Financial Services Agency

Administrative actions against FX Prime by GMO, Inc. August 19, 2020 Kanto Local Finance Bureau 1. As a result of an inspection of FX Prime by GMO Co., Ltd. (head office: Shibuya-ku, Tokyo, corporate number 3011001049147) (hereinafter referred to as "the company"), the following violations of laws and regulations were recognized, so the Securities and Exchange Surveillance Commission A recommendation for administrative action was issued (dated August 4, 2020). Advertisements that are markedly inconsistent with the facts The following problems were recognized with respect to web advertisements, etc. between June 6th and November 18th, 2019. Our system related to trading tools for over-the-counter foreign exchange margin trading provided by our company, in the case of a market order, if there is a fluctuation in the exchange rate between the time the customer places the order and the time the contract is processed, It is a specification that cannot eliminate the occurrence of a price difference between the price of the contract and the actual contract price (hereinafter referred to as “slippage”). In 2014, the Company received a report on the system specifications from the person in charge of the system department in an internal study on slippage, and the directors, the general manager of the legal compliance department, etc. shared the recognition. At least the information received in 2018 was shared by the president, directors, general managers, group heads, etc. Under such circumstances, the results of a survey on the incidence of slippage by Company A, an external research company that we requested from 2017 to 2019, revealed that slippage actually occurred multiple times in our system. When it was confirmed that this was the case, we were aware of our system specifications as described above, and at least in the investigation in 2018, we received a report from Company A that suggested that slippage was occurring. Company A's investigation report without taking any measures to substantially verify the possibility of slippage occurring in its system, including confirmation of the detailed situation, despite having received it orally. (The results of the investigation that slippage occurred multiple times are not described). ” posted an article that is significantly different from the facts. In addition, although we were aware of the possibility of slippage occurring in our company's system specifications, the advertisement review by the compliance department and the internal audit by the audit department were limited to examinations and audits based on formal expressions. , overlooked a markedly untrue indication regarding the occurrence of slippage. The above act of our company is a representation that is significantly different from the facts regarding the performance of the financial instruments business, and violates Article 37, Paragraph 2 of the Financial Instruments and Exchange Act. 2. Based on the above, the following administrative actions were taken against the Company today pursuant to the provisions of Article 51 of the Financial Instruments and Exchange Act. [Business Improvement Order] Promptly explain the content of this administrative action to the customer and take appropriate measures in response to the customer's request. Formulate and steadily implement measures to prevent recurrence of this matter, such as establishing an advertising screening system and developing a business management system, business operation system, and internal control system for the appropriate conduct of financial instruments transactions. To clarify where the responsibility for this matter resides. Please submit a written report on the above response and implementation status by September 23, 2020 (Wednesday), and from then on until all the above are completed.