Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, June 1, 2012, from 9:41 a.m. to 9:47 a.m.)

[Opening Remarks by Minister Jimi]

Today, June 1, is traditionally the day when we make the change to summer clothes. To promote the “cool biz” initiative, all cabinet ministers, including me, attended today's cabinet meeting dressed in kariyushi shirts, as we did last year.

I would like you to cooperate in promoting the cool biz initiative.

[Questions & Answers]

Q.

This Tuesday, the Securities and Exchange Surveillance Commission (SESC) announced a recommendation for the Financial Services Agency (FSA) to order the payment of administrative monetary penalties in relation to the public offering of new shares. What is common to this and other similar cases is that information leaked through securities companies' Chinese walls. There is criticism that this is a problem institutionally entrenched in securities companies. What do you think of this situation?

A.

It is regrettable that information concerning the public offering of new shares, which should be strictly managed, was allegedly leaked from the underwriting division to the sales division at several securities companies.

Securities companies must strictly manage corporate information, including information concerning the public offering of new shares, from the perspective of preventing illegal transactions, such as insider trading. They are required to develop effective internal control systems and conduct business with a high level of compliance awareness and professional ethics.

If problems are recognized with regard to securities companies' business operation, we will check how they identify and handle their problems, and will take strict action in accordance with laws and regulations.

Q.

Let me ask one more question concerning insider trading. Yesterday, the Democratic Party of Japan (DPJ) decided to have a new working group discuss issues relating to insider trading. The idea of strengthening punishments and increasing administrative monetary penalties is expected to be discussed. What are your thoughts on that?

A.

I have learned from media reports that the DPJ decided to establish a working group to discuss issues concerning insider trading related to public offering of shares, as you mentioned now. I understand that insider trading related to public offering of shares could undermine investors' confidence in the fairness and transparency of the Japanese market, and that it is very important to prevent it. As I have repeatedly mentioned, ensuring fairness and transparency is very important both domestically and internationally.

Regarding this matter, we included “Response to Possible Unfair Trade Related to Public Offering” in the Action Plan for the New Growth Strategy, which was announced in December 2010 and have taken preventive measures in terms of institution and operation. As for institutional systems relating to insider trading, the FSA needs to consider more effective preventive measures while taking account of the specifics of recent cases of illegal trade.

Q.

The euro fell into the 96-yen range for the first time in eleven and a half years. How do you view the current situation in Europe? In particular, as the minister in charge of financial services, how do you view the situation in Spain, where concerns over bank bailouts are growing?

A.

Regarding the financial and economic situations in Europe, various media organizations are conducting opinion polls ahead of Greece's re-election scheduled for June 17. In the market, the view is prevailing that there are moves to avert risks, as shown by movements in exchange rates of the euro and other currencies, and a rise in government bonds issued by peripheral European countries, against the background of uncertainty over fiscal consolidation efforts so far made in Europe, and the recent concerns over fiscal and financial problems in Spain.

I would like to refrain from commenting on market developments. As the minister for financial services, I will continue to closely monitor market developments with strong interest and a sense of vigilance while maintaining cooperation with relevant cabinet ministers and the Bank of Japan.

Thank you very much.

(End)