Press Conference by Tatsuya Ito, Minister for Financial Services

(Excerpt)

October 14 , 2005

Q.

The Tokyo Stock Exchange held a press conference yesterday and announced that it abandoned its plan to go public before the end of the current fiscal year. Would the minister please share your thoughts on this, and also your view on what should be the proper role of the exchanges that have the review function?

A.

Regarding the issue of the Tokyo Stock Exchange going public, the decision is entirely up to the Tokyo Stock Exchange itself. We would rather refrain from making any comments on this issue.

Regarding the other question, which is about the proper role played by self-regulating organizations, it is one of the key issues being considered by the Financial System Council as it holds debate on the Investment Service Law. I believe that discussions on this point will continue to be carried out in depth, and that deliberation will be made. It is my understanding that the Tokyo Stock Exchange established a special committee to tackle this issue, and that the committee held discussions and compiled a report. I intend to keep a watchful eye on the development of the situation, including the handling of such reports in the future.

After observing how these reports and the progress of deliberation by the Financial System Council will turn out, we will continue to hold in-depth discussions with market operators, including the Tokyo Stock Exchange, to attain the goals of strengthening the market functions and boosting the public's trust in the market while we examine such issues as how conflicts of interest can be avoided.

Q.

Regarding issues involving CPAs, it has been reported that an argument in favor of revising the rotation rule, slashing the current limit of seven years to five years, gained momentum at yesterday's Liberal Democratic Party committee meeting. What is your thought on such a question as whether or not the Financial Services Agency should revise the rule in the near future?

A.

As you mentioned, the ruling party is holding a debate on this issue right now. I am also aware that discussions are being held in various places. However, the FSA itself has not established any firm policy at this point. Be that as it may, we intend to continue to strive to strengthen the CPA audit system by taking into consideration various arguments, including those of the ruling party. We will also monitor the development of the Kanebo-related trial and incorporate any new facts that may come to our attention along the way.

When you look into the backdrop of the current debate, however, one cannot but wonder if the relationship between corporations and CPAs has grown too cozy. The credibility of the CPA audit system has now been called into question. We therefore ask that corporations prepare accurate financial statements and that CPAs and audit firms fully recognize the gravity of their mission and responsibility, and make utmost efforts to conduct their audits properly so as not to impair the public's trust.

Q.

Yesterday, Rakuten acquired shares of TBS and proposed to set up a joint holding company. This is not an industry that is under the direct supervision of the FSA. Nonetheless, we would appreciate you sharing any thoughts or opinions that you may have on the fact that this development is currently taking place while the TBS side is preparing a powerful measure to fend off this takeover bid.

A.

I am aware that this is an issue that has attracted significant attention. But as you stated in your question, this is a matter that comes under our direct supervision. It is also a company-specific issue. For this reason, we would rather not offer any comment.

(End)