March 27, 2007
Financial Services Agency
Government of Japan

Japan-EU high level Meeting on Financial Issues

The Japan-EU High Level Meeting on Financial Issues co-chaired by the Financial Services Agency (JFSA) and the European Commission took place in Tokyo on March 26, 2007.

The following is the Press Release announced after the closing of the Meeting.

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Press Release

Japan-EU High Level Meeting on Financial Issues
26 March 2007, Tokyo

The Japan-EU High Level Meeting on Financial Issues was held in Tokyo on 26 March 2007. The meeting was co-chaired by Mr. Junichi Maruyama, Deputy Commissioner for International Affairs of the Financial Services Agency (JFSA), and by Mr. Pierre Delsaux, Director, Directorate-F of DG Internal Market and Services of the European Commission (EC). A number of officials participated in the meeting from both sides.

The JFSA explained the current status of the Japanese financial institutions as well as the main thrust of its supervisory policy. The JFSA also briefed the EC on the ongoing preparation works for the implementation of Basel II (Revised International Capital Framework), which is to start as of the end of March 2007 in Japan. The JFSA presented the main contents of the newly introduced Financial Instruments and Exchange Law (FIEL), as well as its implementation schedule to ensure its proper and effective functioning.

The EC indicated a number of landmark developments including the adoption of technical implementing measures for the Markets in Financial Instruments Directive (MiFID). The directive itself and its implementing measures will be entering into force in November 2007. The EC also provided information on the implementation of the MiFID and on a series of reports that it has committed to provide to the European Parliament and the Council. The EC gave an update on the improvements put forward in the White Paper on Investment Funds namely on cost-effectiveness and investor protection. Finally, the EC confirmed its policy on credit rating agencies (CRAs) that, for the time being, the existing EU legislative framework is sufficient. The EC will continue monitoring CRAs compliance with the IOSCO code actively in cooperation with the Committee of European Securities Regulators (CESR) and follow further international developments in this field.

Both sides discussed recent developments in global financial markets, including hedge funds and the emergence of advanced financial techniques, which have contributed significantly to the efficiency of the financial system. Given the strong growth of the hedge fund industry and the instruments they trade, both sides agreed that vigilance and further attention to this issue is required. The JFSA presented the second official survey of hedge fund market in Japan, conducted by the JFSA in 2006. The report was released on 15 March 2007.

Other issues discussed include: (1) Solvency II initiative upon which the EC is to propose a Directive in July 2007, and (2) XBRL (eXtensible Business Reporting Language), a sophisticated way of financial disclosure, which the JFSA is currently preparing to introduce.

Both parties agreed to deepen their cooperation striving for more open and competitive financial services markets. Reference was made in this respect to the visit of Commissioner McCreevy to Tokyo scheduled for 13-14 June 2007.