Provisional translation

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


June 5, 2009

[Opening Remarks by Minister Yosano]

I do not have anything particular to report to you.

[Questions and Answers]


Regarding financial affairs, insider trading cases have emerged again. There are cases of suspected insider trading involving Nomura Securities and Aozora Bank. What do you think of the fact that problems like these continue to arise in the financial industry?


People who have access to insider information are legally prohibited from buying stocks by using their advantageous positions. It is most inappropriate that problems like these arise at securities companies and banks, which are well aware of the prohibition. As this situation could amplify the distrust of depositors and investors in the financial industry, I hope that the Securities and Exchange Surveillance Commission will conduct appropriate investigations.


I have three questions concerning the leverage of FX (foreign exchange margin transactions). First, what is the purpose of (the new restriction on) the leverage. The second question is: what do you think is the basis for setting the maximum allowable leverage at 50 times next year and reducing it to 25 times in the following year? Third, according to a survey on think tanks and other organizations, many of them think that discretion should be allowed regarding this matter and oppose restriction. How do you view this survey result?


One problem with foreign exchange margin transactions is that margin calls may be made any time when the margin rate is set at hundreds of times. Moreover, in some cases, people making foreign exchange transactions based on a small amount of margins may be oblivious to the fact that they are engaging in a large amount of transactions. Foreign exchange transactions involving a large number of people are necessary to even out the level of foreign exchange rates. However, the margin ratio must be correlated to the extent of foreign exchange rate fluctuations if gamble-like trading is to be prevented. One-hundredth (of the yen-dollar exchange rate) is equivalent to one yen and one five-hundredth is 0.2 yen. If such small fluctuations led to margin calls or caused people to lose all their money it would be inappropriate, and ordinary investors are not professionals. If non-professional investors are to participate in foreign exchange margin transactions, the incidence of margin calls should be reduced as much as possible for the benefit of non-professionals. The purpose of such transactions is not serving the interests of business operators.


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