Chairman

Shigenobu Aikyo

Message from Senior Management

President & CEO

Eiji Watanabe

Ever since becoming a wholly-owned subsidiary of Sumitomo Mitsui Banking Corporation on

October 1, 2009, we have focused on the continuous expansion of our business in the retail

divisions and the creation of new business in the wholesale divisions as the main securities

company of Sumitomo Mitsui Financial Group.

We have enhanced our services to individual clients, while steadily establishing a framework that

enables us to respond to various needs of corporate clients. In overseas markets, following the

start of our securities business in London, we also expanded such businesses in New York,

Hong Kong, and Shanghai. We newly established the Research Head Office, which directly relates

to corporate client business, and have also strengthened our trading capabilities of equities and

bonds. We will continue to enhance our business platform so that we can provide more value

added solutions to meet the financial needs of various clients precisely and promptly.

As of April 1, 2011, Nikko Cordial Securities Inc. renamed itself as SMBC Nikko Securities Inc.

The new company name represents our strong determination to provide high quality services to

the clients of both companies as a member of Sumitomo Mitsui Financial Group by exercising

professional skills and knowledge in cooperation with Sumitomo Mitsui Banking Corporation

(SMBC).

Keeping the spirit of a “cordial” attitude, which Nikko Securities had used in its company

name for 10 years, as the very fiber of each of our employees, we will strive to offer our clients

the highest level of satisfaction and security to promote the trust that we have earned from so

many people for over 90 years.

All of our directors and employees will continue to give first priority to our clients and make an

all-out effort to become the No.1 comprehensive securities company in Japan.

We would very much appreciate your understanding and continued support over the years to

come.

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A Member of Sumitomo Mitsui Financial GroupManagement Philosophy

History

Shareholding Ratio 100%

Shareholding Ratio 100%

In June 2009, the former Nikko Cordial Securities Inc. set up Nikko Cordial Securities De-merger Preparatory Company Ltd., and on October 1, 2009, succeeded all of the operations (excluding selected assets and liabilities) of the former Nikko Cordial Securities Inc. and certain businesses, including the domestic debt and equity underwriting businesses, of Nikko Citigroup Limited (current Citigroup Global Markets Japan Inc.) by means of an absorption-type corporate demerger. On October 1, 2009, after succeeding such businesses, Nikko Cordial Securities De-merger Preparatory Company Ltd. renamed itself as Nikko Cordial Securities Inc. to start as a new securities and investment banking firm, with retail and wholesale business arms.

As of October 1, 2009, Sumitomo Mitsui Banking Corporation acquired all the shares in the renamed Nikko Cordial Securities Inc., and through this operation, the renamed Nikko Cordial Securities Inc. became a member of Sumitomo Mitsui Financial Group.

As of April 1, 2011, Nikko Cordial Securities Inc. renamed itself as SMBC Nikko Securities Inc.

Management Philosophy

To provide higher value, based on a customer-first principle.

To seek to be a company that grows together with our customers,and inspires their supreme trust.

To fulfill a role as a sound financial intermediary in order to contribute to the development of both capital markets and our society.

To create a work environment in which each employee demonstrates individualityunder a sense of unity, while respecting diversity.

Our company has served clients for more than 90 years since it started business as Kawashimaya Shoten in July 1918. It made a fresh start in October 2009 as a member of Sumitomo Mitsui Financial Group. As one of the largest full-line financial groups in Japan, we will provide high-quality products and services to our clients.

4 5

1918 July Kawashimaya Shoten founded

1920 April Reorganized as Kawashimaya Shoten Co., Ltd.

June The former Nikko Securities Co., Ltd. established

1943 September The former Kawashimaya Securities and Kawashimaya Shoten Co., Ltd. merged with and name changed to Kawashimaya Securities

1944 April The Nikko Securities Co., Ltd. established

1948 November Registered as a securities business under the Securities Exchange Law

1949 April Became official member of Tokyo Stock Exchange, Osaka Securities Exchange and Nagoya Stock Exchange

1951 June Completed registration as a securities management company under the Securities Investment Trust Law

1961 October The Company listed its shares on the second sections of the Tokyo Stock Exchange, Osaka Securities Exchange and Nagoya Stock Exchange

