Financial Services AgencyFSA Weekly Review No.495

June 30, 2022

What’s New on the FSA Website

Week of June 17, 2022 - June 23, 2022

This page contains the latest in events, developments, and updates to the FSA website.

Public Comments

June 22, 2022 Publication of the finalized amendments to "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators," "Guidelines for Supervision of Credit Rating Agencies," and "Guidelines for Supervision of High Speed Traders" after public consultation
<Summary>
The FSA finalized the amendments to "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators," "Guidelines for Supervision of Credit Rating Agencies," and "Guidelines for Supervision of High Speed Traders" after public consultation.
The amendments expressly set forth in the said guidelines to conduct an interview/hearing with a financial instruments business operator (hereinafter referred to as a "FIBO"), taking into account the actual status of its business operations from the perspective of ascertaining the appropriateness of business operations, in cases where a FIBO has undergone a material change in its shareholder composition due to a business acquisition/merger, or has suspended business operations for an extended period of time, etc.
The amendments took effect on June 22, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220622/20220622.htmlopen new window
June 22, 2022 Publication of the draft "Cabinet Office Order to Amend the Cabinet Office Order on Definitions Under Article 2 of the Financial Instruments and Exchange Act" for public consultation
<Summary>
In response to the proposition made by the SESC (Securities and Exchange Surveillance Commission) regarding the solicitation of offers to acquire (corporate) membership rights "by limited liability companies," the FSA proposed the draft "Cabinet Office Order to Amend the Cabinet Office Order on Definitions Under Article 2 of the Financial Instruments and Exchange Act" for public consultation.
In particular, the proposal intends to provide amendments to the provisions on the issuer of corporate membership rights from the perspective of ensuring the appropriateness of the solicitation of acquisitions of membership rights by employees of limited liability companies, and so forth.
Public comments will be accepted until 5:00 p.m. (JST), July 22, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220622-2/20220622-2.htmlopen new window
June 21, 2022 Publication of the finalized "Cabinet Office Order to Amend the Cabinet Office Order on Financial Instruments Business, etc." after public consultation
<Summary>
The FSA published the finalized "Cabinet Office Order to Amend the Cabinet Office Order on Financial Instruments Business, etc." after public consultation.
The finalized Cabinet Office Order expressly sets forth to review the procedures regarding exemptions to the prohibition of financial instruments business operators and so forth from compensating for losses (where losses are attributed to accidents), such as by changing the base amount for reporting to a competent Local Finance Bureau from 100,000 yen or less to one million yen or less.
The finalized Cabinet Office Order was enforced on June 22, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220621/20220621.htmlopen new window
June 17, 2022 Publication of the finalized amendments to the "Comprehensive Guidelines for Supervision of Financial Market Infrastructures - Clearing Organizations, Fund Clearing Organizations, Book-entry Transfer Institutions, and Trade Repositories" after public consultation
<Summary>
The FSA finalized the amendments to the "Comprehensive Guidelines for Supervision of Financial Market Infrastructures - Clearing Organizations, Fund Clearing Organizations, Book-entry Transfer Institutions, and Trade Repositories" after public consultation.
Based on recent discussions in Japan and abroad, the amendments to the said guidelines clarify the supervisory focal points on the appropriate reflection of stakeholders' opinions in the decision-making process and the formulation of restructuring plans by clearing organizations and so forth.
The amendments took effect on June 17, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220617/20220617.htmlopen new window
June 17, 2022 Publication of the finalized amendments to the "Points to Note on Disclosure of Corporate Affairs, etc. (Guidelines for Disclosure of Corporate Affairs, etc.)" (provisional English title) after public consultation
<Summary>
The FSA published the finalized amendments to the "Points to Note on Disclosure of Corporate Affairs, etc. (Guidelines for Disclosure of Corporate Affairs, etc.)" (provisional English title) after public consultation.
The amendments to the said Guidelines are provided in response to the recommendation stated in the second report published in June 2021 by the "Working Group on Capital Market Regulations" (provisional English title) of the Financial System Council, such as by expressly setting forth that an online advertisement of an offering of securities shall not fall under the category of securities offerings, provided that the advertisement (e.g. solicitations and advertisements on a dedicated website for financial instruments business operators, etc.) is only accessible by notifiers of SPBQII (Specially Permitted Business for Qualified Institutional Investors) and professional investors, and that the appropriate operation of such dedicated website is ensured.
The amendments took effect on June 17, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/sonota/20220617-2.htmlopen new window
June 17, 2022 Publication of the finalized amendments to the regulatory notice determining amounts to be used for the calculation of policy reserves of non-life insurance companies, etc. pursuant to the provision of Article 70, paragraph (4), etc. of the "Regulation for Enforcement of the Insurance Business Act"(the Ministry of Finance Regulatory Notice No.232, 1998) and to the regulatory notice specifying methods and standards regarding accumulation and reduction of policy reserves of small amount and short term insurance companies pursuant to the provisions of Article 211-46 of the "Regulation for Enforcement of the Insurance Business Act" (The Financial Services Agency Regulatory Notice No. 16, 2006) after public consultation
<Summary>
The FSA finalized the amendments to the regulatory notice determining amounts to be used for the calculation of policy reserves of non-life insurance companies, etc. pursuant to the provision of Article 70, paragraph (4), etc. of the "Regulation for Enforcement of the Insurance Business Act" (the Ministry of Finance Regulatory Notice No.232, 1998) and to the regulatory notice specifying methods and standards regarding accumulation and reduction of policy reserves of small amount and short term insurance companies pursuant to the provisions of Article 211-46 of the "Regulation for Enforcement of the Insurance Business Act" (the Financial Services Agency Regulatory Notice No. 16, 2006) after public consultation.
In accordance with the amendments to the "Order for Enforcement of the Act on Special Measures Concerning Taxation," the finalized amendments split and regroup (reclassify) the insurance type group "fire, freight, and transportation," which is currently stipulated under the "current regulatory notices," into three groups, namely, "fire," "freight and transportation," and "liability for damages," to ensure consistency with the treatment of the extraordinary contingency reserve system under the "Act on Special Measures Concerning Taxation."
The finalized regulatory notices took effect on June 30, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/hoken/20220617/20220617.htmlopen new window

