Financial Services AgencyFSA Weekly Review No.496

July 7, 2022

What’s New on the FSA Website

Week of June 24, 2022 - June 30, 2022

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

Public Comments

June 30, 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 in regard to eligibility requirements for an individual investor to be treated as a professional investor.
Under the "Financial Instruments and Exchange Act" (hereinafter referred to as the "FIEA"), transactions by a financial instruments business operator (hereinafter referred to as a "FIBO"), etc. with professional investors are exempt from application of certain conduct rules/regulations, including the obligation to deliver documents prior to the conclusion of a contract and compliance with the principle of suitability. Additionally, the FIEA provides the framework of private placements of securities to professional investors.
An individual investor who meets certain eligibility requirements may make a request to a FIBO for treatment as a professional investor, and upon approval by the FIBO, may be treated as a professional investor only with the said FIBO.
While the current eligibility requirements only take into account the investor's net assets, financial assets, and transaction experience, the finalized Cabinet Office Order broadens the scope of eligibility by adding optional requirements that take into account any of the investor's annual income, vocational experiences, professional certifications, and transaction frequency.
The finalized Cabinet Office Order alongside the amendments to the relevant and applicable comprehensive guidelines for supervision were either enforced or took effect on July 1, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220630/20220630.htmlopen new window
June 30, 2022 Publication of the finalized regulatory notice designating information and methods for provision or publication pursuant to the provisions of Article 2, Paragraph 1, Item 3, etc. of the "Cabinet Office Order on the Provision or Publication of Securities Information, etc." after public consultation
<Summary>
The FSA has published the finalized regulatory notice designating information and methods for provision or publication pursuant to the provisions of Article 2, Paragraph 1, Item 3, etc. of the "Cabinet Office Order on the Provision or Publication of Securities Information, etc." after public consultation.
While the self-regulatory rules of Japan Securities Dealers Association (JSDA) pertaining to the solicitation of unlisted securities to professional investors, which had been on the review for the development and revision, were scheduled to take effect on July 1, 2022, the finalized regulatory notice has set forth a new regulatory notice designating the self-regulatory rules of JSDA with respect to matters to be designated by the FSA in the "Cabinet Office Order on the Provision or Publication of Securities Information, etc."
The finalized regulatory notice took effect on July 1, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220630-2/20220630-2.htmlopen new window
June 30, 2022 Publication of the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Act on Engagement in Trust Business, etc. by Financial Institutions" and other relevant and applicable draft Cabinet Office Orders for public consultation
<Summary>
The FSA published the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Act on Engagement in Trust Business, etc. by Financial Institutions" and other relevant and applicable draft Cabinet Office Orders for public consultation.
The proposal mainly intends to allow trust banks to provide crypto-assets (virtual currencies) custody services, which are currently not allowed for trust banks and which fall under the category of custodial trust business, subject to completion of the approval process for modifications to business operations by filing the Operational Method Statement anew.
Public comments will be accepted until 12:00 p.m. (noon) [JST], August 1, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220630-3/20220630-3.htmlopen new window

Press Releases

International 

June 27, 2022 Updated : International Financial Center Website 

Publication

June 29, 2022 Updated : Publication of “Progress Report on Enhancing the Asset Management Business 2022”  

Councils

June 30, 2022 Publication of Summary of Report by the Working Group on Corporate Disclosure of the Financial System Council
June 27, 2022 Publication of the agenda and handouts of the seventh meeting of the "Technical Committee for ESG Rating and Data Providers, etc."
<Summary>
The FSA published the agenda and handouts of the seventh meeting of the "Technical Committee for ESG Rating and Data Providers, etc.,"* which was held on June 20, 2022.
The committee members discussed the content of the draft report based on previous discussions.
 

* This Technical Committee has been established under the "Expert Panel on Sustainable Finance" to aggregate a wide range of information on green bonds, etc., as well as ESG (Environmental Social and Governance) rating and data providers. The Committee is composed of practitioners, market participants, and academics who are involved in ESG assessment and data provision, along with observers of officials from pertinent ministries and agencies. The FSA (Strategy Development Division, Strategy Development and Management Bureau) serves as the secretariat.