1970 February The Company listed its shares on the first sections of the Tokyo Stock Exchange, Osaka Securities Exchange, and Nagoya Stock Exchange (delisted in January 2008 when the Company became a wholly-owned subsidiary of Citigroup)

1999 March Nikko Salomon Smith Barney Limited (later to become Nikko Citigroup Limited), an investment banking joint venture with Citigroup, started operations

2001 March Nikko Securities De-merger Preparatory Company established

October Nikko Securities De-merger Preparatory Company took over the entire securities business and other operations from The Nikko Securities Co., Ltd. changed its name to Nikko Cordial Securities Inc. The Nikko Securities Co., Ltd. was renamed Nikko Cordial Corporation as a holding company.

2007 May Became Citigroup’s subsidiary through the public offering of shares of Nikko Cordial Corporation (later becoming a wholly-owned subsidiary through a triangular share exchange)

September Registered as first-class financial instrument dealer, second-class financial instrument dealer, and investment advisor/agent under the newly enforced Financial Instruments & Exchange Law.

2008 January Registered as an investment manager under the Financial Instruments & Exchange Law

2009 June Nikko Cordial Securities De-merger Preparatory Company Ltd. established

October Nikko Cordial Securities De-merger Preparatory Company Ltd. took over all of the operations of the former Nikko Cordial Securities Inc. and certain businesses of Nikko Citigroup Limited (current Citigroup Global Markets Japan Inc.) and was renamed Nikko Cordial Securities Inc.

Became a member of Sumitomo Mitsui Financial Group upon the transfer of shares to Sumitomo Mitsui Banking Corporation

2011　April Nikko Cordial Securities Inc. changed its name to SMBC Nikko Securities Inc.

SMBC Nikko Securities will provide clients with integrated financial services and high value-added solutions that meet the many and varied needs of our clients.

Over more than 90 years since its foundation in July 1918, SMBC Nikko Securities has developed solid relationships built on trust with individuals and corporate clients. With the move to become a member of Sumitomo Mitsui Financial Group, the Company, which holds know-how acquired over many years and a solid client base, can collaborate with Sumitomo Mitsui Banking Corporation, which boasts a huge business network and high credibility. In both the retail and wholesale business areas, we will seek integration of banking and securities businesses and provide clients with advanced financial services based on our collective capabilities. Under a business alliance agreement with Citigroup, we will continue to utilize their global business network and other resources.

6 7

SMBC Nikko Securities will provide clients with integrated financial services and high value-added solutions that meet the many and varied needs of our clients.

Over more than 90 years since its foundation in July 1918, SMBC Nikko Securities has developed solid relationships built on trust with individuals and corporate clients. With the move to become a member of Sumitomo Mitsui Financial Group, the Company, which holds know-how acquired over many years and a solid client base, can collaborate with Sumitomo Mitsui Banking Corporation, which boasts a huge business network and high credibility. In both the retail and wholesale business areas, we will seek integration of banking and securities businesses and provide clients with advanced financial services based on our collective capabilities. Under a business alliance agreement with Citigroup, we will continue to utilize their global business network and other resources.

We provide individual clients with high-quality consulting services to meet their diversified asset management needs at 109 branches nationwide. We offer two types of courses. Under the General Course, clients can trade financial products by receiving advice and investment information from a person in a charge position at a branch. For the Direct Course, clients can trade equities on a discounted brokerage commission through our on-line trade system or call center. We provide a wide variety of financial products and services to precisely meet clients’ diversified needs through the following channels: branches, the call center, and the on-line trade system.

For Corporate clients, we have set up divisions according to business type in order to meet various clients’ needs in each business category. We provide higher value to corporate clients from unlisted companies to corporations and financial institutions and public-service corporations to local public authorities and government organizations through various services in cooperation with specialized sections.

Summary of Business

In the investment banking business, our highly professional staff offer corporate clients solutions on M&A and fundraising to support their corporate strategies in the global age.

In the financial product business, we offer trading capabilities and financial products to meet the various needs of our clients, including institutional investors.

Our research service is a platform on which we offer leading information based on our original research. In August 2010, we newly established Equity Research Division to analyze earnings and stock price trends of individual companies and business sectors and provide investment information.

