FSA Weekly Review No.568

The FSA proposed the draft amendments to the "Cabinet Office Order on Financial Instruments Business, etc." and others (hereinafter collectively referred to as the "proposal") for public consultation.

 

The proposal is mainly aimed at setting forth the following:

- Exemption from prohibition of becoming entrusted with a purchase and sale of securities subject to granting credit.

(This is in response to a recommendation to raise the maximum amount of credit card payments for cumulative investment contracts stated in the “Report of Working Group on Capital Market Regulations and Asset Management Task Force of the Financial System Council.”)

 

- Regulation on appointment as a lead managing underwriter for securities issued by the parent corporation and its subsidiary corporations, etc. (beneficiary securities of a trust that issues beneficiary securities will be added to the scope of exemption of the regulation, and consequential amendments will be provided to the form of securities registration statement when a securities company, etc. becomes the lead managing underwriter for underwriting securities issued by its parent and subsidiary corporations, etc.).

 

Public comments will be accepted until 5:00 p.m. (JST), January 19, 2024.

The FSA published the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act" and others (hereinafter referred to as "the proposal") for public consultation.

The proposal mainly intends to provide amendments in response to requests for deregulation from the financial sector and relevant industry organizations, particularly in terms of the following:

 

- to set forth that the head office, etc. shall remain in the category of the place of business subject to the approval system, when a bank applies for/notifies the FSA to designate its business office as its head office, etc. [Amendments to the "Regulation for Enforcement of the Banking Act," etc.] 

- to set forth the documents to be attached to applications for approval and/or notifications when business offices, etc. of banks, etc. newly establish business holidays (non-business days), etc. [Amendments to the "Regulation for Enforcement of the Banking Act," etc.] 

- to provide amendments to various notifications for the establishment of business offices by simplifying fill-in requirements thereof [Amendments to "Comprehensive Guidelines for Supervision of Major Banks, etc." (including Forms and Reference Materials), etc.], and 

- to provide consequential amendments in response to the amendments to the relevant and applicable Cabinet Office Orders and Ministerial Orders, etc. [Amendments to "Comprehensive Guidelines for Supervision of Major Banks, etc." (including Forms and Reference Materials), etc.]

 

Note: As for the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Guidelines, consequential amendments are to be provided in response to the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act" (available only in Japanese) published on June 30, 2023. 

 

Public comments will be accepted until 5:00 p.m. (JST), January 22, 2024.

The FSA proposed the draft amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Guidelines (hereinafter referred to as the "proposal") for public consultation.

Subsequent to the finalized amendments to the regulatory notice on capital adequacy requirements (Pillar I)  promulgated in September 2023 (scheduled to take effect on March 31, 2024) in response to the document titled "Capital treatment of securitisations of non-performing loans"  published in November 2020 by the BCBS (Basel Committee on Banking Supervision), the proposal is intended to provide the consequential amendments* to "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Comprehensive Guidelines.

 

* The consequential amendments to the said Comprehensive Guidelines, etc. are intended to preclude transactions executed with the main purpose of reducing the capital charge on the non-delinquent exposures in the underlying relative to the 100% risk weight on the senior exposure to the non-performing loans (NPLs) securitization, in line with the document published in November 2020 by the BCBS. 

Public comments will be accepted until 5:00 p.m. (JST), January 26, 2024.

The Kanto Local Finance Bureau took administrative action against Stock Japan Co., Ltd., ordering it to partially suspend its business operations (in terms of the solicitation and conclusion of new investment advisory contracts [including contracts for changes involving an increase in the contract amount]) from December 15, 2023, to January 14, 2024, and improve its business operations pursuant to the "Financial Instruments and Exchange Act" (hereinafter referred to as the "FIEA"). 

 

The administrative action was taken in response to the recommendation from the Securities and Exchange Surveillance Commission (SESC) for administrative action against the said entity, which was ascertained to have been acting in violation of the FIEA, such as in terms of making false statements, etc. in regard to the conclusion of, or solicitation for, financial instruments transaction contracts, based on the results of onsite inspection conducted by the SESC.

 

The business improvement order against the entity includes the following:

1. to immediately stop posting inappropriate advertisements

2. to analyze the cause of the act in violation of the FIEA, and to formulate and implement measures to prevent recurrence, thereby establishing an appropriate business operational structure and internal control system

3. to explain to all customers the details of the administrative action taken against the entity by the Bureau, and to take appropriate responses

4. to clarify where the responsibility for the act in violation of the FIEA lies; and

5. to report in writing by January 15, 2024, on the status of actions 1 through 4 above.