Financial Services Agency

Regarding administrative actions against UBS Securities Co., Ltd. Tokyo Branch and UBS AG Japan Branch I. Tokyo Branch of UBS Securities Co., Ltd. Tokyo Branch of UBS Securities Co., Ltd. (hereinafter referred to as "our branch") was found to have violated laws and regulations as a result of an inspection by the Securities and Exchange Surveillance Commission on December 9, 2011. , a recommendation for administrative action was made. As a result of receiving this recommendation, today we have taken the following administrative action against our branch based on the provisions of Article 51 and Article 52, Paragraph 1, Item 9 of the Financial Instruments and Exchange Act. 1. Contents of recommendation ○ Inappropriate conduct related to Euroyen TIBOR, etc. (hereinafter referred to as "TIBOR") to the UBS AG Tokyo Branch staff (hereinafter referred to as "the person in charge of presentation"), and from around February 2007 at the latest, (hereinafter collectively referred to as the "person in charge of presentation, etc."), for the purpose of changing the TIBOR so that it would be advantageous to the derivative transactions related to the yen interest rate that Trader A was doing. , and continued to make efforts such as requesting a change in the submission rate. The act conducted by Trader A is TIBOR (3-month), which is the subject of trading of 3-month Euroyen interest rate futures listed on the Tokyo Financial Exchange, Inc. In view of the fact that TIBOR was used as a benchmark interest rate for financial institutions to raise and invest funds, and that TIBOR is an extremely important financial benchmark, it is extremely unfair and malicious, and there is a risk of damaging the fairness of the market. It is recognized that there are serious problems in the public interest and investor protection. Furthermore, from around June 2007 at the latest, Trader A continued to make inappropriate efforts, such as requesting changes to the Yen LIBOR quoted rate offered by the UBS Group. In addition, serious deficiencies were recognized in the internal control system of the branch, such as ignoring such efforts for a long period of time, neglecting the act and not taking appropriate measures. In this way, (a) Trader A lobbied the person in charge of submission of TIBOR for the purpose of market derivatives transactions that the Branch was conducting as a proprietary transaction. (b) The act is deemed to be extremely unfair and malicious in terms of the public interest and investor protection, such as the risk of impairing the fairness of the market; (c) ) Trader A was working on Yen LIBOR as well as TIBOR. Article 52, Paragraph 1, Item 9 (In the case of committing fraudulent or significantly unjustifiable acts in relation to the financial instruments business, when the circumstances are particularly serious) is deemed to apply. 2. Details of the order (1) Order to suspend business From January 10, 2012 (Tuesday) to January 16, 2012 (Monday), TIBOR- and LIBOR-related derivative transactions (transactions associated with the performance of existing contracts) etc.). (2) Business Improvement Order (a) Clarification of responsibility for violation of the above law. (b) Thorough legal compliance by officers and employees. (c) Formulation of measures to prevent recurrence, including enhancement and strengthening of business management and business operation systems. (d) The implementation status of (a) to (c) above will be reported by January 16, 2012 (Monday), and the progress of (b) and (c) after that date will be reported by March 2012. Report in writing by Friday, March 30, and every three months thereafter, and from time to time as necessary. II. Based on the results of inspections conducted on UBS AG Japan Branches of UBS AG Japan Branches (hereinafter referred to as "the Bank") and the contents of reports based on such inspections, today In order to ensure sound and appropriate operations, the Bank has taken the following administrative actions. 1. Reason for Disposition According to an on-site inspection by the FSA (notified on November 22, 2011) and reports from branches in Japan based on the provisions of Article 24, Paragraph 1 and Article 48 of the Banking Act, the Tokyo Branch of the Bank staff were continuously approached by staff at the Tokyo branch of UBS Securities Co., Ltd. regarding the TIBOR submission rate. However, despite these actions, problems were found in the internal control system, such as not being properly reported to management. 2. Details of the order Order based on Article 47, Paragraph 2 and 4, and Article 26, Paragraph 1 of the Banking Act (1) To ensure sound and appropriate business operations, implement the following. (a) Thorough legal compliance by officers and employees (b) Strengthening of the internal control system (c) Formulation of measures to prevent recurrence Submit an improvement plan by January 31, 2012 (Tuesday) and implement it immediately. (3) After the execution of (2) above, until the completion of the implementation of the business improvement plan, the first date will be March 30, 2012 (Friday), and the progress, implementation and improvement status will be summarized every three months thereafter. Report by the 15th of the following month.