In our overseas markets, SMBC Nikko Capital Markets Limited and SMBC Nikko Securities America, Inc., subsidiaries of SMBC in the United Kingdom and the United States respectively, provide securities business services, including underwriting activities (SMBC Nikko Capital Markets Limited), arrangement of Samurai bonds, M&A advisory and Japanese stock broking, in collaboration with us. In addition, SMBC Nikko Securities (Hong Kong) Limited provides Japanese stock broking and M&A advisory services, and SMBC Nikko Investment Consulting (Shanghai) Limited offers M&A advisory related services. These overseas arms will continue to offer high quality financial services to their clients on a global basis.

To meet the diversified needs of our clients, we strive to provide high value-added financial products and services and solutions and continue to be a strategic partner for clients.

8 9

We have established a service network for

domest ic c l ients based on 109 branches

nationwide.

To capture investment opportunities in global

economic growth for the future and realize

international diversified investment, we tout From

Japan to the World as a key philosophy and offer

various financial products, such as equities, bonds,

investment trusts, annuity and insurance products,

and a custom-made asset management service,

Nikko Fund Wrap/SMA.

We aim to be the best partner for clients in

asset management by providing high-quality

consulting services after taking into account

clients’ investment purposes and risk tolerance.

Our branches each have a privacy-conscious

space where we provide consulting services so

that clients who visit our branches can consult us

on asset management with utmost confidence.

We of fer clients three channels in which to

complete transactions. Clients can choose a

channel that suits their needs.

● Branches

Our 109 branches nationwide provide various

services that meet the needs of clients, including

asset management consulting services, account

startups, and administrative procedures.

● Call Center

At the Nikko Contact Center, our specialized staff,

who have received high evaluations from a third-

party organization, handle orders for equity trading

and respond to inquiries from clients. The center

facilitates clients who do not have access to

physical branches.

● On-line Trade

We have upgraded Nikko EZ Trade so that clients

can trade at their own convenience using their

own judgment while having access to a variety

of financial products and abundant sources of

investment information.

In addition, we will improve on our system in which

a person in charge and specialized sections, such

as Equity Advice Center and the Investment Trust

Assist Center, jointly support clients in accordance

with their needs. This multiple support system is

unique to SMBC Nikko Securities.

Under the management philosophy of placing

clients first to provide them with ever higher

value, we continue to strive to improve the quality

of customer service. We have received high

evaluations from third-party organizations, as

detailed below.

As a leader in the financial product intermediary

business, we form partnerships with individuals

and companies with unique specialties to offer

clients various distribution channels for financial

products by providing infrastructures such as

systems and financial product information and

business support. The individuals and companies

we partner with share our philosophy of remaining

close to clients and treating clients with trust and

sincerity while offering expert financial know-how.

・ Won the highest award in the contest of Best Contact Center of The Year 2010・ COPC-2000® CSP standards Obtained certification for Inbound Customer Contact Center Services (2008) Obtained certification for Outbound Customer Contact Center Services (2010)・ CRM Best Practice Award (held under the sponsorship of by CRM Association Japan) Won the award for three consecutive years (from 2008 to 2010)・ National Telephone Manners Contest (held under the sponsorship of by Japan Telecom Users Association) Won the prize for five consecutive years (from 2006 to 2010)・ HDI Benchmarking (held under the sponsorship of HDI-Japan) Won 3 Stars Customer Service, the highest rating, for five consecutive years

(from 2006 to 2010)

Retail Sales Network

Financial Product Intermediary Business

Services to ClientsFrom Japan to the World

SMBC Nikko Securities will provide high-quality consulting services and solutions

in cooperation with specialized sections to meet our clients’ needs.Evaluations from third-party organizations (sample)

Versatile Support System to Meet the Various Needs of Individual Clients

Clients On-line tradingCall center

Retail sales network

Support by sales divisions and branches and specialized sections

109 branches nationwide

Equity Advice CenterInvestment Trust Assist Center

Nikko EZ TradeNikko Contact Center

Individual Clients

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Owners of Companies and Executives and Employees of Listed Companies

Corporate Clients

Our private banking services mainly consist of

consulting services to clients including owners

of listed companies. We provide custom-made

proposals to each client and strive to realize these

proposals by using all available resources. We aim

to be an indispensable part of clients’ business

by offering various support measures such as

providing solutions on the preservation of client’s

assets, fund management, and the effective use

of clients’ assets and proposals of specialized

financial products.

After grasping their priorities and potential needs,

we provide total solutions to clients such as

corporations and financial institutions based on our

abundance of experience, market knowledge, and

a variety of financial products and services in close

cooperation with financial product division and

investment banking division. To respond to clients’

inquiries and requests on various matters including

fund-raising, fund management, and employee

benefits, we will offer strategic backup services

based on solid relationships of trust.

We also offer our clients a window to cutting-

edge corporate management and asset management

through guidance on market information and

various seminars.

We provide client companies with all the support

they need until they go public, such as guidance

and advice at the time of initial public offering and

suggestions about capital policy, group strategy,

and information disclosure. We also offer solutions

including M&A and the likes to increase clients’

corporate value, preserve their assets, and transfer

their businesses in a stable manner.

We of fe r c l ients, inc luding publ ic-ser v ice

corporat ions, loca l publ ic author i t ies and

government organizations, wide-ranging consulting

services based on our abundant experience.

Based on multi-faced approaches in cooperation

with specialized sections, we provide the following

solutions: providing materials that support clients’

bond investment; suggesting investment policies

in view of the needs of competent authorities and

clients such as nationwide public-service and

non-taxable corporations. We also offer services

such as portfolio analysis by using the asset

management and analysis system, NBA (Nikko

Bond Analysis).

We provide executives and employees of listed

companies with proposals on wealth building in

accordance with clients’ life plans. Our proposals

include advice on financial products and services

based on clients’ risk tolerance in a market

environment that is changing every day. We also

propose management of severance allowances

after retirement and reallocation of assets.

Private Banking

Corporations and Financial Institutions

Companies Planning IPO

Public-Service and Non-Taxable Corporations

Workplace Sales

12 13

We provide advice on M&As, an important option

in the corporate strategy these days, including

acquisitions, mergers, capital and business

alliances, and business restructurings, to meet

each client’s needs. We support all operations:

p roposa l o f an M& A , bus iness va lua t ion

calculation, due diligence, preparation of contracts,

and closing. After precisely grasping the key

concerns, such as related laws and systems,

industry trends, the business environment, and the

global situation, we form a specialist project team

that includes staff who are fully conversant with the

industry and M&A advisory operations to offer the

most appropriate advice to clients.

To respond to f inancing needs, which are

indispensable to achieve long-term business

targets, we offer various direct financing solutions,

centering on public offerings, underwriting of

various bonds, and liquidation of owned assets. We

provide all types of services related to fund-raising

operations: proposal of an optimal-fund raising

scheme, marketing management to investors,

decision of optimal conditions, and documentation.

In the investment banking business, we focus on corporate clients and offer them optimal solutions to meet their various needs and the market environments they operate in. Our staff, dominated by experts with excellent track records in M&A and fund-raising, provide services to thoroughly support corporations at home and abroad using business know-how accumulated through our long experience.

As a good business partner that strongly supports corporations, we continue to provide high value-added services by making full use of an extensive network centering on Sumitomo Mitsui Financial Group.

M&A Advisory

Underwriting Equities and Bonds

Investment BankingWe offer corporate clients solutions on M&A and fund-raising

to support their corporate strategies in the global age.

As a Partner for Executing Corporate Strategy

14 15

Asset management products

Investment trusts Insurance Wrap account

Globally balancedDomestic equityGlobal equityDomestic bondGlobal bondAlternative funds

Variable annuity insuranceFixed-amount annuity insuranceForeign-currency annuity insuranceBusiness annuity insurance

Custom-made globally diversified investment services, etc.

Financial ProductsWe will respond to various clients’ needs

by strengthening our financial product development capabilities and our trading system.

We provide various types of equity-related

products and services to individual and corporate

clients including institutional investors. Our trading

system offers an extended range of services to

respond to clients’ various needs. Regarding

derivatives such as futures and options, we meet

clients’ various needs by handling not only trading

at the exchanges, but also OTC derivative trading.

