FSA Weekly Review No.517 December 8, 2022

FSA Weekly Review No.517: December 8, 2022

What’s New on the FSA Website

Week of November 25, 2022 - December 1, 2022

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

Press Conferences

December 1, 2022	Press Conference by the Minister of State for Financial Services (November 8, 2022)
December 1, 2022	Ad Hoc Press Conference by the Minister of State for Financial Services (October 7, 2022)
December 1, 2022	Press Conference by the Minister of State for Financial Services (October 7, 2022)

Public Comments

November 30, 2022	Publication of the finalized amendments to the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy alongside the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable regulatory notices and guidelines after public consultation <Summary> The FSA finalized the amendments to the "regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy" alongside the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable regulatory notices and guidelines after public consultation.* In regard to the implementation of the finalized Basel III,** the finalized amendments provide further amendments to the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy, thereby providing corresponding amendments to other relevant and applicable regulatory notices, comprehensive guidelines, and FAQs. Meanwhile, the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." reflect the revisions on the assessment methodology for identifying D-SIBs (Domestic Systemically Important Banks) in Japan, following the assessment methodology for identifying G-SIBs (Global Systemically Important Banks) revised by the BCBS (Basel Committee on Banking Supervision) in 2018. The finalized amendments to the aforementioned regulatory notices and comprehensive guidelines alongside other applicable notices and guidelines will be enforced on March 31, 2023. As announced on April 28, 2022 in the publication of the finalized amendments to the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy, the implementation dates of the regulatory notices in conjunction with the finalization of the Basel III framework are scheduled as follows: - Internationally active financial institutions and non-internationally active financial institutions that use internal model-based approaches for measuring risks: March 31, 2024 - Non-internationally active financial institutions that do not use internal model-based approaches for measuring risks: March 31, 2025 - Financial institutions that desire an early implementation on or after March 31, 2023, may do so by submitting a notification to the FSA. Public consultation for the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy were conducted from September 9, 2022, to October 11, 2022, whereas the public consultation for the "Comprehensive Guidelines for Supervision of Major Banks, etc." were conducted from March 25, 2022, to April 28, 2022. *The finalized Basel III framework refers to a consolidated package of the "Basel III framework"(December 2017) and the "market risk capital framework (minimum capital requirements for market risk)"(January 2019). The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/ginkou/20221130.html

November 30, 2022

Publication of the finalized amendments to the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy alongside the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable regulatory notices and guidelines after public consultation
<Summary>
The FSA finalized the amendments to the "regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy" alongside the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable regulatory notices and guidelines after public consultation.*

In regard to the implementation of the finalized Basel III,** the finalized amendments provide further amendments to the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy, thereby providing corresponding amendments to other relevant and applicable regulatory notices, comprehensive guidelines, and FAQs.

Meanwhile, the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." reflect the revisions on the assessment methodology for identifying D-SIBs (Domestic Systemically Important Banks) in Japan, following the assessment methodology for identifying G-SIBs (Global Systemically Important Banks) revised by the BCBS (Basel Committee on Banking Supervision) in 2018.

The finalized amendments to the aforementioned regulatory notices and comprehensive guidelines alongside other applicable notices and guidelines will be enforced on March 31, 2023.

As announced on April 28, 2022 in the publication of the finalized amendments to the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy, the implementation dates of the regulatory notices in conjunction with the finalization of the Basel III framework are scheduled as follows:

- Internationally active financial institutions and non-internationally active financial institutions that use internal model-based approaches for measuring risks: March 31, 2024

- Non-internationally active financial institutions that do not use internal model-based approaches for measuring risks: March 31, 2025

- Financial institutions that desire an early implementation on or after March 31, 2023, may do so by submitting a notification to the FSA.

*Public consultation for the regulatory notice pertaining to Pillar 1 and Pillar 3 requirements of capital adequacy were conducted from September 9, 2022, to October 11, 2022, whereas the public consultation for the "Comprehensive Guidelines for Supervision of Major Banks, etc." were conducted from March 25, 2022, to April 28, 2022.

**The finalized Basel III framework refers to a consolidated package of the "Basel III framework"(December 2017) and the "market risk capital framework (minimum capital requirements for market risk)"(January 2019).

