Financial Services AgencyFSA Weekly Review No.579

March 22, 2024

What’s New on the FSA Website

Week of March 8, 2024 - March 14, 2024

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

Public Comments

March 8, 2024 Publication of the finalized amendments to the "Cabinet Office Order on Financial Instruments Business, etc." and the "Cabinet Office Order on Financial Service Intermediary Business Operators, etc." after public consultation
<Summary>
The FSA finalized the amendments to the "Cabinet Office Order on Financial Instruments Business, etc." and the "Cabinet Office Order on Financial Service Intermediary Business Operators, etc." after public consultation.
The finalized amendments mainly set forth the exemption from prohibition of becoming entrusted with a purchase and sale of securities subject to granting credit. (This is in response to a recommendation to raise the maximum amount of credit card payments for cumulative investment contracts stated in the  PDF“Report of Working Group on Capital Market Regulations and Asset Management Task Force of the Financial System Council”open new window [available only in Japanese] published on December 12, 2023).

The finalized amendments were enforced on March 8, 2024.

The original press release is available in Japanese.open new window
March 8, 2024 Publication of the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Guidelines after public consultation
<Summary>
The FSA finalized the amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Guidelines after public consultation.
Subsequent to the finalized amendments to the regulatory notice on capital adequacy requirements (Pillar I)open new window  promulgated in September 2023 (scheduled to take effect on March 31, 2024) in response to the document titled "Capital treatment of securitisations of non-performing loans"open new window  published in November 2020 by the BCBS (Basel Committee on Banking Supervision), the finalized amendments provide consequential amendments* to "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Comprehensive Guidelines.
The finalized amendments will take effect on March 31, 2024.
 

* The consequential amendments to the said Comprehensive Guidelines, etc. are intended to preclude transactions executed with the main purpose of reducing the capital charge on the non-delinquent exposures in the underlying relative to the 100% risk weight on the senior exposure to the non-performing loan (NPL) securitization, in line with the document published in November 2020 by the BCBS.


The original press release is available in Japanese.open new window

Press Releases

Policies

March 14, 2024 Publication of a series of ex-ante valuation reports based on regulatory impact analysis (RIA) in regard to a "bill to partially amend the Financial Instruments and Exchange Act and the Act on Investment Trusts and Investment Corporations," and to "bill on the promotion of cash flow-based lending"
<Summary>
The FSA published a series of ex-ante evaluation reports based on regulatory impact analysis (RIA)* pertaining to a "bill to partially amend the Financial Instruments and Exchange Act and the Act on Investment Trusts and Investment Corporations," and to a "bill on the promotion of  cash flow-based lending" in terms of the following:

- to review the Tender Offer Rule and Large Shareholding Reporting Rule

- to develop a system for enhancement and diversification of asset management business, and

- to establish a trust business to facilitate the use of new security interests in the entire business, including intangible assets, as collateral.
 

* RIA is a methodology aimed at improving the objectivity and transparency of regulations by objectively analyzing the impact of the introduction or revision of regulations in respect of the expected implementation costs and effects, etc., and by disclosing the results. In this regard, competition assessment estimates and evaluates the impact on the competitive status based on the benefits and burdens incurred by the establishment, revision, or abolition of a regulation.


The original press release is available in Japanese.open new window
March 13, 2024 Initiatives by the financial industry to enhance their asset management businesses

International 

March 13, 2024 Asia High-level Financial Regulators' Forum holds its first meeting
March 11, 2024 Asia GX（Green Transformation）Consortium will hold kick-off meeting

Publication

March 8, 2024 Publication of "FSA Analytical Notes"

Banks

March 8, 2024 Publication of the updated FY 2023 edition of the reference casebook of good practices on the disclosure of narrative information, mainly in regard to perspectives and initiatives for corporate sustainability
<Summary>
The FSA has been publishing a series of reference casebooks of good practices on the disclosure of narrative information to encourage corporate initiatives to accumulate and instill good practices toward the enhancement of corporate narrative disclosure that contributes to constructive dialogue between investors and a corporation. 
Following the publication of the FY 2023 edition of the reference casebook* in December 2023, the FSA published the updated edition  by adding good practices regarding the following section items:

- Status of corporate governance, etc. (an outline of corporate governance)

- Status of audits

- Status of shareholding 

- Key Contracts critical to business management. etc., and 

- Disclosure practices by small- and mid-sized listed companies related to respective topics covered in the reference casebook

In addition, a quantitative analysis related to sustainability disclosure in securities reports is added to the reference casebook.

