Press Conference by the Minister for Financial Services

(Excerpt)

August 26, 2005

Q.

The other day, an investment fund that attempted to acquire more than 20% of Osaka Securities Exchange's shares was reportedly notified by the Financial Services Agency (FSA) that such an application would not be approved. The representative of the investment fund had allegedly claimed that the criteria for approval were a bit unclear. One may well have an impression that the criteria appear to be unclear. There may be a variety of issues associated with stock exchanges, and I would like to hear your views on this.

A.

As for the clarity of the criteria, it is difficult to set detailed standards beyond the existing ones stipulated by the relevant legislation, at this stage. And the authority will, upon application, make decisions on a case-to-case basis regarding approval for a major shareholder of a publicly-traded securities exchange.

Q.

Can you please explain once again the reasons why it was not approved?

A.

To be approved as a major shareholder, the authority will examine the appropriateness of the applicant in order to ensure fairness and other matters about the operation of the securities exchange, since major shareholders of the securities exchange will have substantial influence over its operations. In the present case, examination was carried out in accordance with the criteria stipulated in the Securities and Exchange Law. The authority, having gone through the hearing procedures under the Securities and Exchange Law, had decided not to approve the application on the ground that the authority could not ascertain that the criteria were met as the sound and proper operation of the securities exchange might be prejudiced by the applicant exercising its voting rights.

Q.

Another similar question by looking at the reasons for not approving the Murakami Fund (M&A Consulting, Inc), it might be extremely difficult for investment funds or institutional investors that file such an application to be given approval in the future. What is your view on this?

A.

If I may answer to the question in general, an application for approval to become a major shareholder of a securities exchange will be considered on a case-to-case basis, and approval will be given if there is no risk of conflict of interest and the criteria in the relevant legislations are met.

Q.

Some media have recently reported that the cap on deferred tax assets in calculating capital adequacy ratios of large banks will be 40% at the first stage and 20% at the last stage. If you can, please describe how much progress has been made in regards to studies on this subject.

A.

I am aware that there are various news reports. As you may know, in accordance with the work schedule of the Program for Further Financial Reform, the plan is to amend the ministerial notification on capital adequacy ratios incorporating the contents of the regulations, the timing for implementation and other matters in the first half of fiscal 2005. With this in mind, the FSA is currently in the process of conducting a full study on the appropriateness of accounting for deferred tax assets, so no concrete decisions have been made at this stage yet.