The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/singi/esg_hyouka/siryou/20220620.htmlopen new window
June 27, 2022
Publication of the agenda and handouts of the 13th meeting of the "Expert Panel on Sustainable Finance"
<Summary>
The FSA published the agenda and handouts of the 13th meeting of the "Expert Panel on Sustainable Finance," which was held online on June 27, 2022.
The secretariat of the expert panel gave a briefing on the draft report compiled by the "Technical Committee for ESG Rating and Data Providers, etc.," the draft "Report of Working Group on Corporate Disclosure (FY 2021) – Toward the Creation of a Capital Market That Will Contribute to Medium- and Long-Term Enhancement in Corporate Value" (provisional English title), and the draft "Second Report of the Expert Panel on Sustainable Finance," whereby the expert panel members discussed the respective key topics thereof.
 
*The Expert Panel is composed of business, financial, and academic experts with observers of officials from pertinent ministries and agencies. The FSA (Strategy Development Division, Strategy Development and Management Bureau) serves as the secretariat.


The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/singi/sustainable_finance/siryou/20220627.html open new window

Banks

June 30, 2022 Overview of modifications to lending conditions by financial institutions
<Summary>
The FSA published an overview of modifications to lending conditions made by financial institutions for the period from March 10, 2020 to May 31, 2022.
*The majority of the data reflects the data until May 31, 2022, whereas the data of cooperative financial institutions reflects the data until March 31, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/ordinary/coronavirus202001/kashitsuke/20200430.htmlopen new window
June 30, 2022 Publication of statistics regarding unlawful reimbursement of deposits (as of the end of March 2022)
<Summary>
The FSA published statistics regarding unlawful reimbursement of deposits caused by counterfeit and stolen cash cards, stolen deposit books, and unlawful Internet banking activities. The statistics include details of incidents and compensation made by financial institutions based on reports from the financial institutions.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220630.htmlopen new window
June 30, 2022 Publication of the results of the corporate questionnaire survey and of the corporate questionnaire survey on evaluation of financial institutions’ initiatives in regard to intermediary services offered to their corporate clients.
<Summary>
The FSA published the results of the corporate questionnaire survey and of the corporate questionnaire survey on the evaluation of financial institutions’ initiatives (such as in regard to intermediary services offered to their corporate clients). Small- and medium-sized enterprises were subject to the questionnaire survey and response.

The original press release is available in Japanese at the following URL.
PDFhttps://www.fsa.go.jp/policy/chuukai/shiryou/questionnaire/220630/01.pdfopen new window
June 30, 2022 Publication of a report entitled "Progress Report on the Efficiency of Financial Intermediation" (provisional English title)
<Summary>
The FSA published a report entitled "Progress Report on the Efficiency of Financial Intermediation" (provisional English title). The report outlines key initiatives and approaches taken over the past year (program year 2021) by the FSA and the respective Local Finance Bureaus toward the enhancement of the efficiency of financial intermediation by regional financial institutions.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/ginkou/20220630-4/20220630.htmlopen new window

Securities

June 30, 2022 Updated : Guidebook for Registration of Investment Management Business and Other Financial Instruments Businesses
June 30, 2022 Publication of the list of financial business operators that conducted large-scale OTC derivative transactions in FY 2021
<Summary>
The FSA published, complying with the "Cabinet Office Order on Restrictions on Over-the-Counter Derivatives Transactions," the list of financial instruments business operators whose average monthly total notional principal amount of OTC derivative transactions in FY2021 was 300 billion yen or more.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/status/torihikikibo/index.htmlopen new window
June 27, 2022 Administrative actions against i SECURITIES Co., Ltd. and ARBITRAGE SYSTEM FUND COMPANY LIMITED (The Kanto Local Finance Bureau)
<Summary>
The Kanto Local Finance Bureau took administrative actions against i SECURITIES Co., Ltd., a type I and type II financial instruments business operator, and against ARBITRAGE SYSTEM FUND COMPANY LIMITED, a notifier of specially permitted business for qualified institutional investors (SPBQII)* (both entities are within the purview of the Kanto Local Finance Bureau), ordering the improvement of their business operations pursuant to the "Financial Instruments and Exchange Act" (hereinafter referred to as the "FIEA").
The administrative actions are based on the findings from the onsite monitoring by the Kanto Local Finance Bureau, whereby certain business conduct of the two entities was found to have been problematic.
 

