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FSA Weekly Review No.545 - July 14, 2023
What’s New on the FSA Website
Week of June 30, 2023 - July 6, 2023
This page contains the latest in events, developments, and updates to the FSA website.
Public Comments
| June 30, 2023 | Publication of the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act, etc." for public consultation <Summary>
The FSA published the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act, etc." (hereinafter referred to as "the proposal") for public consultation.
The proposal mainly intends to provide amendments in response to requests for deregulation from the financial sector and relevant industry organizations, particularly in terms of the following:
- to review procedures for establishing business offices of banks, etc. [Amendments to the "Regulation for Enforcement of the Banking Act, etc."]
- to add intermediary service of credit card issuance business (cashing function) of credit card companies to incidental operations of banks, etc. [Amendments to the "Regulation for Enforcement of the Banking Act, etc."]
- to expand the scope of business of a company conducting financial services (finance-related services) that concurrently engages in general business in foreign countries [Amendments to the "Regulation for Enforcement of the Banking Act, etc., and to the "Regulation for Enforcement of the Insurance Business Act"]
- to review regulations concerning the handling of individual customer information by bank agents, etc. and measures taken by the principal bank [Amendments to the "Regulation for Enforcement of the Banking Act," and to the "Comprehensive Guidelines for Supervision of Major Banks, etc."]
- to clarify agency and intermediary services, such as training services, consulting services, and research services, for other businesses conducted by bank subsidiaries and fellow subsidiaries as incidental services for banks, etc. [Amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and to the "Comprehensive Guidelines for Supervision of Insurance Companies"].
Public comments will be accepted until 12:00 p.m. (noon) [JST], July 31, 2023.
The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/ginkou/20230630/20230630.html  |
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| June 30, 2023 | Publication of the draft amendments to the "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc." for public consultation <Summary> The FSA proposed the draft amendments to the "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.," (hereinafter referred to as "the proposal") in regard to the LEX (Large Exposures) Framework for public consultation. The proposal is mainly intended to provide amendments to the Guidelines to clarify the screening/assessment criteria for granting special approval under the LEX Framework. Public comments will be accepted until 5:00 p.m. [JST], July 31, 2023. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/shouken/20230630-3/20230630.html |
| June 30, 2023 | Publication of the draft amendments to the "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc." for public consultation <Summary> The FSA proposed the draft amendments to the "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc." (hereinafter referred to as "the proposal") for public consultation. The proposal is mainly intended to provide consequential amendments to the Guidelines in terms of regulating acts of solicitation for churning conducted by financial institutions using Nippon Individual Savings Account (NISA)'s "Growth Investment Quota,"* thereby setting forth supervisory responses based on laws and regulations. Public comments will be accepted until 5:00 p.m. [JST], July 31, 2023. *"Growth Investment Quota" is a quota available for investment in listed stocks. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/shouken/20230630-2/20230630-2.html |
| June 30, 2023 | Publication of the draft amendments to the "Cabinet Office Order on Disclosure of Corporate Affairs" and others (in regard to the notification prior to the approval of listing) for public consultation <Summary> The FSA proposed the draft amendments to the "Cabinet Office Order on Disclosure of Corporate Affairs" and others (in regard to the notification prior to the approval of listing) [hereinafter referred to as "the proposal"] for public consultation. The proposal is mainly intended to provide amendments to the said Cabinet Office Order in response to the recommendation to review the IPO pricing process set out in the interim report of the "Working Group on Corporate Disclosure" (FY 2021) of the Financial System Council published in June 2022, which is based on a report of the "Working Group on the IPO (Initial Public Offering) Pricing Process," published by the Japan Securities Dealers Association (JSDA) in February 2022. The said JSDA's report sets out improvement measures, recommending that a review of the IPO pricing process, etc., should make steady progress while the necessary regulatory responses are taken. The report points out the necessity to shorten the listing schedule with more flexibility in setting the schedule, and suggests an improvement measure that a securities registration statement (hereinafter referred to as "pre-approval notification") be filed with the FSA prior to the approval of listing, and that the practical application for the fill-in requirements, etc., of the pre-approval notification be considered accordingly. In this context, the proposal is intended to provide amendments to the fill-in requirements of the pre-approval notification. Public comments will be accepted until 5:00 p.m. [JST], July 31, 2023. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/sonota/20230630-7/20230630-7.html |
