors ・The criteria for timely disclosure relating to events that have been decided or events that have taken place in the new market will be the same as the criteria used in existing TSE markets (except for criteria relating to information disclosure for non-listed parent companies, etc.)

･ Timely disclosure of corporate information will be carried out using the Timely Disclosure Network (TDnet), and transmission to the new exchange of the disclosure materials will be carried out through the J-Nomad ・The new exchange will not require the listed company to disclose earnings forecasts

Appendix 1

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(b) Financial reporting etc. ・The listed company must disclose financial reports at least twice a year in accordance with an acceptable accounting standard. ・Also, the listed company must disclose annual financial information in the format consistent with that of an Annual Securities Report

・The annual financial report in the format consistent with that of an Annual Securities Report shall be audited and an audit certification shall be attached to it. ・The half-yearly report shall as a minimum be checked by an accountant at a level consistent with an audit and its certification shall be attached to it. ・The listed company shall disclose its

annual or half-yearly financial information as soon as possible prior to disclosing the certified report. ・ Providing quarterly disclosure is optional ・A company listed on the new market does not need to prepare an internal control report

(c) Language of disclosure ・The listed company must select English or Japanese as the disclosure language

・A listed company can only change the language that it selected at the time of listing, with the consent of its shareholders’ or other relevant decision making process of the

Appendix 1

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company ・From the perspective of providing full

disclosure to Japanese and overseas investors, the listed company and its J-Nomad are encouraged, but not mandated, to provide English to Japanese or Japanese to English translations of its disclosures

(d) Documents to be submitted

・The listed company must submit documentation sent to shareholders and other documents required by the new exchange at the time the listed company conducts a corporate action

・Submission of documents to the new exchange must be done through the J-Nomad

(e) Additional listing ・If the listed company changes the number of listed shares by

procuring financing or other means, it must submit an application for change of listing to the new exchange

・ Applications for additional listing must be made through the J-Nomad

(f) Other

・The listed company is required to meet requirements for listing (h), (i), and (j)

(3) Delisting ・ If a listed company can no longer meet the ongoing requirements for listing, or is considered by the new exchange to not be appropriate from the perspective of investor protection, the new exchange may suspend the listing of the company or delist it

Appendix 1

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・A listed company may apply to delist securities that it has issued, subject to getting the consent of its shareholder’s meeting or other relevant decision making process of the company

(4) Applicable fees for listing ・A listed company must pay to the new exchange a new listing fee and annual listing fee in addition to an additional fee for issuance of new securities

・ The fee system will be adapted referring to the TSE Mothers system

(5) Ensuring effectiveness ・If it considers it necessary, the new exchange may take necessary measures in relation to the listed company, such as providing advice and direction

Appendix 2

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Trading System and Clearing & Settlement System ○ Outline


Ⅰ Trading system

１．On-floor trading (1) Business days, etc. ・Business days (and half days) are to be the same as

those of the TSE.

・As with the TSE, the last and first days of the trading year, traditionally half days, are to become full days from, respectively, the last trading day of 2009 and the first trading day of 2010.

(2) Trading hours ・Up until the start-up of the exchange’s next-generation system, on-floor trading hours are to be the same as those of the exchange. ・Trading hours after the start-up of the system are to be

determined later.

・Order acceptance hours will also be the same as those of the exchange.

・We will consider, for instance, the possibility

of extending afternoon trading hours.

(3) Types of trades ・The types of on-floor trades are to be the same as those of the exchange.

・Same-day settlements (limited to participants to a single trade); regular-way delivery and when-issued transactions (limited to domestic equities).

(4) Method of transaction completion, etc.

・The method of on-floor transaction completion, etc., is to be the same as that of the exchange.

・Individual auction trading.

(5) Method of bid/ask ・ In principle, trading is to be conducted with the ・Transaction classifications for the new

Appendix 2

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quoting, etc. exchange’s next-generation system. ・However, until the start-up of the next-generation

system, trading is to be conducted with the exchange’s current system.

market are to be set with the next-generation system.

・No transaction classifications or market classifications are to be set for the new market under the current system, but instead new-market issues are to be included in the exchange’s current market classifications (new-market domestic equities are to be placed in Section 2; new-market foreign equities, in the Foreign Section.

