The penalty came after former staff at UBS Securities Japan and Citigroup Global Markets Japan were accused of trying to gain an unfair advantage for their firms through interest rate manipulation.
The Securities and Exchange Surveillance Commission said last week that a British trader with UBS Securities Japan had asked banks participating in the Tokyo interbank offered rate, or Tibor, to offer rates that would help his derivative transactions.
He also allegedly made similar moves related to the London interbank offered rate or Libor, it added.
The rates are the average interest rate that major banks in Tokyo and London charge for interbank lending, and are widely used as benchmark rates for other loans such as corporate borrowing.
The man later moved to Citigroup Global Markets Japan, where he allegedly conspired with his superior in similar moves aimed at benefiting their derivative transactions, the commission said.
The actions were "acknowledged to be seriously unjust and malicious, and could undermine the fairness of the markets", the Financial Services Agency said, as it ordered the firms' suspension.
The suspension will start January 10, the agency said.