In connection with the transition to the paperless share system in accordance with the Act Concerning Book-Entry Transfer of Corporate Bonds, Stocks, and other Securities (hereinafter the “Book-Entry Transfer Act”), Tokyo Stock Exchange (TSE) makes partial amendments to its Business Regulations.
TSE will implement the following amendments on 5 January 2009:
– Method of settlement between trading participants and customers, etc.With respect to the following securities that newly become subject to the book-entry transfer system (hereinafter the same), settlement of transactions between trading participants and customers shall be conducted by book-entry transfers based on the Book-Entry Transfer Act:
Domestic stocks
Preferred equity investment securities
Investment securities
Domestic subscription warrant securities, and
Bonds (excluding (i) government bonds and (ii) convertible bonds which will not be handled in the book-entry transfer operation of the Japan Securities Depository Center (JASDEC))
The TSE shall abolish provisions related to types of certificates, etc. which pertain to securities that newly become subject to the book-entry transfer system.
– Securities in lieu of money
In the event that a customer submits or deposits securities that newly become subject to the book-entry transfer system as securities in lieu of money for margin for futures and/or options contracts, said customer must submit or deposit such securities by book-entry transfer in accordance with the Book-Entry Transfer Act. Moreover, when the customer carries out such submissions or deposits,he/she must obtain consent from the trading participant in advance.
The Exchange shall make the following securities eligible for securities in lieu of money as guarantee funds, trading participant security money, and margin for when-issued transactions, and deposits of these securities shall be made by book-entry transfers at the JASDEC:
foreign investment trust beneficiary certificates;
foreign investment securities;
foreign stock depositary receipts;
beneficiary certificates of a beneficiary certificate issuing trust; and
beneficiary certificates of a foreign beneficiary certificate issuing trust
– T+4 settlementT+4 settlement shall be carried out in cases where the JASDEC gives notice of all shareholders (including notice of all preferred equity investors and notice of all investors) with respect to domestic stocks, preferred equity investment securities, or investment securities.
In the event that an issuer makes a change to compensation for acquisition of a classified stock, etc. or a change in the conditions for exercising subscription rights attached to convertible bonds, if the JASDEC suspends intermediation of acquisition requests and requests to exercise subscription rights attached to convertible bonds, the following cash transactions shall be settled on the fourth day after the transaction is executed.
Those cash transactions that are to be executed three (3) days prior to the last day of the period during which acquisition requests and requests to exercise subscription rights attached to convertible bonds are permitted according to the old terms and conditions.
– Trading suspension for a predetermined period in the case of a reverse stock split, etc.A trading suspension for a predetermined period shall be implemented when the Exchange deems it necessary in the following cases:
If an issuer carries out a reverse split of stocks, preferred equity investments, beneficiary rights, and investment lots; or
If an issuer increases the number of shares in the Share Unit or prescribes the number of shares in the Share Unit in its articles of incorporation at the same time that it carries out a stock split.
– When-issued transactions
The TSE will abolish when-issued transactions that pertain to public offerings of domestic stocks, preferred equity investment securities, and investment securities.
The TSE will abolish when-issued transactions that pertain to gratis allotment of domestic subscription warrant securities. (When-issued transactions pertaining to paid-in allotment of domestic stocks and preferred equity investment securities to shareholders and preferred equity investors will continue to be available.)
– Amendments to the listing criteria
The listing criteria will be revised to require that securities that newly become subject to the book-entry transfer system must be handled in the book-entry transfer operation of a designated central securities depository, and that they be delisted if they were not subject to said operation.
The TSE will abolish provisions concerning the form of share certificates during time of initial listing as well as provisions related to the submission of sample share certificates.
– Special arrangements in conjunction with the transition to the paperless system
The JASDEC will identify beneficiary shareholders (hereinafter including beneficiary preferred equity investors and beneficiary investors) of domestic stocks, preferred equity investment securities, and investment securities, and then give notice of said beneficiary shareholders on the day before implementation of the “Act for Partial Amendments to the Act Concerning Book-Entry Transfer of Corporate Bonds and other Securities for the Purpose of Streamlining the Settlement for Trade of Stocks and Other Securities (Act No. 88, 2004).
In this case, any cash transaction executed four (4) days prior to the day of said identification (i.e. on 25 December 2008) shall be settled on the fourth business day following the day of the transaction (i.e. on 5 January 2009). Moreover, with respect to cash transactions on 25 December 2008, the cut-off time of delivery by the customer shall be 9:00 a.m. on the fourth business day after the day of the transactions.
– Others
The TSE will make necessary revisions to the terminology. The TSE will make other necessary amendments.
L.D.