(Provisional Translation)
March 20, 2002
Financial Services Agency

An administrative action against KBC Financial Products UK Limited., Tokyo Branch

1. On February 13, 2002 the Financial Services Agency (FSA) ordered KBC Financial Products UK Limited., Tokyo Branch (''the Branch'' hereafter) to report about Short-selling in breach of Securities and Exchange Law (''the Law'' hereafter) based on the information obtained through the comprehensive review of compliance on short-selling regulation* , and the following legal violation of the Law was found.

*	The comprehensive review of compliance on short-selling regulation was conducted by the member firms of the Japan Securities Dealers Association (JSDA) at the request of the FSA through the JSDA as a part of ''the comprehensive measures for short-selling of stocks'' announced on December 21,2001.

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Short-selling in breach of the Law In November 2001 the Branch executed short-selling of stocks by clients' order without legally required disclosure of the fact of short-selling to the stock exchange many times. Because its internal control system was not adequate, staffs of the Branch did not confirm its own possession balance adequately. In addition, by the investigation on sampling trading days, the branch was found to have conducted short sales at a price lower than the latest published price immediately prior to the short sale. The conduct above was found to violate the Article 26-3 (1), the Article 26-4 (1) of the Cabinet Order (the Securities and Exchange Law) and the Article 162 (1) (i) of the Law, both of which regulate short-selling.

2. On the basis of the above findings, the FSA issued the following orders to the Branch to:

-	Improve its compliance with the law
	1) Strengthen its internal control system, secure strict compliance by the directors and staff, take preventive measures against recurrence of the above mentioned violations, and clarify locus of responsibility. 2) Work out concrete measures with a target date to root out short-selling in breach of the Law, and to impose stricter internal penalty to a staff and his/her supervisor in the Branch.