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/news/r4/ginkou/20221130.html open new window

Press Releases

International

November 25, 2022	The Japan-Switzerland Financial Dialogue

Councils

November 25, 2022	Publication of the agenda and handouts of the second meeting of the "Working Group on Financial Institutions' Efforts towards the Decarbonization of the Economy" <Summary> The FSA published the agenda and handouts of the second meeting of the "Working Group on Financial Institutions' Efforts towards the Decarbonization of the Economy," which was held on November 30, 2022. Guest practitioners (from GFANZ [Glasgow Financial Alliance for Net Zero] and PCAF [Partnership for Carbon Accounting Financials]) shared their initiatives and recent updates on international discussions regarding the decarbonization of financial institutions, followed by a discussion. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/singi/20221125-2.html
November 25, 2022	Establishment of the “Working Group on Financial Institutions’ Efforts towards the Decarbonization of the Economy”
November 25, 2022	Publication of the agenda and handouts of the third meeting of the "Working Group on Impact Investment" <Summary> The FSA published the agenda and handouts of the third meeting of the "Working Group on Impact Investment," which was held on November 25, 2022. Guest practitioners from the financial sector and non-financial sectors of the third meeting shared impact investment practices, followed by a discussion. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/singi/impact/siryou/20221125.html

Banks

November 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 October 31, 2022. *The majority of the data reflects the data until October 31, 2022, whereas the data of cooperative financial institutions reflects the data until September 30, 2022. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/ordinary/coronavirus202001/kashitsuke/20200430.html
November 28, 2022	Requests for the facilitation of financing for small- and medium-sized enterprises during the calendar- or fiscal-year-end season and further beyond <Summary> Against the backdrop of the heightened economic uncertainty due to global price hikes and the prolonged impact of COVID-19, businesses are still facing difficult cash flow conditions with tight borrowing constraints, especially given the increasing demand for operating funds and other resources toward the calendar- or fiscal-year-end season. In response to such circumstances, the FSA has held meetings with government officials and representatives from various financial institutions to exchange views on facilitating financing to small- and medium-sized enterprises and others. In this regard, following the comprehensive economic measures to overcome high prices and achieve economic revitalization finalized by the Japanese Government on October 28, 2022, the FSA has requested that the relevant financial associations and institutions facilitate and ensure appropriate and proactive financing for small- and medium-sized enterprises during the calendar- or fiscal-year-end season and further beyond. The original press releases are available in Japanese at the following URLs. https://www.fsa.go.jp/news/r4/ginkou/20221128/20221128.html https://www.fsa.go.jp/news/r4/20221128/20221128.html

November 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 October 31, 2022.

*The majority of the data reflects the data until October 31, 2022, whereas the data of cooperative financial institutions reflects the data until September 30, 2022.

The original press release is available in Japanese at the following URL.
https://www.fsa.go.jp/ordinary/coronavirus202001/kashitsuke/20200430.html open new window

November 28, 2022

Requests for the facilitation of financing for small- and medium-sized enterprises during the calendar- or fiscal-year-end season and further beyond
<Summary>
Against the backdrop of the heightened economic uncertainty due to global price hikes and the prolonged impact of COVID-19, businesses are still facing difficult cash flow conditions with tight borrowing constraints, especially given the increasing demand for operating funds and other resources toward the calendar- or fiscal-year-end season. In response to such circumstances, the FSA has held meetings with government officials and representatives from various financial institutions to exchange views on facilitating financing to small- and medium-sized enterprises and others.
In this regard, following the comprehensive economic measures to overcome high prices and achieve economic revitalization finalized by the Japanese Government on October 28, 2022, the FSA has requested that the relevant financial associations and institutions facilitate and ensure appropriate and proactive financing for small- and medium-sized enterprises during the calendar- or fiscal-year-end season and further beyond.

The original press releases are available in Japanese at the following URLs.
https://www.fsa.go.jp/news/r4/ginkou/20221128/20221128.html open new window