*This entity is registered under the former FIEA (prior to the amendments to the FIEA made in May 2020). 


The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220627.htmlopen new window
June 24, 2022 Administrative action against OKAYASU SHOJI Co., Ltd. (Kinki Local Finance Bureau)
<Summary>
The Kinki Local Finance Bureau took an administrative action against OKAYASU SHOJI Co., Ltd., ordering the suspension of the entity's entire business (except for certain services that are exempted from suspension of operations by the FSA from a customer-protection perspective), from July 8, 2022, to August 7, 2022, and the improvement of its business operations pursuant to the "Financial Instruments and Exchange Act" (hereinafter referred to as the "FIEA").
This administrative action is based on the findings from the onsite monitoring by the FSA, in which the entity was found to have increased its capital adequacy ratio higher than it should have been (from August 30, 2010, to February 28, 2022), to have filed with the FSA a capital adequacy ratio differing from the actual ratio, and to have made it available for public perusal, etc., in violation of the FIEA and other relevant and applicable laws and regulations.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/shouken/20220624.htmlopen new window

Insurance

June 30, 2022 The outline of an economic value-based solvency framework, etc.
<Summary>
The FSA has published the basic contents of the new economic value-based solvency framework scheduled to be introduced in 2025, from the perspective of encouraging insurance companies to improve their corporate structure.
Based on the content of this publication, the FSA will continue to consider the matter to ensure a seamless shift to the new solvency framework.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/hoken/20220630_2.htmlopen new window
June 27, 2022 License granted to Assuranceforeningen SKULD Gjensidig to conduct foreign non-life insurance business
<Summary>
The FSA granted a license to Assuranceforeningen SKULD Gjensidig to conduct foreign non-life insurance business pursuant to the "Insurance Business Act."

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/hoken/20220627-2.htmlopen new window
June 27, 2022 Administrative action against justInCase, Inc. (The Kanto Local Finance Bureau)
<Summary>
The Kanto Local Finance Bureau took an administrative action against justInCase, Inc., ordering the improvement of its business operations pursuant to the “Insurance Business Act.”

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/hoken/20220627.htmlopen new window
June 24, 2022 Initiatives and practices to enhance regional collaboration in the insurance business sector
<Summary>
The Life Insurance Association of Japan, the General Insurance Association of Japan, the Small Amount and Short Term Insurance Association of Japan, and the FSA have respectively published documents summarizing various initiatives and practices that have been taken so far and are to be taken for the enhancement of regional collaboration* in the insurance business sector.
The documents are shared with the local governments to support their efforts to resolve regional issues, and are publicized on the FSA website.
 

* Against the backdrop of a declining population, an aging society with a falling birthrate, and of the economic impact of COVID-19, the insurance business sector is working to solve regional issues by leveraging its strengths and expertise in areas such as health promotion, support for the elderly, disaster prevention/mitigation, traffic safety, and measures against solitary deaths, whereas the Local Finance Bureaus (including Branch Bureaus) and the Okinawa General Bureau of the Cabinet Office are working as a regional conduit to build networks with various stakeholders in the region, involving regional financial institutions, local governments, and economic organizations, thereby helping resolve various regional issues.


The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/hoken/20220624/20220624.htmlopen new window

