The Japanese securities market is confronting a major change in
environment, triggered by liberalization and globalization of
financial markets, rapid progress in communications and information
technology, and the aging of the society. Japan faces a major
challenge in preparing a securities market fit for the 21st century
under a medium- and long-term perspective.
With this in mind, the Securities and Exchange Council established
the General Committee to conduct a comprehensive review of the
securities market, its intermediaries, and administration of the
market.
In November last year, the Prime Minister issued a directive concerning
Financial System Reform, aimed at rejuvenating the Japanese financial
market, under the three principles of Free, Fair and Global, so
that by 2001, the beginning of the 21st Century, the Japanese
market will rival those in New York and London. The Finance Minister
invited the Securities and Exchange Council to present a plan
of action for the securities market, that will be required to
meet this objective.
The General Committee met 23 times in all, making publicly available
interim results of its deliberations at main junctures in the
course of its discussions. In November last year, the Committee
published the document, `Issues for Discussions', which described
the Committee's views on the issues that need to be tackled, basic
philosophy and vision concerning the securities market reform,
and the general direction of the reform that need to be pursued.
From January, the Committee met under three Working Parties (Investment
Product WP, Market WP, Market Intermediary WP), a total of 24
sessions to discuss specific reforms for individual items subject
to review, within the overall framework set by the `Issues for
Discussions' paper. The three Working Parties issued their reports
on 16 May.
The Derivatives Special Committee also met a total of 16 times to
discuss issues relating to derivatives transactions, and issued its
report on 20 May.
The reform of the securities market must be a national effort.
The `Issues for Discussion' and the Working Parties' reports were
therefore disseminated immediately upon publication, using such
media as the Internet, and opinions were widely sought. The Committee
received a large number of responses. In addition, to seek opinion
from a broad section of the public including investors and issuers,
some 500 interviews were conducted by the Council's Secretariat.
Opinion collected through these routes were summarized and published
by the Secretariat, and was an important material for the discussions
of the Council. The Council thanks those who have shared their
thoughts with it.
To make this reform a truly national one, the problems currently
confronting the market must be overcome, and the market must regain
its trust of the people.
The Securities and Exchange Council is presenting here its report
recommending a comprehensive reform of the securities market,
based upon the work of three Working Parties and the Derivatives
Special Committee. The Council recommends that the reform should
be undertaken along the timetable proposed in this report.
The Council hopes that, by carrying out this reform, the market will
enhance its attractiveness and competitiveness, and become a market
that is trusted by its users, so that it can fulfill the role expected
of it in the 21st Century.