| June 30, 2023 | Publication of the draft amendments to the "Cabinet Office Order on Disclosure of Corporate Affairs" and other relevant and applicable cabinet office orders (in regard to important contracts) for public consultation <Summary> The FSA proposed the draft amendments to the "Cabinet Office Order on Disclosure of Corporate Affairs" and other relevant and applicable cabinet office orders (in regard to important contracts) [hereinafter referred to as "the proposal"] for public consultation. In response to the recommendation in the summary report of the "Working Group on Corporate Disclosure" (FY 2021) of the Financial System Council published in June 2022 to develop a regulatory framework mainly for "disclosure of corporate initiatives regarding sustainability" and "disclosure of corporate governance," the proposal is intended to provide amendments to the narrative information to be filled out in the Annual Securities Report and Securities Registration Statement, as well as the Extraordinary Report. Public comments will be accepted until 12:00 p.m. (noon) [JST],August 10,2023. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/sonota/20230630-8/20230630-8.html |
| June 30, 2023 | 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 finalized the 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. In response to the recommendation made in the report on a review of the IPO public offering price setting process compiled and published in February 2022 by the "Working Group on Optimizing the Public Offering Price-Setting Process" [provisional English title] of the Japan Securities Dealers Association (JSDA) that IPO (Initial Public Offering) prices be set forth outside the scope of preliminary (provisional) pricing terms as a matter related to disclosure regulations, the finalized amendments provide corresponding amendments to "Points to Note on Disclosure of Corporate Affairs, etc. (Guidelines for Disclosure of Corporate Affairs, etc.)" The finalized amendments took effect on June 30, 2023. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/sonota/20230630-6/20230630-6.html |
| June 30, 2023 | Publication of the finalized amendments to the matters to be considered in handling the guidelines for the "Regulation on Terminology, Forms and Preparation Methods of Financial Statements" and other guidelines for other relevant and applicable regulations after public consultation <Summary>
The FSA finalized the amendments to the matters to be considered in handling the respective guidelines for the following regulations, etc. after public consultation:
- Regulation on Terminology, Forms and Preparation Methods of Financial Statements
- Regulation on Terminology, Forms, and Preparation Methods of Interim Financial Statements
- Regulation on Terminology, Forms and Preparation Methods of Quarterly Financial Statements, and
- the Cabinet Office Order on the System for Ensuring the Adequacy of Documents on Financial Calculation and of Other Information.
The finalized amendments mainly clarify the criteria for determining cases where the Commissioner of the FSA deems that the filing of financial statements disclosed or prepared by a foreign company in its home country or in an area outside Japan does not impair the public interest or the protection of investors when the foreign company files a Securities Registration Statement, etc. with the FSA.
The finalized amendments took effect on June 30, 2023.
The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/sonota/20230630-3/20230630-3.html |
| June 30, 2023 | Publication of the finalized "Cabinet Office Order to Amend the Cabinet Office Order on the System for Ensuring the Adequacy of Documents on Financial Calculation and of Other Information" after public consultation <Summary>
The FSA published the finalized "Cabinet Office Order to Amend the Cabinet Office Order on the System for Ensuring the Adequacy of Documents on Financial Calculation and of Other Information" after public consultation.
The said Cabinet Office Order was published in response to the revision* of the "Standards and Practice Standards for Management Assessment and Audit concerning Internal Control over Financial Reporting" (provisional English title) (hereinafter referred to as the "Internal Control Standards and Practice Standards"), which was conducted by the Business Accounting Council** at its plenary meeting on April 7, 2023, from the perspective of improving the effectiveness of internal control over financial reporting.
The finalized Cabinet Office Order as well as the relevant and applicable laws and regulations reflect the recent revision of "Internal Control Standards and Practice Standards," and will be enforced on April 1, 2024.
* The revision mainly pertains to the addition of items to be included in the "Internal Control Report," "Amended Internal Control Report," and "Internal Control Audit Report."
** The Business Accounting Council is comprised of external experts and stakeholders, wherein the FSA serves as the secretariat.