Others

June 30, 2022 FSA updated Information on COVID-19 (Novel Coronavirus)
June 30, 2022 Publication of the level of remuneration paid to the officers of the authorized corporations
<Summary>
The FSA published the level of remuneration paid to the officers of the authorized corporations under its jurisdiction: Deposit Insurance Corporation of Japan, and Banks’ Shareholdings Purchase Corporation.
Such information is subject to disclosure on an annual basis by respective competent government agencies and is required to be presented on the format designated by the Ministry of Internal Affairs and Communications.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/sonota/20220630/20220630.htmlopen new window
June 30, 2022 Administrative action against UHY Tokyo and Co. 
<Summary>
The FSA took an administrative action against UHY Tokyo and Co., ordering the improvement of its business management structure pursuant to the "Certified Public Accountants Act." This administrative action is based on a recommendation from the Certified Public Accountants and Auditing Oversight Board as a result of their on-site monitoring.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/sonota/20220630_4.htmlopen new window
June 30, 2022 Publication of a report on trends in high-speed trading activities
<Summary>
The FSA has published a report on trends in high-speed trading activities including the number of orders placed by high-speed traders and trading values thereof. The updates reflect the activities from January to March 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r2/sonota/20210630/20210630.htmlopen new window
June 30, 2022 Publication of the monitoring results pertaining to the status of investment trust distributors' implementation of customer-oriented business conduct (for program year 2021)
<Summary>
The FSA has conducted monitoring and dialogues with major investment trust distributors (hereinafter referred to as "distributors") for program year 2021 (10 major banks, 26 regional banks, and 12 securities firms) regarding the status of customer-oriented business conduct in their business management strategies and the mid- to long-term business model to achieve both customer asset formation and sustainable business operations.
In this respect, the FSA has compiled and published a summary of its analysis of facts, suggested contents, and issues identified through such monitoring and other activities.
Key findings from the monitoring and dialogues are as follows:

◆Some distributors are practicing creativity and ingenuity based on business strategies with an awareness of customer segments. A selection mechanism of distributors is beginning to function.

◆On the other hand, many distributors still have issues in enhancing transparency in their sales practices/policies. This may be due in part to the fact that they have not yet implemented customer-oriented business operations as a management priority.

◆There are products and services, such as structured bonds, which are not considered to meet general customers' needs for medium- to long-term asset building. Thus, business operations should be reviewed from the corporate management perspective to ensure that such products and services are sold to a specifically targeted group of customers.


The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/kokyakuhoni/202206/fd_202206.htmlopen new window
June 29, 2022 Updated statistics of money lending business
June 28, 2022 Publication of the PoC test results of the seventh project for "FinTech PoC (Proof-of-Concept) Hub"
<Summary>
From the perspective of further acceleration of challenges toward financial innovation utilizing FinTech, on September 21, 2017, the FSA has launched "FinTech PoC (Proof-of-Concept) Hub" to eliminate the hesitation and concern that FinTech firms and financial institutions are inclined to have in conducting unprecedented tests.
Since its launch, the Hub has selected eight PoC projects so far, in which the Hub has offered support by forming special working teams for the respective projects in cooperation with other relevant authorities as necessary. In the meantime, the seventh project (selected on May 29, 2020) has finalized its PoC test, whereby the FSA has accordingly published its PoC test results.
The seventh project mainly pertains to "the enhancement of information provision to customers and promotion of digitalization"* and "Principles for Customer-Oriented Business Conduct."
*This is a topic discussed by the "Working Group on Capital Market Regulations" (provisional English title) of the Financial System Council. 

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r3/sonota/20220628/20220628.htmlopen new window
June 27, 2022 Keynote speech by the Commissioner of the FSA, NAKAJIMA Junichi, at the Research and Study Committee Interim Symposium on ESG-S Indicators, "Reviewing Anew the 'S' Indicator of ESG" (provisional English title)
<Summary>
The FSA has published the PDFkeynote speechopen new window* (mainly in regard to the FSA's initiatives on sustainable finance) given by the Commissioner of the FSA, NAKAJIMA Junichi, at the Research and Study Committee Interim Symposium on ESG-S Indicators, "Reviewing Anew the 'S' Indicator of ESG" (provisional English title) jointly hosted by the JTUC Research Institute for Advancement of Living Standards and QUICK Corp. on May 27, 2022.
*The speech is only available in Japanese.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/common/conference/danwa/index_kouen.html#Commissioneropen new window
June 24, 2022 The FSA's initiatives for the reduction of food loss as well as food donation through the effective use of a portion of the government's emergency food reserves
<Summary>
From the perspective of reducing food loss and supporting people in need, the FSA has been engaging in food donation to food bank (hunger-relief) organizations and other outreach groups since August 2021, by making effective use of a portion of food reserves (mainly non-perishable foods, such as canned goods) that are originally kept for disaster-relief/emergency by the government.
The FSA has called for applications for its fifth offering of a portion of its emergency food reserves subsequent to the fourth offering made in April 2022. (The offering is for residents in Japan).

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/choutatu/choutatu_j/choutatsu_saigaisyokuhin.htmlopen new window

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