・In principle, bid/ask price units, bid/ask price limits, and order types are, for domestic issues, to be the same as those for on-floor trading of domestic issues on the exchange and, for foreign issues, the same as those for on-floor trading of foreign issues on the exchange.

・Proprietary/client transactions, short sales, and other such classifications to be the same as those for the on-floor exchange.

・ Bid/ask price limits shall, in principle, be set in reference to closing prices of the previous day.

・To be handled in the same manner as domestic issues on the on-floor exchange. Reference (base) prices to be adjusted for ex-dividend effects.

(6) Trading units ・ For domestic equities, 100 shares. ・ For foreign equities, 100 shares as a general

principle.

Appendix 2

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(7) Publication of transaction price, etc.

・The new exchange is to publish in a specified location the price at which a transaction is made.

・Equity-specific price information and trading volume are to be distributed in real-time via the exchange’s information reporting system.

・Notification and publication of daily transaction totals

and the like for the new exchange are, in principle, to be conducted via its website.

・Aggregate market trading volume and the like are not to be distributed in real-time via the exchange’s information reporting system.

(8) Suspension of trading ・Suspension of trading on the new exchange is, in principle, to be handled the same as on the exchange.

(9) Participation to ensure smooth trading

・The rights and obligations of trading participants as necessary to ensure smooth trading in listed securities on J-Nomad (provisional name) are to be determined later.

・Orders issued by participants “to ensure smooth trading” are to be issued as regular orders.

(10) Margin trading ・Listed issues are not subject to standardized (seido)

margin transactions.

２．Off-floor trading (1) Transaction classes ・ To establish system (method) similar to that for

single-stock trading in ToSTNeT market.

・System (method) is not to be like that for basket trading, closing-price trading, or own share repurchase trading (all ToSTNeT).

Appendix 2

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・Issues to be listed on new exchange are to be listed on both on-floor and off-floor markets.

(2) Trading hours ・From 8:20am to 5:00pm.

・Same for order acceptance hours.

(3) Types of trades ・ Regular-way delivery and same-day settlements (limited to participants to a single trade).

(4) Method of transaction completion, etc.

・Transaction completes when a buy order matches a sell order.

(5) Method of bid/ask quoting, etc.

・Done by FAX. ・Cannot use TSE derivatives trading system.

・Bid/ask prices to be within 7% of closing price of previous trading day.

Ⅱ Clearing & settlement system

1. Handling of clearing and settlement functions

・Settlement of domestic and foreign equity transactions on the new exchange are to be conducted between clearing participants and the clearinghouse per the procedures of the Japan Securities Clearing Corporation (JSCC).

・Securities settlements are, as with TSE transactions, to be handled by the Japan Securities Depository Center (JASDEC) with the book-entry transfer system. Cash

・Rests on the assumption that the JSCC will prepare the necessary procedural framework.

・Rests on the assumption that JASDEC

will prepare the necessary procedural framework.

Appendix 2

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settlements are to be handled in the same way as settlements on the TSE.

2. JSCC settlement system (The items listed here have not been determined by the clearinghouse (JSCC) and are thereby subject to revision).

(1) Clearing participant system

・Transactions in new market are included within those covered by the cash products clearing qualification of the clearinghouse (JSCC). ・For the time being, the requirements for obtaining that

qualification are to remain as they are under the current system.

・Under the clearinghouse’s current system, only Financial Instrument Firms and registered financial institutions are eligible for a clearing qualification. Foreign companies without a presence are not eligible.

・ In case a foreign company becomes a trading member, it entrusts its clearing to a clearing participants.

(2) Settlement system a Novation (assumption

of obligation) ・Same as present system.

b Netting ・ As with transactions on the TSE, cash market transactions are to be netted.

c Settlement method ・DVP settlement.

・ Scheduling/methods for administrative processing to be handled under system like that for clearing stocks.

Appendix 2

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3. JASDEC settlement system (The items listed here have not been determined by

JASDEC and are thereby subject to revision).

・Domestic issues are to be handled with the book-entry transfer system for stocks, etc. ・Foreign issues are to be handled with the custody and

book-entry transfer system for foreign stocks, etc.