The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/sonota/20230630-5/20230630-5.html |
| June 30, 2023 | Publication of the finalized "Cabinet Order to Amend the Order for Enforcement of the Financial Instruments and Exchange Act" after public consultation <Summary> The FSA published the finalized "Cabinet Order to Amend the Order for Enforcement of the Financial Instruments and Exchange Act" in regard to the review of the facilitation of secondary trading of unlisted securities after public consultation. While PTSs (Proprietary Trading Systems) operated by financial instruments business operators are currently not permitted to handle unlisted securities for professional investors, the finalized Cabinet Order enables PTSs to handle unlisted securities for professional investors. The finalized Cabinet Order was enforced on July 1, 2023. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/shouken/20230630/20230630.html |
| June 30, 2023 | Finalization of the revisions to the “Discussion Paper on Dialogues and Practices Regarding Financial Institutions’ IT Governance” after public consultation <Summary> Since the publication of  the first edition of the "Discussion Paper on Dialogues and Practices Regarding Financial Institutions’ IT Governance" on June 21, 2019, the FSA has maintained constructive dialogues with financial institutions and those with expertise in IT governance. Taking into account that considerable progress has been made in digital transformation (DX) of financial institutions that utilize IT and digital technologies, the FSA updated the Discussion Paper to the second edition (available only in Japanese) that incorporated the perspectives and expectations for DX following public consultation conducted in May 2023. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/sonota/20230630/20230630.html |
Press Releases
International
| July 5, 2023 | Updated : Dedicated Website for International Financial Center |
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Publication
| June 30, 2023 | Publication of a research report as part of the project of "Multilateral Joint Research on Blockchain" <Summary> As part of the project of "Multilateral Joint Research on Blockchain," the FSA commissioned QUNIE CORPORATION, a consulting firm, to conduct research on ascertaining the actual status of the utilization of on- and off-chain data in decentralized financial systems including DeFi (decentralized finance), and published the compiled research report (available only in Japanese).The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/policy/bgin/innovationtop.html |
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| June 30, 2023 | Publication of a final report of a survey on the stewardship activities conducted by institutional investors. <Summary> The FSA commissioned Mizuho Research & Technologies, Ltd. to conduct a survey on the stewardship activities conducted by institutional investors, and published the compiled final report(available only in Japanese).The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/common/about/research/20230630/20230630.html |
Councils
| June 30, 2023 | Publication of the report for a summary of discussions of the meetings of the "Advisory Council on Scenario Data for Climate Change Risk and Opportunity Assessment" (provisional English title) <Summary> The FSA, Ministry of Education, Culture, Sports, Science and Technology, Ministry of Land, Infrastructure, Transport and Tourism, and Ministry of the Environment have co-hosted, as the secretariat, the meetings of the "Advisory Council on Scenario Data for Climate Change Risk and Opportunity Assessment" (provisional English title) continuously since December 2022, where a total of six meetings have been held to discuss the needs, challenges, and direction of responses to climate change-related data among a wide range of stakeholders, including research institutions, business corporations, financial institutions, and other organizations. Based on a series of discussions thereof, the FSA compiled and published the report for a summary of discussions of the Advisory Council's meetings that had been held six times since December 2022 alongside  the list of data contributing to physical risk assessment of climate change, which summarizes data maintained by the Japanese Government.The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/singi/20230630_4.html |
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| June 30, 2023 | Updated : Japan Corporate Governance Forum |
Banks
| June 30, 2023 | 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, 2022, and March 31, 2023. (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/r4/ginkou/20230630.html |
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| June 30, 2023 | 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, 2023. *The majority of the data reflects the data until May 31, 2023, whereas the data of cooperative financial institutions reflects the data until March 31, 2023. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/ordinary/coronavirus202001/kashitsuke/20200430.html |
Securities
| June 30, 2023 | Publication of the monitoring results pertaining to the implementation status of customer-oriented business conduct by distributors of financial instruments, such as investment trusts <Summary> The FSA published the monitoring results pertaining to the implementation status of customer-oriented business conduct by distributors of financial instruments, such as investment trusts. The compiled monitoring results include matters that can be common to all distributors based on the actual status ascertained through the monitoring conducted by the FSA in FY 2022. For the monitoring, the FSA selected distributors to be monitored intensively on a risk basis and conducted in-depth dialogue and monitoring, focusing on the sales and management systems of structured bonds and foreign currency-denominated single-premium insurance policies, based on the sales trends of financial instruments, such as investment trusts, etc. in each business line, and on the amount of sales in terms of the scale of each individual distributor. The original press releases are available in Japanese at the following URLs: https://www.fsa.go.jp/news/r4/kokyakuhoni/fdreport/fd_202306.html |
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Insurance
| June 30, 2023 | Current status of deliberations on the finalization of the standards for the economic value-based solvency regulatory framework (mainly for insurance companies) <Summary> The FSA has published a report on the current status of its deliberations on the finalization of standards for the economic value-based solvency regulatory framework (mainly for insurance companies)[available only in Japanese] scheduled to be introduced in 2025. Based on the contents set out in the report, the FSA intends to continue its deliberations to ensure a smooth shift to the new regulatory framework. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/hoken/20230630.html |
