8.6.2002
Financial Services Agency

Program for Promoting Securities Markets Reform [Summary]
(Provisional Translation)

The FSA is to take comprehensive measures for the reform on the securities markets, including the involvement of issuers, market intermediaries, market operators and investors, in order to enhance the depth of securities markets in which a wide range of investors can participate and enable the markets to play a central role in the Japanese financial system in which the market mechanism is set as its core.

1. Development of securities markets easy to access for everyone
    ~Promoting broader participation of diversified investors~

(1)	Expanding the marketing channel through securities companies Reducing the minimum capital requirement/ Introducing a fit and proper rule on principal shareholders [Considering a submission of a bill] Introducing a sales agency system [Considering a submission of a bill] Reviewing securities companies' business practices to enhance investors' confidence Reviewing the coverage of discretionary trading account transactions to enhance customers' convenience
(2)	Promoting sales of securities through banks Realizing common space sharing between banks and securities companies Clarifying the rule on banks' operations of handling written orders from customers to buy and sell securities (establishing FSA's operational guidelines/ Removing the prohibition on cooperative-type financial institutions accepting written orders from customers to buy and sell securities [Considering a submission of a bill]
(3)	Developing environment for reliable investment trust and investment advisor services Reducing the minimum capital requirement/ Introducing a fit and proper rule on principal shareholders [Considering a submission of a bill] Reviewing business practices to enhance customers' confidence Strengthening disclosure of investment trusts/ realizing more understandable prospectus
(4)	Promoting investment knowledge/ Providing information to investors
(5)	Requesting tax measures that promote active participation by investors

2. Establishment of securities markets that investors can invest with confidence
    ~Ensuring fairness and transparency of the markets~

(1)	Strengthening the organization and function of the Securities and Exchange Surveillance Commission (SESC) Strengthening surveillance against the violation of disclosure requirements Enhancing inspection and supervision against vicious market intermediaries
(2)	Enhancing accounting and auditing system considering recent incidents in the U.S. Strengthening supervision over auditing firms Reviewing the CPA system (increasing the number and improvement of quality of CPA)
(3)	Ensuring fair transactions in the markets Introducing a pricing rule on margin transactions to ensure fairness of transactions Introducing a system of best execution of customers' order in JSDA's OTC markets Ensuring effective fiduciary duty of institutional investors Enhancing reliability of securities analysts/ Strengthening compliance by securities sales representatives
(4)	Enhancing disclosure Enhancing continuous disclosure of ''risk information'' in financial reports Enhancing quarterly disclosure of listed companies
(5)	Strengthening corporate governance from the investors' viewpoint Enhancing disclosure of ''governance information'' on earnings digests and financial reports/ Examining effective measures to strengthen corporate governance

3. Establishment of efficient and competitive securities markets
    ~Improving stability and efficiency in securities markets~

(1)	Reviewing comprehensively the Japanese markets from a medium-to-long term perspective Reviewing the role of stock exchanges responding to globalization and the progress in Information Technology
(2)	Developing rules in stock exchanges, OTC markets and private offering markets Stock Exchanges: Stricter delisting criteria : Developing provisions to set rules on establishing order routing terminals by foreign stock exchanges on cross-border transactions [Considering a submission of a bill] OTC markets : Considering expansion of trading of non-public companies' stocks (green sheet markets) Private Offering Markets : Expanding the scope of accredited institutional investors who participate in the markets
(3)	Promoting reform of Securities Settlement System for smooth transactions in the markets Implementing smoothly the new securities settlement system on bonds Establishing the uniform securities settlement system which includes a settlement system for stocks
(4)	Promoting securitization Developing a securitization market of housing loans Improving convenience of asset securitization schemes Establishing an environment which facilitates securitization of bank loans

[Reference] New Comprehensive Program for Promoting Securities Markets Reform