Remarks by Dr. Takafumi Sato
Commissioner of the Financial Services Agency, Japan
at the welcome reception of the IOSCO Technical Committee Conference
Tokyo, November 7, 2007

Chairman Prada, Chairperson Diplock, Chairman Damodaran, distinguished guests, ladies and gentlemen,

Good evening. It is a great honour for Japan FSA to host an IOSCO Technical Committee Conference here in Tokyo. Representing the institution, I would like to extend my wholehearted welcome to all of you.

I am pleased that this conference has become truly international. More than 400 persons from 51 countries and regions are participating in this conference. I think this reflects ever more globalising financial markets.

The market turmoil triggered by the subprime loan problem in the United States has vividly shown us how closely financial markets have been integrated. Risks have been dispersed all around the world, together with the transfer of financial technology. And a problem in one country can spill over to another very quickly. Finance is also becoming increasingly market-oriented, and investment banks and market-based financial products have gained importance in the financial sector.

These developments made it clear that cross-border co-operation among securities regulators has become ever more crucial. In order to address global problems such as the recent market turmoil, it is essential that both private and public sectors co-operate with each other and across borders. It is in this context that I believe this IOSCO conference is really meaningful.

The overarching theme of this conference is ''competition, convergence, and co-operation.'' I have just talked about the need for closer co-operation. I would say that the other two elements are also in line with my belief, that is, both harmonisation and diversity are called for with regard to market regulation.

Capital markets are becoming increasingly integrated and huge amount of capital flows across borders instantaneously. In order to cope with this financial globalisation and to reap the benefits from it, regulators need to harmonise market regulation and infrastructure internationally. However, harmonisation does not mean that regulation needs to be monolithic. Effective regulation is not sustainable unless the global system pays due attention to the diversity of market-specific circumstances. And this diversity is an important source of sound competition among markets, which will bring about enhanced market efficiency and improved quality of financial services.

From the perspective of individual markets, this ''harmonisation and diversity'' means ''international consistency and uniqueness.'' Obviously, a financial market cannot survive global competition unless it is open to the outside world. At the same time, however, the market cannot be attractive unless it has at least some elements of uniqueness.

From this standpoint, Japan's position looks interesting. This is because Japan has many common elements with the countries that have large markets, but it also has distinctively unique national characteristics. I think this goes beyond the economy and markets. If you go out and see the city of Tokyo, you will find that modern skyscrapers nicely co-exist with very traditional buildings such as Shinto shrines and Buddhist temples. The Japanese language is an amalgam of original Japanese, ancient Chinese, and Western words pronounced in a Japanese manner. It is no wonder that Japanese is a very difficult language to learn.

Food is another example. Take tempura, fish and vegetable fritters, which you can try later on. It originally came from Portugal in the 16^th century. I hear that no such food exists in Portugal anymore, but tempura has been handed down for generations in Japan, and is now well established as a Japanese dish. So tempura has both international and uniquely Japanese elements. In addition to that, both Western and Japanese foods are being served this evening. This kind of combination is a typical mirror of modern Japan. I would be happy if you are able to experience Japan's international and unique characters this evening, not by looking at its markets but by tasting quality food.

Let me conclude by wishing all of you a successful conference and a pleasant stay in Tokyo in autumn.

Now, shall we toast? For your health and further prosperity, ''kampai!'' ''cheers!''

Thank you.