We continue to strengthen our Sales & Trading

system to improve our order execution capability.

Our comprehensive strengths—a high level of

capability to structure products, offer attractive

primary products, and present timely research

information—enables us to provide products to

an extensive sales network. We develop various

types of bond trading businesses to meet clients’

diversified investment needs. We also offer financial

solutions to satisfy a wide range of clients’ needs

by engineering and providing various derivative

products, derivative-containing products such as

structured notes, and securitized products that

require the latest financial engineering technique

and risk management capability.

We develop and offer asset management products

such as investment trusts, insurance, and fund

wraps. We gather specialists in each field and aim

to develop one-of-a-kind innovative products after

grasping current market trends and clients’ needs.

Basing on our best product policy, we offer clients

new options for international diversified investment

by developing a variety of products with fund

management companies and insurance companies

at home and abroad.

Equities

Bonds

Asset Management Products

16 17

ResearchWe provide high value-added information

to support clients’ investment strategy.

We analyze the rapidly changing global economy

and market trends from various perspectives and

promptly offer the latest domestic and international

information in an easy-to-understand format.

Regarding information on f ixed income

products, including analysis on the domestic

and international macro economy and financial

markets, we provide clients with a variety of

information on bond markets and credit reports

on domestic corporate bond issuers as well

as Samurai bonds (overseas companies and

sovereign nations). To provide clients with high-

quality investment opportunity, we also offer

the NBA (Nikko Bond Analysis) service, which

enables diverse portfolio management, analysis,

and proposal. We have received a high evaluation

from many clients. Regarding information on

equity, we have organized equity research team

in which competent top-ranking analysts provide

institutional investors at home and abroad with

expert information on earnings and stock price

trends of individual companies and business

sectors in addition to overall equity market

information analysis. We continue to expand the

scope of equity research in order to continuously

upgrade our information providing service.

We have implemented various joint operational measures with SMBC since we started operations as a member of Sumitomo Mitsui Financial Group on October 1, 2009.

Businesses Operated Jointly with Sumitomo Mitsui Banking Corporation (SMBC)

The new investment trust products developed jointly

by SMBC Nikko Securities and SMBC were launched

on the market. Both companies will continue to

develop and market more attractive f inancial

products.

Jointly Developed Investment Trusts

In January 2011, we will take over the services for

retail clients currently being offered by SMBC Friend

Securities Co., Ltd. in collaboration with SMBC. We

will offer clients higher-level services by utilizing

the know-how and human resources SMBC Friend

Securities has cultivated through collaboration

with SMBC and the strength of the brand and its

capabilities to offer products and sales supports that

SMBC Nikko Securities, which aims to become a

global integrated securities company, has developed.

Integration of Services Offered by SMBC Friend Securities in Collaboration with SMBC

We have commenced a customer referral service in

partnership SMBC. We will offer clients introduced

by SMBC the most appropriate products and

services to specifically meet their needs. We also

refer our clients to SMBC when they request us to do

so.

Customer Referral Service

We have received a license to trade as a banking

agency business (SMBC as the bank to which we

belong) from the Kanto Finance Bureau. We started

our banking agency business from October 2010

after concluding a business collaboration agreement

with SMBC. To meet a variety of clients’ needs, we

will jointly offer clients high value-added products

and services.

Commencement of Banking Agency Business

We are engaged in business collaboration with

SMBC Nikko Capital Markets Limited and SMBC

Nikko Securities America, Inc., SMBC’s subsidiaries

in London and New York respectively, to jointly

provide securities businesses including underwriting

(only in London), arrangement of Samurai bonds,

M&A advisory and Japanese stock broking. These

overseas affiliates provide expanded and high quality

services to clients on a global basis.

Expansion of Securities Business Activities in London and New York

As an agent for SMBC, we star ted a financial

instruments intermediary service for corporate

clients in January 2010 and for individual clients in

April 2010. We have been offering clients financial

products and services that meet clients’ fund

management needs by capitalizing on our strengths

with a lineup of products and infrastructure designed

for securities operations.

Financial Instruments Intermediary Service

In July 2010, we announced that SMBC Nikko

Securities, SMBC, and Barclays Bank PLC had

reached an agreement to commence joint operations

for wealthy individuals in Japan. With effect the

business model, we provide investment solution

through our division in charge to clients introduced

by SMBC, utilizing the unique strengths and the

know-how of Barclays Wealth, a leading global

wealth manager part of the Barclays group.