https://www.fsa.go.jp/news/r4/20221128/20221128.html open new window

Securities

November 30, 2022	Updated list of entities that are operating financial instruments businesses without proper registration (The Kanto Local Finance Bureau) <Summary> The FSA and the Kanto Local Finance Bureau issued warnings to entities that are operating financial instruments businesses without proper registration. (See the updated list of foreign-based entities). This list also includes the warned non-registered entities with untraceable/unidentified addresses. (Postal and/or web addresses on the list of the warned non-registered foreign-based entities reflect those shown on their respective webpages, not necessarily the addresses that could be traced and identified). The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/ordinary/chuui/mutouroku.html
November 28, 2022	Warning against inappropriate solicitation to acquire membership in limited liability companies, and so forth <Summary> The FSA issued a warning against inappropriate solicitation to acquire membership in limited liability companies ("godo gaisha [kaisha]" in Japanese), in response to the recent numerous inquiries and complaints regarding the inappropriate solicitation of investments by limited liability companies and so forth, in which the solicitation is made to a large number of investors by numerous employees who do not necessarily have a clear understanding of their company's business operations. In principle, registration as a financial instruments business operator is required when a person other than an executive member, including an employee, is involved in soliciting the acquisition of membership in a limited liability company, where the solicitation of the acquisition by the employee (or employees) is deemed to be conducted in the course of business. The FSA alerts the public to make prudent decisions when they receive solicitations to acquire membership interests in limited liability companies and so forth. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/ordinary/chuui/syainnken.html

November 30, 2022

Updated list of entities that are operating financial instruments businesses without proper registration (The Kanto Local Finance Bureau)
<Summary>
The FSA and the Kanto Local Finance Bureau issued warnings to entities that are operating financial instruments businesses without proper registration. (See the updated list of

foreign-based entities

*).

*This list also includes the warned non-registered entities with untraceable/unidentified addresses. (Postal and/or web addresses on the list of the warned non-registered foreign-based entities reflect those shown on their respective webpages, not necessarily the addresses that could be traced and identified).

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

November 28, 2022

Warning against inappropriate solicitation to acquire membership in limited liability companies, and so forth
<Summary>
The FSA issued a warning against inappropriate solicitation to acquire membership in limited liability companies ("godo gaisha [kaisha]" in Japanese), in response to the recent numerous inquiries and complaints regarding the inappropriate solicitation of investments by limited liability companies and so forth, in which the solicitation is made to a large number of investors by numerous employees who do not necessarily have a clear understanding of their company's business operations.
In principle, registration as a financial instruments business operator is required when a person other than an executive member, including an employee, is involved in soliciting the acquisition of membership in a limited liability company, where the solicitation of the acquisition by the employee (or employees) is deemed to be conducted in the course of business.
The FSA alerts the public to make prudent decisions when they receive solicitations to acquire membership interests in limited liability companies and so forth.

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

Others

December 1, 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 under the "Money Lending Act." 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.html
November 30, 2022	Administrative action against EXIA Digital Asset K.K. (The Kanto Local Finance Bureau) <Summary> The Kanto Local Finance Bureau took administrative action against EXIA Digital Asset K.K., a crypto-asset (virtual currency) exchange service provider, pursuant to the "Payment Services Act," ordering the suspension* of the entity's business operations from December 1, 2022, to December 31, 2022, in regard to crypto-asset exchange services (excluding those individually approved by the Bureau, such as management of assets in custody and payment transactions for users) and the acceptance of assets from new users in conjunction with such operations, thereby ordering the improvement of its business operations. This administrative action is based on findings by the Bureau, in which the Bureau ascertained that EXIA Digital Asset K.K.'s business management structure is insufficient to ensure appropriate and reliable crypto-asset exchange business mainly in terms of the following: - The entity is unable to make all of the payments scheduled for November 30, 2022, including the end-of-month payment to its system contractor, unless it receives financial assistance from outside sources, resulting in a shortage of working capital necessary for the continuation of business operations. There is a risk that such status may affect the return of users' property (assets) and so forth to the users of the crypto-asset exchange services. - The entity has already vacated its office with no new office in place, causing concern about the management of users' assets and the conduct of its business. * The suspension of business operations will be lifted if a fundamental review of the entity's business management structure to ensure the crypto-asset exchange business is appropriately and reliably carried out and the status of the review is confirmed by a statutory report to be filed by the entity based on the business improvement order. The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/news/r4/sonota/20221130/20221130.html
November 30, 2022	Activities of the FSA's Counseling Office for Financial Services Users for the period between July 1 and September 30, 2022 <Summary> The FSA's Counseling Office for Financial Services Users offers a counseling service to respond to inquiries and comments from financial services users. Between July 1 and September 30, 2022, the counseling office received 10,921 inquiries and comments, remaining roughly flat from 11,197 cases in the previous quarter (between April 1 and June 30, 2022). The original press release is available in Japanese at the following URL. https://www.fsa.go.jp/soudan/2022soudan07-09/2022_07-09.html

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