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| June 30, 2023 | Publication of the summary from "Annual Report on Insurance Supervision 2023" |
Others
| July 3, 2023 | Request for financial measures to deal with disasters caused by heavy rain from June 29, 2023 (The Chugoku Local Finance Bureau) <Summary> The Chugoku Local Finance Bureau alongside Shimonoseki Branch of the Bank of Japan issued a statement titled "Request for financial measures to deal with disasters caused by heavy rain from June 29, 2023" (available only in Japanese) to the relevant financial institutions.The statement requests financial institutions in Yamaguchi prefecture* to appropriately deal with victims of the disaster considering their circumstances, such as by making the repayment of deposits flexible. *Matters related to financial measures in Yamaguchi prefecture are within the purview of the Chugoku Local Finance Bureau. Disaster-affected areas in the prefecture are 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/r5/ginkou/20230703.html |
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| June 30, 2023 | Publication of a report on the current status and challenges regarding anti-money laundering, counter financing of terrorism, and counter proliferation financing in Japan (as of June 2023) <Summary> The FSA has published a report on the current status and challenges regarding anti-money laundering, counter financing of terrorism, and counter proliferation financing (hereinafter referred to as "AML/CFT/CPF") in Japan (as of June 2023). The report summarizes the status and progress of financial institutions’ AML/CFT/CPF regimes and the FSA's AML/CFT/CPF policies as of June 30, 2023. Taking into account recommendations prescribed in the "Fourth Round Mutual Evaluation Report of Japan" published by the FATF (Financial Action Task Force) in August 2021, the FSA believes it is important to cooperate with the private sector to enhance AML/CFT/CPF actions and to build a sound financial system that will not be abused for money laundering, etc. The FSA hopes the report will help financial institutions enhance their AML/CFT/CPF measures by referring to the FSA’s view and issues identified through its supervisory work prescribed therein. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/20230630/20230630.html |
| June 30, 2023 | Administrative action against Akasaka Audit LLC. <Summary> The FSA took an administrative action against Akasaka Audit LLC., 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/r4/sonota/20230630.html |
| June 30, 2023 | 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/r4/sonota/20230630-4/20230630.html |
| June 30, 2023 | Warning against trading with entities that are operating financial instruments businesses without proper registration <Summary> In response to the recent surge in reports from financial service users who have engaged in transactions with entities that are operating financial instruments businesses without proper registration (i.e. "unregistered business operators"), and have been denied withdrawals, charged exorbitant fees, or have suddenly lost contact with such entities, the FSA issued a warning against trading with unregistered business operators, urging the public to make prudent judgment before they engage in transactions with a business operator, by checking whether the business operator is registered as a crypto asset exchange service provider or financial instruments business operator, etc., by referring to the "List of Licensed (Registered) Financial Institutions." The FSA also urges financial service users to contact the FSA's Counseling Office for Financial Services Users or the information contact of the SESC (Securities and Exchange Surveillance Commission) if they have concerns or encounter any problems after engaging in transactions with an unregistered business operator. The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/ordinary/chuui/highrisk.html |
| June 30, 2023 | Publication of an analysis report on financial Institutions' IT system failures <Summary>
Based on reports of system failures from financial institutions, the FSA analyzes the trends, causes and countermeasures of system failures, thereby annually publishing the results of the analysis in a
report
(available only in Japanese) that serves as a reference for financial institutions in their system risk management.
The report includes trends of the system failures reported by financial institutions in FY2022 (April 2022 through March 2023), as well as description and causes of system failures and countermeasures observed in typical cases of system failure among the reported cases from July 2018 through March 2023.
The original press release is available in Japanese at the following URL: https://www.fsa.go.jp/news/r4/sonota/20230630-2/20230630-2.html |
| June 30, 2023 | Publication of the main issues raised by the FSA at opinion exchange meetings with relevant associations in the financial sector <Summary>
The FSA has published the main issues raised by the FSA at opinion exchange meetings* held with relevant associations in the financial sector in June 2023. (Available only in Japanese).
Common topics in almost all groups were:
- Response to the shift from LIBOR (London Interbank Offered Rate)
- Integration of identity verification into My Number Card
- Initiatives for sustainable finance
- Requests (by the FSA to financial institutions and associations) for financial measures to deal with disasters caused by heavy rainfall due to a "Baiu" front (rainy season front), and by Typhoon No.2, 2023, and
- Cybersecurity self-assessment.
Other notable topics were:
- Government initiatives, etc. related to Web 3.0, and
- Publication of Cabinet Orders, etc. pertaining to the FY 2022 amendments to the "Payment Services Act" and the amendments to the "Act on Prevention of Transfer of Criminal Proceeds."
* To enhance the transparency of its administration and to share its awareness of issues in the financial sector in a timely manner, every month the FSA publishes the main issues raised by the FSA at opinion exchange meetings with the relevant associations** in the financial sector. Opinion exchange meetings are held with the respective associations on a regular basis.
** In June 2023, opinion exchange meetings were held respectively with the following six groups: major banks, etc.; the Regional Banks Association of Japan and the Second Association of Regional Banks; the Life Insurance Association of Japan; the General Insurance Association of Japan; the Japan Securities Dealers Association (JSDA); and Japan Virtual and Crypto assets Exchange Association.
https://www.fsa.go.jp/common/ronten/index.htmlThe original press release is available in Japanese at the following URL: |
| June 30, 2023 | Updated : Trends in High-Speed Trading |
| June 30, 2023 | Comprehensive Guidelines for Supervision of Financial Service Intermediaries |
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