Between 1989 and 1993, prolonged pressure from stock investors, Tokyo Stock Exchange officials and the Ministry of Finance, blaming the Nikkei 225 derivatives for creating excessive volatility in the stock market, keeping away investors and aggravating the market's slump Ied to changes in the regulatory framework of Japanese equity derivatives markets (EDM). Thus far, the discussion of the Iiberalization of Japanese financial markets has failed to take into account the effects of these regulatory measures. This paper analyzes the development of the EDM-regulations and their effects on EDM and on the stock market. The thesis of this paper is that the tight controls which have been enacted by public as well as private regulators lead to an overall re-regulation of EDM. With reference to the collapse of Barings in early 1995, the effectiveness of the regulatory controls is assessed.