Press Conference by Kaoru Yosano, Minister of State for Economic and Fiscal Policy and Financial Services

November 4, 2005

Minister's Statement

At the Cabinet meeting, there was one subject relating to the Financial Services Agency (FSA), namely, the determination of the written response to the Questions on Disclosure and Privacy Protection in Securities Reports submitted by Mr. Kenzo Fujisue, member of the House of Councilors. There is nothing further to announce in relation to the Cabinet meeting. Prior to the Cabinet meeting, I was informed by the FSA administration staff that some trades at the Nagoya Stock Exchange were shut down. Pursuant to Article 151 of the Securities and Exchange Law, the FSA will order a report. Since the beginning of the year, problems have occurred at the Osaka Securities Exchange and recently at the Tokyo Stock Exchange, and this time, in the Nagoya Stock Exchange. We will therefore conduct an inspection not only at the Nagoya Stock Exchange but at all stock exchanges simultaneously.

Q & A

Q.

In the said reporting order given to the Nagoya Stock Exchange, what is the deadline and the nature of the report?

A.

The reply must be made within two weeks by law, so a report must be given by November 18.

Q.

Is the report about the causes and the measures to prevent it from happening again?

A.

Specifically, it must clarify the reasons why it happened--such as problems in both software and hardware and problems in capacity--and where the responsibility lies. Further, a proper explanation must be given with respect to measures to preventing this from happening again.

Q.

When will all the stock exchanges in Japan be inspected simultaneously? What is the focus of the inspection?

A.

We hope to conduct an inspection by November 30, but because the inspection task must be done in an extremely detailed manner, November 30 is just a target date. Therefore, we will take a two-tiered approach: we will request reports on specific matters under Article 151, and request all stock exchanges to inspect their systems and report the system inspection results.

Q.

The system failures that occurred at the Tokyo Stock Exchange recently and at the Nagoya Stock Exchange this time may undermine confidence in Japan's market infrastructure. With respect to reports on simultaneous inspections, what kind of stance will the FSA take in supervising stock exchanges in the future?

A.

System problems could be attributable to hardware problems, software problems or lack of capacity relative to increasing trading volumes.

Therefore, inspections must be conducted from all angles. If any instability is identified in the system itself, efforts must be made to further perfect the system.

Q.

The Nikkei Stock Average recovered to the ¥ 14,000 level for the first time in four and a half years. What is your view on this, including your understanding of the economic climate?

A.

Stock prices are the most important leading indicator for the economy, with a lead of six months or so according to popular theory. Judging from the growth rate, unemployment rate and other indicators, the Japanese economy is clearly on the way to recovery as far as statistics are concerned, and it is hoped that it is a full-fledged recovery track. At the same time, the recovery in stock prices means that the asset valuation of banks, life insurance companies and other financial institutions will improve, so that in itself is a very welcome phenomenon.

Q.

In regards to the recent system failure at the Tokyo Stock Exchange, don't you think it is necessary to directly interview the senior officers of the Tokyo Stock Exchange?

A.

Mr. Nishimuro from the Tokyo Stock Exchange is scheduled to be here today, so I intend to ask him about the details and what is currently being done to deal with the situation.

Q.

This may be a trivial question about the stock exchanges, but does the simultaneous inspection include the regional stock exchanges in addition to JASDAQ and Mothers?

A.

Yes, it covers the five stock exchanges plus JASDAQ.

Q.

Meiji Yasuda Life Insurance Company appears to be attempting to radically change its management team, having been subject to administrative action recently. Although this question relates to an individual company, can you comment on this?

A.

Although I cannot comment on the personnel affairs of an individual company, I imagine that personnel reshuffling has been carried out at the Company, probably based on the view that it needs to take proper responsibility. That is up to the Company's own judgment, but I assume that ultimately the top management explicitly accepted responsibility.

Q.

What time do you plan to meet Mr. Nishimuro today?

A.

2:30pm.

Q.

How long will the meeting be, about an hour?

A.

No, I have not put anything in my schedule after that so there is no time limit.

(End)