Press Releases

International 

June 20, 2022 Assistant Commissioner of International Affairs Office Elected New Co-Chair of the FATF Policy Development Group
June 17, 2022 Japan and Indonesia Sign Letters on Cooperation Framework regarding Innovation in the Financial Sector

Councils

June 20, 2022 Publication of the agenda and handouts of the 19th meeting of the "Working Group on Capital Market Regulations" (provisional English title) of the Financial System Council
<Summary>
The FSA published the agenda and handouts of the 19th meeting of the "Working Group on Capital Market Regulations" (provisional English title) of the Financial System Council, which was held on June 21, 2022.
The working group members discussed the content of the "Interim Summary Report of Working Group on Capital Market Regulations (Draft)" (provisional English title) based on key issues discussed at the previous meeting held on May 20, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/singi/singi_kinyu/market-system/siryou/20220621.htmlopen new window

Banks

June 23, 2022 Publication of a statistical report on financing by financial institutions for enterprises utilizing the "Guidelines for Personal Guarantee Provided by Business Owners"
<Summary>
The FSA published a statistical report on financing by financial institutions for enterprises utilizing the "Guidelines for Personal Guarantee Provided by Business Owners." The report reflects the period between October 1, 2021 and March 31, 2022. (The report is regularly published to further promote the utilization of the Guidelines).

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220623.htmlopen new window
June 23, 2022 Publication of referential practices/cases for liquidation/consolidation of guarantee obligations in the event of the closure of businesses in line with "Guidelines for Personal Guarantee Provided by Business Owners" (provisional English title)
<Summary>
The FSA published PDFreferential practices/cases for liquidation/consolidation of guarantee obligations in the event of the closure of businessesopen new window (available only in Japanese) in line with "Guidelines for Personal Guarantee Provided by Business Owners" (provisional English title).
It has been pointed out that in many cases when small- or medium-sized enterprises go bankrupt, their business owners with personal guarantees often face personal bankruptcy, hindering their early decision to revitalize their businesses.
The FSA expects that financial institutions and insolvency practitioners involved in the liquidation/consolidation of guarantee obligations will use the said referential practice/cases as a reference in considering various approaches (including business revitalization), whereby guarantors' efforts to avoid bankruptcy filings (by finding options for business revitalization) will be further disseminated.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220623-1.htmlopen new window
June 20, 2022 Request to depository financial institutions to check for the existence of invalid provisions/clauses in card loan contracts, etc. that make the commencement of inheritance a cause for forfeiture of the benefit of time.
<Summary>
With respect to a request for an injunction, and so forth against a business operator made by a qualified consumer organization authorized by the Prime Minister under the "Consumer Contract Act," the Consumer Affairs Agency (CAA) is required to publicly announce a summary of the case upon receiving a report from the organization when it has reached an agreement with the other party regarding the request.
The CAA has received a report/request filed by the qualified consumer organization requesting financial institutions to delete clauses in their credit card loan contracts that stipulate that the commencement of inheritance is a cause for forfeiture of the benefits of time, on the grounds that such clauses unilaterally harm the interests of consumers and are therefore invalid as set forth in Article 10 of the said Act. The CAA announced that consultations with applicable financial institutions have been held in 26 cases (as of the end of May 2022).
Financial institutions that have reached an agreement are proceeding with the removal of the provision/clause from a customer-oriented perspective as soon as their internal structures and coordination with guarantee companies and so forth are in place.
 

