The ruling Democratic Party of Japan is seeking changes to insider-trading rules that will allow criminal charges and fines for brokerages and bankers who leak stock listing information, according to a draft document.

The DPJ's 15-member working group, led by former Morgan Stanley Managing Director Tsutomu Okubo, will discuss the draft and submit a final version to the party by July 31, officials at the lawmaker's office said Thursday, while declining further comment. The DPJ will then submit a proposal to the Financial Services Agency.

The Securities and Exchange Surveillance Commission has uncovered five insider-trading cases since March related to share offerings in 2010. The watchdog has recommended fines for traders who made short sales based on leaked information in those cases, while underwriters who gave them tips have received no penalties, based on existing rules.

Other DPJ proposals include allowing lead underwriters to market equity offerings under strict confidentiality agreements before share sales are announced, according to the document. The working group is also proposing that pension funds pledge not to invest in hedge funds that have breached insider trading rules.