Commencement of Joint Wealth Management

W e h a v e i n s t a l l e d AT M

machines that accept SMBC’s

cash cards at our Main Branch,

as we l l as the Ikebukuro,

Yokohamaekimae, Nagoya,

Osaka and Kobe branches, etc.

We plan to increase the number

of branches with ATM machines

by monitoring ATM usage.

Installing SMBC’s ATMs at Branches of SMBC Nikko Securities

18 19

Handling environment-conscious products●Green Week

Green Committee

President & CEO

Divisions, branches, and group companies

Sharing information and collaboration

Sharing informationand collaboration

SMBC Nikko Securities promotes CSR initiatives using our position as financial service company primarily in the following four initiatives: Env i ronment Conservat ion In i t i a t i ves , F inanc ia l and Economic Education, Regional Contribution, and Support of Disaster Victims.

CSR Initiatives

We set up the Green Committee, a cross-sectional

committee to promote CSR initiatives, in January

2010. The President & CEO himself chairs the

committee, which sets the annual target of CSR

initiatives, and improves internal communication.

We actively of fer oppor tunit ies to invest in companies that take a pro-environmental business approach through sales of financial products. In 1999, we started handling the Nikko Eco Fund, the first SRI (Social Responsibility Investment) fund in Japan to introduce a stance of environment conservation. Since then, we have increased our lineup of environment-related investment trusts. In February 2010, we commenced handling of the SMBC Nikko World Bank Bond Fund. This fund is the world’s first fund developed in cooperation with the World Bank to invest in World Bank green bonds. A portion of the profits from this fund are donated to UNICEF and the Japanese Red Cross. We collectively refer to bonds designed to contribute to environment protection as green bonds. We aim to contribute to global environment conservation by limiting the use of funds raised by green bonds to loans related to environmental preservation and conservation.

In addition to direct activities such as the reduction in

energy consumption and paper and waste discharge,

we are promoting such initiatives taking advantage

of our position as a securities company, including

by offering society an opportunity to investing in

companies that take pro-environmental approach

to business so as to support such companies to

implement their environment initiatives.

Recognizing the dissemination of accurate knowledge

on securities and finance as the mission of a financial

service company, we promote financial and economic

education to foster individual investors.

Employees at our headquar ters and branches

participate in cleanup and volunteer activities with

the aim of contributing to regional society.

We have donated relief supplies offered by in-house

volunteers and a portion of the profits from funds

related to disaster-stricken regions to support victims

of natural disasters around the world. We open bank

accounts to gather donations from our employees,

encouraging their participation. The company and

employees jointly participate in these activities.

To promote environment conservation initiatives

effectively and efficiently, we set up environmental

management systems and acquired ISO14001*

cer tif ication in April 2001, becoming the f irst

Japanese company in the securities industry. We

have acquired ISO14001 certification for the Kabuto-

cho Nikko Building and the Tokyo Dia Building that

houses our headquarters function to strengthen our

initiatives.

In summer, we hold Nikko Family Exciting Experience

Day, a special hand-on learning program for

elementary school students and their families at our

branches. Participants can look around our office

and learn about the economy, the flow of money,

stocks, and the social roles of financial institutions.

We offer company visits and hold seminars so that

students and laypeople can deepen their knowledge

of securities firms and securities investment. We

hold seminars on the system of money and stocks

and tours of the Tokyo Stock Exchange and our

headquarters and branches.

We help foster future investors and human resources

that will shoulder the securities industry by presenting

courses on securities investment and dispatching

instructors through Nikko Financial Intelligence, Inc.,

a group company.

*ISO 14001 is an international standard for a system which helps corporations ascertain the environmental impact of their business operations and assist them in making continual improvement in their environmental management through the Plan-Do-Check-Act methodology.

