(1) It is expected that financial products and services, which
transcend the traditional framework of each businesses' scope
and regulations, will rapidly appear as the liberalization progresses.
However, the current regulatory system, under which financial
products and services are regulated by laws addressed to supervising
each business category, poses such problems as limited regulatory
scope and as inconsistent degree of regulation of similar products.
As a result, concerns have been expressed that such problems
have caused inadequate investor protections and restricted creative
innovation of products.
(2) Therefore, taking necessary measures under the current regulatory
system is imperative to cope with the diversification and sophistication
of financial products and services. However, it will also be
necessary to revise the traditional vertical regulatory framework,
under which each business is regulated according to its category,
and to establish horizontal rules, under which all market participants
are commonly regulated, in line with such things as the introduction
of various financial products, the improvement in financial institutions'
risk management skills, and the spread of the principle of taking
responsibility, while considering the reduction of regulatory
burden.
(3) In some foreign countries, a comprehensive regulatory framework
for the investment business has been adopted. For example, the
UK has the Financial Services Act, and France and Germany are
establishing new regulatory frameworks based on the Council Directive
93/22/EEC on investment services in the securities field. In
the US, although the investor protection is separately prescribed
under several securities related laws, the definition of "securities"
has been extended through judicial interpretation and thus enables
regulators to cover a wide range of activities, and to achieve
investor protection.
(4) Regarding this subject, there were two opinions in this Committee:
one argued that work should be done immediately; the other asserted
that this should be addressed as a medium-range plan. In either
way, we generally reached a consensus that establishing a new
regulatory framework that covers a broad range of financial services
(the so-called financial services law), should be considered,
taking foreign examples and the current legal framework into account.