Daiwa Securities Group Annual Report 2012 Compliance The Daiwa Securities Group’s Approach to  Compliance Compliance Initiatives at Daiwa Securities Co. Ltd. The Daiwa Securities Group is constantly taking steps to educate  and train executives and employees to uphold external regulations,  exercise self-discipline and appropriate conduct, and thereby main- tain high ethical standards to fulfill its role in society. We aggres- sively conduct compliance training programs for our employees.  These programs commence as soon as employees join the Group  and continue through regularly scheduled training sessions  throughout their career, thus ensuring that every employee is aware  of, and thoroughly understands, compliance issues. As the Group  pursues new business ventures in areas where the regulatory struc- ture is still incomplete, employees are trained to approach all mat- ters with strong self-discipline and legal awareness, refer to existing  legal precedents whenever possible, and always adhere to  accepted social norms of proper behavior. In FY2011, Group companies continued to hold training related  to insider trading regulations from FY2010. Furthermore, the Group  promoted the integration of head office functions in pursuit of effi- ciency by consolidating the overlapping functions within Daiwa  Securities Co. Ltd., Daiwa Securities Capital Markets Co. Ltd., and  Daiwa Securities Group Inc. The consequent unification of manage- ment structures of the companies enabled the Group to strengthen  its compliance systems further. Initiatives the Group took to eliminate any and all relations with  corporate racketeers and other antisocial groups involved collecting  information on their increasingly sophisticated methods by working  in close contact with mainly police organizations and legal experts,  and enhancing the Group’s various outward procedures for scrupu- lously severing contact with such undesirable groups. As a result, a  system of cooperation among Group companies to perform checks  preventing the outflow of funds to antisocial forces is now in place. Daiwa Securities Co. Ltd. is taking measures, under the compli- ance program, to ensure the effective operation of its internal con- trol system in order to ensure strict compliance with laws and  regulations. Measures taken in FY2011 included strengthening the self- correcting mechanism of sales branches, an internal control system  for head office departments as a whole, a structure to prevent  unjust trade practices, and a compliance system that is being used  on a global basis. In FY2012, the Company will formulate the following three  compliance programs aimed at bolstering internal control systems  further, in moving us towards meeting our management targets. 1. Program for building effective and efficient internal control  systems 2. Program for further improving customer sales and marketing  manners 3. Program for raising the quality of internal control systems  through thorough inspection The Daiwa Securities Group’s corporate principles identify “building trust” and “contributing to society” as  among the most important goals of our business operations. We believe that compliance is necessary to “build  trust.” The goal of the Group’s compliance activities is not merely to “comply with laws and regulations,” but to  earn the trust of customers, the market, and society. 39