● New Green Committee ● Environment Conservation Initiatives● Financial and Economic Education ● Regional Contribution

● Support of Disaster Victims

ISO14001Environmental Management Systems

Nikko Family Exciting Experience Day

Company Visits and Seminars

Presenting Courses at Universities

We held “Green Week,” a period to enhance

environment conservation and social contribution

a c t i v i t i e s , w i t h t h e a im o f d e e p e n in g th e

understanding of our directors and employees

on environment conservation through actual

participation in social contribution activities, while

activating communication between regional societies

and participating directors and employees. We plan

to continue to implement the activities once a year.

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StatutoryAuditors

Head Office divisions and Front-Line Offices Nikko’s subsidiaries, etc.

Compliance Unit

ComplianceCommittee

Board of Directors

ManagementCommittee

Internal Audit Unit

Instruction, monitoring, and legal supports AuditReport and

consultation

ReportReport

Report

Report Request for resolution, report

Requestfor advice

Audit

AuditBoard of Directors

Head Office divisionsand Front-Line Offices Nikko’s subsidiaries, etc.

Risk Management Committee Management Committee

Risk Management Divisions

Approval and monitoring Application and report

Report

Report Request for resolution, reportRequest for advice

( As of December 31, 2010)

Corporate Governance

At our company, four statutory auditors (three of

whom are outside statutory auditors) attend meetings

of the Board of Directors, which consists of 16

directors and decides the company’s management

policy, management plans, and other important

matters. In the Board of Directors’ meeting, the

board members regularly receive reports from the

advisory council, which deliberate and examine

corporate governance matters including compliance,

risk management, and information systems, and

ensure the company’s operations are performed

appropriately. The statutory auditors also attend

the management committee, a decision-making

Fully recognizing significant social responsibilities

as a player in the financial product market, we have

positioned compliance as one of the most important

management priorities, and constantly upgrade and

implement our compliance system to enhance the

understanding and trust of market participants and

society as a whole.

Securities companies are surrounded by various and

complicated risks, such as market risk, credit risk,

liquidity risk, operational risk including processing

risk and system risk, legal risk, and reputation risk.

We continuously enhance and implement our risk

management system so that we can recognize,

appropriately manage and control these risks to

maintain the company’s soundness and enhance

profitability.

body for the overall business, and each meeting

regarding the execution of operations to grasp how

directors perform their duties. Furthermore, the

statutory auditors receive detailed reports, on their

independent authority, from each organization that is

responsible for performing operations.

We adopt an executive officer system with the

aim of effective execution of the management plan

and other important operations that are approved at

the Board of Directors’ meeting while clarifying where

responsibility lies. Currently, 39 executive officers are

appointed by the Board of Directors’ meeting.

Corporate Governance System

Compliance System Risk Management System

(As of April 1, 2011)

Corporate Overview

Company Name SMBC Nikko Securities Inc.

Head Office 3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-8325, Japan

Phone Number +81-3-5644-3111　（Head office）Representative President & CEO Eiji Watanabe

Date of Incorporation June 15, 2009

Commencement of Operations October 1, 2009 * *Took over all of the operations (excluding selected assets and liabilities) of the former

Nikko Cordial Securities Inc. and certain businesses of Nikko Citigroup Limited (current

Citigroup Global Markets Japan Inc.)

Financial Instrument Dealer Director of Kanto Local Finance BureauRegistration Number (Financial instruments firms) No.2251

URL www.smbcnikko.co.jp/en

Membership in Associations Japan Securities Dealers Association

Japan Securities Investment Advisers Association

The Financial Futures Association of Japan

This material contains certain forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may materially differ from those contained in the forward-looking statements as a result of various factors. Important factors that might cause such a material difference include, but are not limited to, those economic conditions referred to in this material as assumptions.

In addition, the following items are among the factors that could cause actual results to differ materially from the forward-looking statements in this material: business conditions in the securities industry, the regulatory environment, new legislation, competition with other financial services companies, changing technology and evolving securities industry standards and similar matters.

The information contained in this material is based on data available as of March 15, 2011 and this material is intended to provide information for a general description of SMBC Nikko Securities Inc. Any information and opinions contained in this material reflect our judgment as of the date of presentation of the material (March 15, 2011) and are subject to change without notice. No guarantees, representations, or warranties are made as to the accuracy or completeness of such information. Reference information contained and shown in this material for the period before September 2009 are based on the former Nikko Cordial Securities Inc.

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