In this regard, the FSA requested depository financial institutions the following:

－Clarify the policy of not requiring an heir to immediately repay the entire amount of his/her decedent's debt in a lump sum on the grounds that the heir has forfeited the benefits of time by reason of the commencement of inheritance, and make the policy known to customers.

－In cases where the contract (terms and conditions) of card loans and other loans stipulate that the commencement of inheritance is a reason for the forfeiture of the benefits of time, delete the corresponding contractual provisions and inform customers to that effect, by designating the specific method of communicating such policy with customers.


The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220620/20220620.htmlopen new window
June 17, 2022 Overview of major banks’ financial results as of March 31, 2022
June 17, 2022 Publication of a progress report on Business Revitalization Plans
<Summary>
The FSA published a report on the progress of business revitalization by Shinsei Bank Ltd. as of March 31, 2022, pursuant to the "Act on Emergency Measures for Early Strengthening of Financial Functions" and the "Deposit Insurance Act.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220617-1/20220617-1.htmlopen new window
June 17, 2022 Publication of the updated Business Revitalization Plan filed by Shinsei Bank Limited
<Summary>
The FSA accepted the updated Business Revitalization Plan filed by Shinsei Bank Limited.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220617-2/20220617-2.htmlopen new window

Securities

June 17, 2022 Administrative penalty charge against MTG Co., Ltd. for making false statements in its quarterly securities reports
<Summary>
On June 16, 2022, the FSA issued an order to impose an administrative penalty charge against MTG Co., Ltd. for making false statements in its quarterly securities report in violation of the "Financial Instruments and Exchange Act."

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220616-1.htmlopen new window
June 17, 2022 Administrative penalty charge against G Three Holdings CORPORATION for making false statements in its securities reports and so forth
<Summary>
On June 16, 2022, the FSA issued an order to impose an administrative penalty charge against G Three Holdings CORPORATION for making false statements in its securities reports and so forth in violation of the "Financial Instruments and Exchange Act."

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220616-2.htmlopen new window
June 17, 2022 Administrative penalty charge against an individual for market manipulation regarding stocks of SPANCRETE CORPORATION
<Summary>
On June 16, 2022, the FSA issued an order to impose an administrative penalty charge against an individual for market manipulation regarding stocks of SPANCRETE CORPORATION in violation of the "Financial Instruments and Exchange Act."

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220616-3.htmlopen new window

Insurance

June 17, 2022 Overview of financial results of major insurance companies as of March 31, 2022

Others

June 22, 2022 Establishment of a contact point for collecting information in regard to the prevention of abuse of a dominant bargaining position in financial service transactions
<Summary>
The FSA has decided to establish a contact point, effective June 22, 2022, to collect information on the abuse of a dominant bargaining position in financial service transactions in response to the relaxation of firewall regulations on sharing domestic corporate clients' non-public information, etc.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/receipt/firewall-conduct.htmlopen new window
June 20, 2022 Notification of business discontinuance submitted by a foreign audit firm
<Summary>
The FSA published the notification of business discontinuance submitted by a foreign audit firm, Ernst & Young S.p.A. pursuant to the "Certified Public Accountants Act."

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/sonota/20220620-haigyo.htmlopen new window
June 20, 2022 New series of articles contributed to "Bank Business" (a monthly magazine published by Kindai-Sales Co., Ltd.) in regard to financial and economic education (financial literacy) [release of the fourth installment]
<Summary>
The FSA has been contributing to a new series of articles in "Bank Business" (a monthly magazine published by Kindai-Sales Co., Ltd.) since March 2022, mainly in regard to financial and economic education (financial literacy). The contents of the series are also publicized on the FSA's web portalopen new window* to provide a greater number of people with information about financial literacy and financial and economic education initiatives.
*PDFThe fourth installment in the series is available (only in Japanese) on the FSA's web portal. The theme of the fourth installment is "types and features of key financial instruments to consider when building assets."

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/teach/kyouiku/01/01.htmlopen new window
June 20, 2022 Publication of the agenda and handouts of the sixth meeting of the "Study Group on Digital- and Decentralized-Finance" (provisional English title)
<Summary>
The FSA published the agenda and handouts of the sixth meeting of the "Study Group on Digital- and Decentralized-Finance" (provisional English title) which was held on June 20, 2022. The Study Group members discussed the favorable state of disciplines in DeFi (decentralized-finance) and disciplines required for remittance/payment methods.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/singi/digital/siryou/20220620.htmlopen new window
June 17, 2022 Warnings about entities that are operating money lending businesses without proper registration
<Summary>
The FSA (Local Finance Bureaus) updated warnings about entities that are operating money lending businesses without proper registration. The warnings include the updated list of entities that misrepresent their registration using fictitious or stolen registration numbers.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/ordinary/chuui/index.htmlopen new window

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