(Provisional translation)
September 30, 2011
Financial Services Agency

Administrative action on Barclays Capital Japan Limited

As a result of the reporting order issued by the Financial Services Agency (FSA) in accordance with Article 56-2 (1) of the Financial Instruments and Exchange Act (hereinafter referred to as the “FIEA”) to Barclays Capital Japan Limited (hereinafter referred to as “BCJL”) based on the notification from BCJL, the following violations of the FIEA were found.

Short-Selling in breach of the FIEA

Concluding a contract with its affiliated overseas company (hereinafter referred to as the "Affiliate") to manage a discretionary account, which enabled BCJL to determine whether to purchase or sell, issues of stock, volume and price, BCJL placed many short-selling orders based on the contract the Osaka Securities Exchange without the legally required indication of the fact of short-selling from February 2010 to August 2011. In addition, BCJL conducted short sales at a price equal to or lower than the latest published price immediately prior to the short sale.

The above was found to be a violation of Article 26-3 (1) and Article 26-4 (1) of the Cabinet Order for Enforcement of the FIEA, and hence Article 162 (1) (i) of the FIEA, both of which regulate short-selling.

Inadequate management of the electronic data processing systems for the financial instruments business

The short-selling in breach of the FIEA mentioned above was due to BCJL's error in designing the system through which BCJL ordered equity trades to the Osaka Securities Exchange. This error was related to the indication of the fact of short-selling. BCJL started the operation of the system without checking for such an error. In addition, it continued the operation of the system without the appropriate system check for a year and a half.

The above was considered to be inadequate management of the electronic data processing systems for the financial instruments business under Article 123 (1) (xiv) of the Cabinet Office Ordinance for the financial instruments business, and hence Article 40 (ii) of the FIEA.

Administrative action on BCJL

On the basis of the above findings, the FSA today issued the following business suspension and improvement orders to BCJL based on Article 51 and Article 52 (1) (vi) of the FIEA: