FSA Weekly Review No.499 July 28, 2022

FSA Weekly Review No.499: July 28, 2022

What’s New on the FSA Website

Week of July 15, 2022 - July 21, 2022

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

Public Comments

July 15, 2022	Publication of the finalized amendments to the regulatory notices pertaining to leverage ratio requirements after public consultation <Summary> The FSA finalized the amendments to the regulatory notices pertaining to leverage ratio requirements after public consultation. Subsequent to the public consultation conducted in regard to the Pillar 1 and Pillar 3 requirements of capital adequacy, the amendments mainly provide corresponding amendments to leverage ratio requirements in response to the finalized Basel III framework (which refers to a consolidated package of the "Basel III framework" (December 2017). The introduction of the leverage ratio buffer across G-SIBs will take effect on March 31, 2023. Other than the introduction of the leverage ratio buffer, changes in the method of calculating the leverage ratio will be implemented simultaneously in conjunction with the finalized Basel III capital adequacy requirements. This means that, while the effective date will be March 31, 2024, in principle, financial institutions that adopt early implementation of the Basel III framework finalized on or after March 31, 2023, will also be required to adopt early implementation of leverage ratio calculations simultaneously. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r3/ginkou/20220715.html
July 15, 2022	Publication of the draft amendments to the relevant and applicable Cabinet Office Orders, Ministerial Orders, and regulatory notices pertaining to leverage ratio requirements for public consultation <Summary> The FSA proposed the draft amendments to the relevant and applicable Cabinet Office Orders, Ministerial Orders, and regulatory notices pertaining to leverage ratio requirements for public consultation. The FSA has announced on March 25, 2022, that the temporal measure to exclude the outstanding balance of financial institutions' current accounts at the Bank of Japan (BOJ) from the calculation of leverage ratio exposures would end at the end of March 31, 2024. This proposal intends to provide amendments to raise the required level of leverage ratio from 3% to 3.15%, while excluding the outstanding balance of financial institutions' current accounts at the BOJ from the exposure measure in exceptional macroeconomic circumstances after April 2024, for the post-COVID-19 response framework. Public comments will be accepted until 5:00 p.m. [JST], August 15, 2022. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/ginkou/20220715-2.html
July 15, 2022	Publication of the finalized "Cabinet Order to Amend the Order for Enforcement of the Banking Act, etc." and the finalized "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act, etc." after public consultation <Summary> The FSA published the finalized "Cabinet Order to Amend the Order for Enforcement of the Banking Act, etc." and the finalized "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act, etc." after public consultation. The Cabinet Order and the Cabinet Office Order mainly provide amendments in response to requests for deregulation from the financial sector and relevant industry organizations, particularly in regard to the following: - Procedures to approve holidays and temporary closures of banks, etc. (to amend the "Order for Enforcement of the Banking Act" as well as the Regulation for Enforcement of the Banking Act"), and - Filing procedures for notification by (trust agreement) agencies of financial institutions concurrently engaged in trust business (to amend the "Regulation for Enforcement of the Act on Engagement in Trust Business by Financial Institutions"). The Cabinet Order and the Cabinet Office Order were enforced on July 16, 2022. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/ginkou/20220715/20220715.html
July 15, 2022	Publication of the finalized "Examples of Indicators for Social Benefits of Social Projects" (provisional English title) after public consultation <Summary> The FSA published the finalized "Examples of Indicators for Social Benefits of Social Projects" (provisional English title) after public consultation. The Examples are compiled based on discussions at the meetings of "Sub-Working Group on Impact Indicators for Social Projects"* (provisional English title) comprising representatives from the Cabinet Office and relevant ministries and agencies, as well as the meetings of "Working Group on Social Bonds"** (provisional English title), and are included as Annex 4 in Social Bond Guidelines. The finalized Examples took effect on July 15, 2022. * Establishment of the sub-working group under the "Working Group on Social Bonds" was announced on December 14, 2021. ** "Working Group on Social Bonds" was established under the "Expert Panel on Sustainable Finance" in March 2021 to discuss the formulation of practical guidelines for social bonds in response to requests from economic and other organizations. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/singi/20220715.html
July 15, 2022	Publication of "Supervisory Guidance on Climate-related Risk Management and Client Engagement"