The FY 2023 edition of the reference casebook has been compiled by the "Study Group for Collecting Good Practices on Corporate Disclosure of Narrative Information Based on the Principles Regarding the Disclosure of Narrative Information,"** and it shares the latest collection of favorable practices on the disclosure of narrative information mainly in terms of corporate sustainability. (Updates to the casebook are made as deemed necessary).
 

* Corporate disclosure of sustainability information is a key corporate disclosure element that has been gaining focus and interest in society lately. Relevant initiatives to enhance corporate disclosure of sustainability information are encouraged through amendments to the Corporate Governance Code and other measures.

** The Study Group is to bring investors, analysts, experts, and representatives from listed companies together to update the reference casebook.


The original press release is available in Japanese.open new window
March 8, 2024 Overview of modifications to lending conditions by financial institutions 
<Summary>
The FSA published an overview of modifications to lending conditions made by cooperative financial institutions for the period from March 10, 2020 to December 31, 2023.

The original press release is available in Japanese.open new window
March 8, 2024 Authorization of the merger of Resona Holdings, Inc. and Kansai Mirai Financial Group, Inc.
<Summary>
The FSA authorized the merger of Resona Holdings, Inc. with Kansai Mirai Financial Group, Inc., pursuant to the "Banking Act." The merger is scheduled to take effect on April 1, 2024, whereby the corporate name of the merged bank holding company will thereafter be Resona Holdings, Inc.

The original press release is available in Japanese.open new window
March 8, 2024 Publication of "Holistic Support Measures for Business Turnaround of Corporate Borrowers" (provisional English title) and a request for the facilitation of financing for small- and medium-sized enterprises (SMEs)
<Summary>
While socioeconomic activities are beginning to normalize from the phase of the COVID-19 crisis, many businesses are still facing difficult cash flow conditions with tight borrowing constraints due to global price hikes, labor shortages, and other factors.
In response to such circumstances, and particularly given that an inability to repay the virtually interest-free unsecured loans extended by public or private financial institutions (FIs) amid the COVID-19 crisis can cause failures of corporate borrowers, the FSA alongside METI (Ministry of Economy, Trade and Industry) and MOF (Ministry of Finance) compiled and published  PDF"Holistic Support Measures for Business Turnaround of Corporate Borrowers" (provisional English title)open new window[available only in Japanese]. 
The said holistic support measures ensure FIs to provide corporate borrowers with support measures in terms of forward-looking management improvement and business turnaround, not limited to financial (cash management) support. 
In this context, the FSA requested FIs to further extend tailored business support to corporate borrowers suffering from corporate debts, which ballooned during the COVID-19 crisis, by referring to the said holistic support measures.

The original press release is available in Japanese.open new window

Others

March 13, 2024 Updated list of issuers of gift certificates in repayment procedures based on the "Payment Services Act"
March 13, 2024 Updated：Initiatives by the financial industry to enhance their asset management businesses
March 11, 2024 The Dialogue between the Financial Services Agency (FSA) and the Center for Financial Industry Information Systems (FISC)
March 8, 2024 Administrative action against FTX Japan, Inc. (extension of the order of retention of assets within Japan for another three months) [The Kanto Local Finance Bureau]
<Summary>
The Kanto Local Finance Bureau took administrative action against FTX Japan, Inc., pursuant to the "Financial Instruments and Exchange Act" (hereinafter referred to as the "FIEA"), ordering the extension of the order of retention of assets* within Japan for another three months from March 10, 2024, to June 9, 2024, upon expiration of the order for the retention of assets within Japan issued on December 8, 2023 pursuant to Article 56-3 of the FIEA. 
This administrative action was taken to ensure the continued protection of investors, taking into account the fact that the company is subject to bankruptcy filings** under the U.S. Bankruptcy Code initiated by its parent company, etc. (The order to improve its business operations, which was issued on November 10, 2022, remains in effect.)
Details of the administrative action are available [only in Japanese] on the website of the Kanto Local Finance Bureauopen new window.
 

* "Assets" in this context refer to those retained within Japan from March 10, 2024, to June 9, 2024, equal to the amount of liabilities to be recorded in the liabilities section of the entity's balance sheet (including the amount of guarantee obligations) less the amount of liabilities to non-residents as of the respective dates (unless otherwise approved by the Bureau as being in the public interest or in the interest of investor protection).

** Bankruptcy filings under Chapter 11 of the U.S. Bankruptcy Code generally pertain to reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. (Source: the webpage of the U.S. Federal Courtsopen new window) 


The original press release is available in Japanese.open new window

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