Tokyo Stock Exchange Requested KBC Financial Products UK Limited. To Submit Business Improvement Report

TSE requested KBC Financial Products UK Limited. (KBC) to submit business improvement report as to strengthen its internal control system, secure strict compliance by the directors and staff, take preventive measures against recurrence of the violations mentioned below, and clarify locus of responsibility, pursuant to the TSE's Trading Participant Rule.

Short-selling in breach of the Law

In November 2001, KBC executed short-selling of stocks by clients' order without legally required disclosure of the fact of short-selling to the stock exchange many times. KBC staff did not confirm its own possession balance adequately. In addition, KBC 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.