Press Releases

Banks

July 15, 2022	Publication of the updated "FAQ on Capital Adequacy Regulation" <Summary> The FSA published the updated "FAQ on Capital Adequacy Regulation," particularly in regard to credit risk, in order to implement the finalized Basel III framework in response to the publication of the finalized amendments to the regulatory notices pertaining to the Pillar 1 and Pillar 3 requirements of capital adequacy on April 28, 2022. The FAQ has been updated to reflect the FSA's current perspectives on the capital adequacy requirements to facilitate smooth implementation of capital adequacy requirements, and to contribute to the enhancement of risk management by financial institutions. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/ginkou/20220715.html

July 15, 2022

Publication of the updated "FAQ on Capital Adequacy Regulation"
<Summary>
The FSA published the updated "FAQ on Capital Adequacy Regulation," particularly in regard to credit risk, in order to implement the finalized Basel III framework in response to the publication of the finalized amendments to the regulatory notices pertaining to the Pillar 1 and Pillar 3 requirements of capital adequacy on April 28, 2022.
The FAQ has been updated to reflect the FSA's current perspectives on the capital adequacy requirements to facilitate smooth implementation of capital adequacy requirements, and to contribute to the enhancement of risk management by financial institutions.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r4/ginkou/20220715.html open new window

Securities

July 15, 2022	Administrative action against ES-CON ASSET MANAGEMENT Ltd. (The Kanto Local Finance Bureau) <Summary> The FSA took administrative action against ES-CON ASSET MANAGEMENT Ltd. that engages in investment management business, Type II financial instruments business, and investment advisory and agency business, ordering the suspension of the entity's business operations* from July 15, 2022, to October 14, 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 was taken in response to the recommendation (as of June 17, 2022) from the Securities and Exchange Surveillance Commission for an administrative action against ES-CON ASSET MANAGEMENT, which was found to have been in violation of the FIEA, based on onsite monitoring. *Business operations subject to suspension pertain to services associated with the solicitation, conclusion, and renewal of new asset management agreements as well as providing investment instructions for the acquisition of real estate (including trust beneficiary interests in real estate). The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/shouken/20220715.html

July 15, 2022

Administrative action against ES-CON ASSET MANAGEMENT Ltd. (The Kanto Local Finance Bureau)
<Summary>
The FSA took administrative action against ES-CON ASSET MANAGEMENT Ltd. that engages in investment management business, Type II financial instruments business, and investment advisory and agency business, ordering the suspension of the entity's business operations* from July 15, 2022, to October 14, 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 was taken in response to the recommendation (as of June 17, 2022) from the Securities and Exchange Surveillance Commission for an administrative action against ES-CON ASSET MANAGEMENT, which was found to have been in violation of the FIEA, based on onsite monitoring.

*Business operations subject to suspension pertain to services associated with the solicitation, conclusion, and renewal of new asset management agreements as well as providing investment instructions for the acquisition of real estate (including trust beneficiary interests in real estate).

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r4/shouken/20220715.html open new window

Others

July 19, 2022	Request for financial measures to deal with disasters caused by the heavy rain from July 14, 2022 (The Tohoku Local Finance Bureau) <Summary> The Tohoku Local Finance Bureau alongside the Sendai Branch of the Bank of Japan issued a statement titled "Financial Measures to Deal with Disasters Caused by the Heavy Rain from July 14, 2022" (issued as of July 19, 2022) [available only in Japanese] to the relevant financial institutions. The statement requests relevant financial institutions in Miyagi prefecture to appropriately deal with victims of the disaster considering their circumstances, such as by making the repayment of deposits flexible. Disaster-affected area in the prefecture is currently subject to the "Disaster Relief Act." If more areas in the prefecture become subject to the said Act, financial institutions in the prefecture will be requested to take measures in the same manner as above accordingly. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/ginkou/20220719.html

July 19, 2022

Request for financial measures to deal with disasters caused by the heavy rain from July 14, 2022 (The Tohoku Local Finance Bureau)
<Summary>
The Tohoku Local Finance Bureau alongside the Sendai Branch of the Bank of Japan issued a statement titled "Financial Measures to Deal with Disasters Caused by the Heavy Rain from July 14, 2022" (issued as of July 19, 2022) [available only in Japanese] open new window

to the relevant financial institutions. The statement requests relevant financial institutions in Miyagi prefecture to appropriately deal with victims of the disaster considering their circumstances, such as by making the repayment of deposits flexible.
Disaster-affected area in the prefecture is currently subject to the "Disaster Relief Act." If more areas in the prefecture become subject to the said Act, financial institutions in the prefecture will be requested to take measures in the same manner as above accordingly.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r4/ginkou/20220719.html open new window

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