The Financial Services Agency on Friday issued business improvement orders to the Sapporo Securities Exchange and the Fukuoka Stock Exchange, saying they don’t have proper internal standards to monitor stock transactions.

The FSA also said in its first disciplinary actions against the two bourses that they are not prepared for a system failure.

The two stock exchanges must submit reports by Oct. 31 detailing steps they will take to address the issues.

According to the FSA, the Sapporo bourse does not have procedures or standards that can be used to determine the presence of insider trading or other illegal behavior. The Fukuoka bourse, meanwhile, doesn’t have clear standards for screening transactions after companies revise earnings projections or announce mergers or acquisitions.

In addition, the FSA found that both bourses remain unready to settle transactions in the event of a computer system failure.

The Securities and Exchange Surveillance Commission inspected the two bourses for the first time between June and early September, and recommended the FSA take disciplinary action.

The FSA has already taken disciplinary action against the Tokyo Stock Exchange, the Nagoya Stock Exchange and the Osaka Securities Exchange.

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