・ Toward the dematerialization (electronic replacement) of stock certificates in January 2009, JASDEC plans that the way of Account Transfer of non-Japanese issues will be the same as that of Japanese issues.

4. Other ・ Settlements between clearing participants and

non-participants to be handled in the same manner as on the TSE.

Appendix 3

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Trading Participants System ○ Outline


1. Trading participation system (1) Trading participants

Trading participants

Trading of marketable securities on new exchange (2) Obtainment of trading

qualifications Application

・Trading participants are those who possess a trading

qualification which allows them to trade marketable securities on the new exchange.

・Trading participants with a cash products clearing

qualification are to trade marketable securities on the new exchange under their own name; those without are to enter into a clearing entrustment contract with an agency firm for clearing securities.

・Parties seeking to become a trading participant must

first apply for a trading qualification.

・There is only one class of participant. ・A cash products clearing qualification is a

qualification issued per the procedures of the Japan Securities Clearing Corporation (JSCC).

・Over the period from the start-up of the new

exchange to the start-up of the new system (initial period), a trading qualification will only be granted to those have a General Trading Qualification with the Tokyo Stock Exchange, INC. However, once that period comes to an end, those seeking to

Appendix 3

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Eligibility

Approval

Obtainment costs a. Joining fee b. Review fee

・Eligibility is limited to Financial Instrument Firms or

firms given permission to trade by the Financial Service Agency (FSA).

・The new exchange is to grant a trading qualification to

those who have a TSE General Trading Qualification, are members of the London Stock Exchange, or have been determined to be suitable for the qualification upon an examination by an entity determined by the new exchange.

・A joining fee is to be paid when a trading qualification is

obtained. ・The amount of the examination fee is to be determined

later.

maintain that qualification are to file an application.

・Firms given permission to trade by the FSA”

refers to remote trading participants. ・A joining fee need not be paid by those

granted a qualification within the initial period.

・The amount of the joining fee is to be determined later.

Appendix 3

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Notification, announcement (3) Major obligations, etc., of trading participants

Observance of laws, regulations, etc.

Signing of a trading participation contract

Payment of trading participation fees

Deposit of participant bond

Notification, reporting

・When a qualification is granted, other trading participants are to be notified and a public announcement is to be made.

・Trading participants are to observe all legal

requirements and regulations of the new exchange. ・Trading participants are to enter into a trading

participation contract (agreement) with the new exchange and are also to appoint a trading participation representative.

・Trading participants must pay a specified trading

participation fee. ・Trading participants are to deposit a participant bond

with the new exchange. ・Trading participants are to submit notifications/reports

to the new exchange on specified matters.

・The amount of the fee is to be determined

later. Also, we will exempt participants from basic fees during the initial period.

・Cash is to be entrusted as a participant

bond. The amount is to be determined later.

Appendix 3

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Limitations on consignment (4) Loss of trading qualification (5) Trading participant reprimands, etc.

Reprimands

・Trading participants are not to accept purchase orders on consignment from any party other than an accredited institutional investor, etc.

・A trading participant that seeks to give up its trading

qualification must first request and receive permission for this from the new exchange.

・Should a trading participant fail to observe some law or

regulation, should it fail to permit an investigation by

・To be limited in accordance with Article 117-2-2 of the Financial Instruments and Exchange Act.

・ “Accredited institutional investors, etc.” refers to the following:

a. Qualified institutional investors b. Listed companies c. Listed companies/joint-stock corporations

with capital of ¥500 million or more d. Corporations other than the above e. Individuals with net assets of ¥300 million

or more, and one year or more of trading experience

(For approval under “d” or “e,” the party must file an application with a securities company, which is then to verify it).

Appendix 3

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Corrective orders

Resolution

the exchange, or in some other such situation, the new exchange may issue a reprimand.

・Should a trading participant be under a control relation

deemed to be unsuitable for the proper operation of the exchange and should it not comply with requests for correction, the new exchange may issue a corrective order.

・Should a trading participant have its operations stopped

in whole or in part by legal decree, or should it have its registration rescinded, the new exchange may issue a resolution.

・Depending on the contents of the

reprimand, etc., trading in negotiable securities, etc., may be stopped or limited, or trading qualifications may be rescinded.