Better Regulation
- Improving the quality of financial regulation -

I. What is Better Regulation?

"Better Regulation" refers to improving the quality of financial regulation in order to bring about a Better Regulatory environment. The FSA sees "better regulation" as an overarching theme for the institution's work in the coming years.

1. Better Regulation -Improving the quality of financial regulation -
2. “Toward Better Regulation” speech by Takafumi Sato, Commissioner of the Financial Services Agency (September 25 and 26, 2007)Presentation material (PDF:123KB)

II. Optimal combination of rules-based and principles-based supervisory approaches

The first pillar of Better Regulation aims to ensure the effectiveness of financial regulation as a whole through the optimal combination of a "rules-based supervisory approach," which involves establishing detailed rules and applying them to individual cases, and a "principles-based supervisory approach," which is a framework in which several key principles are explicitly stated so as to encourage voluntary efforts by financial firms in line with such principles. The FSA agreed with the financial firms on 14 key principles that constitute the cornerstones of the principles-based supervisory approach.

1. "The Principles in the Financial Service Industry" (PDF:18KB)
2. FSA publishes "The Principles in the Financial Service Industry" (April 24, 2008)
3. "Improving the Quality of Financial Regulation: Compliance with the Rules and Principles" speech by Takafumi Sato, Commissioner of Financial Services Agency (September 12, 2007) (Available in Japanese)Presentation material (PDF:340KB)

III. Other Pillars of Better Regulation

We have been engaged in various efforts to achieve "Better Regulation," centering on the following major pillars:

• Second Pillar: Timely recognition of priority issues and effective response

• Third Pillar: Encouraging voluntary efforts by financial institutions and placing greater emphasis on providing incentives

• Fourth pillar: Improving the transparency and predictability of regulatory actions

• Read more

IV. Progress reports on Better Regulation

From the viewpoint of conducting regular reviews of the progress of its efforts toward “Better Regulation”, which will then serve as a reference for subsequent efforts, the FSA has decided to publish progress reports on Better Regulation on a regular basis.

• First Progress Report (May 19, 2008)
• Second Progress Report (January 26, 2009)
• Third Progress Report (September 17, 2009)

(Reference material)

• “ Progress in the FSA's Efforts toward ‘Better Regulation’ ” speech by Takafumi Sato, Commissioner of the Financial Services Agency at the International Bankers Association (June 26, 2008)Presentation material (PDF:119KB)