(Note) The above regulatory capital adequacy ratio is calculated in accordance with the "Cabinet Office Examples concerning the Financial Instruments Dealing Business".

Regulatory capital adequacy ratio

The "regulatory capital adequacy ratio" is used as an indicator to show if a company engaged in the financial instruments dealing business has adequate financial resources to withstand risks associated with price volatility of portfolio assets and other potential risks for a short time. This ratio is an important means of measuring the financial soundness of a financial instruments dealer. Article 46, Paragraph 6 of the Financial Instruments and Exchange Law requires financial instruments and products dealer to maintain a regulatory capital adequacy ratio of at least 120%.

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1:Capital, capital surplus, retained earnings, treasury stock

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2:Reserve for contingent liabilities for financial product transactions, allowance for doubtful accounts, investment security valuation gains, etc.

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3:Fixed assets, deferred assets, deposits, advances to customers, etc.

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4:Risk of decline in asset value due to effect on portfolio assets of price volatility, etc.

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5:Risk of losses resulting from failure of a counterparty to fulfill contractual obligations, etc.

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6:Risks associated with payment of operating expenses, clerical errors and other potential problems associated with business operations.