Press Conference by Kaoru Yosano, Minister of State for Economic and Fiscal Policy and Financial Services

December 9, 2005

Minister's Statement

To give just the schedule for budget planning, the timetable for the Fiscal 2006 Budget and the Supplementary Budget for the 2005 fiscal year is tentatively set as follows: On Monday, December 19th, an extraordinary Cabinet meeting will be held to discuss economic outlook. On Tuesday the 20th, the Cabinet will meet to deliberate on the draft budget of the Ministry of Finance for the 2006 fiscal year and the supplementary budget for the 2005 fiscal year. On Saturday the 24th, the Cabinet will meet again to discuss the fiscal 2006 budget.

Regarding reform of policy-based finance, a task force has been established. The prime minister heads the task force and the chief cabinet secretary, the minister in charge of administrative reform and the state minister in charge of economic and fiscal policy, who happens to be me, assist him as his deputies. All other state ministers also participate in the task force as members.

That's all.

Q & A

Q.

Mizuho Securities caused market turbulence yesterday by placing a massive erroneous sell order for a stock that was newly listed. Trading of the stock is suspended all day today. First of all, would you please give us your views on this problem, and also how the FSA intends to deal with it in the coming days?

A.

It is highly regrettable that a human error led to such a serious situation. It is also very unfortunate that the error caused Mizuho Securities to incur a loss and exerted a serious blow to the company's profit and loss picture.

Personally, I earnestly hope that the issue will be resolved promptly to ensure that confidence in the Tokyo Stock Exchange will remain intact. As for Mizuho Securities, I have no reason to be concerned about the adequacy of the company's funds available for settlement, as it is a member of the Mizuho Financial Group.

Trading will be suspended all day today for reasons of an abnormal order in accordance with the rules of the Tokyo Stock Exchange. The 13th will probably be the date of stock delivery. I think that various possible solutions will be explored before the day. I believe that the majority of the more than 600 thousand shares that were sold have already been bought back. At this point, it is not known how many are still left. In my opinion, a resolution should be urgently sought for these shares.

Aside from the question of how experienced the person who operated the terminal is, I think it is necessary to examine Mizuho Securities' system and the system of the Tokyo Stock Exchange, although there probably was no error on the part of the Tokyo Stock Exchange, so as to find out whether or not it would have been possible to mechanically halt the human error.

What the FSA has to do first and foremost is to find out facts in detail. Once we have the details, we will then move on to the determination of what is required under laws and regulations.

Q.

In connection with this, Mizuho Securities informed only specific shareholders about this incident and waited until the market closed to make a public announcement. Would you please comment on this action by Mizuho Securities and what your thoughts are on the company's social responsibility?

A.

They sold shares that did not exist. So, I think it was very natural of Mizuho Securities to rush to buy back the shares. It seems to me that Mizuho Securities did all it could in the market, which is open to the public.

As for responsibilities, I think that it is something that Mizuho itself should decide. I do not see any issue that the FSA would have to pursue at this time.

Q.

Some people raise questions about the very fact that a sell order for more than 40 times the number of outstanding shares was accepted. What are your thoughts on this?

A.

The total number of outstanding shares is probably about 14,500. Those that were dispersed among shareholders prior to the IPO probably accounted for about one quarter of this number. Mizuho, which placed a sell order, intended to sell just one share. As the result of an input error, the selling price and the number of shares were transposed. From what I understand, the entry was not intentional. It was an error.

Q.

The second preliminary GDP estimates have just been released. It has been revised downward from the initial figure. Would you please comment on this, including the causes?

A.

There is the crude oil issue and the issue of inventory adjustments. Falling inventories are one bright economic sign. Therefore, there has been no change in the government's recognition of the economy as a whole. There is no need for a change either.

Q.

In connection with Mizuho Securities' latest incident, I suspect that there were similar input errors and orders that were placed by mistake in the past and that the Tokyo Stock Exchange naturally must have taken action on such errors. And yet, the Mizuho order went through. This makes one wonder if there was a problem in the Tokyo Stock Exchange's system. Would you please comment on this point?

A.

First of all, there is no question as to the fact that the initial error was an input error. There must have been alarm software on the computer of the ordering party. We must therefore first find out how the alarm functioned, and whether or not the alarm fully functions when a stock is newly listed. This is the first step.

Next, the FSA will investigate if the Tokyo Stock Exchange has a system that detects anomalies, and whether or not having an alarm system is good or bad. I do not think it will be too long before we will be able to give you a full report.

Q.

The other day, Minister Takenaka criticized the way in which the Council on Fiscal and Economic Policy is run. Do you have any comment on this?

A.

I was appointed by Prime Minister Koizumi as a state minister. I feel it is my duty to devote myself to fulfill my responsibilities.

Prime Minister Koizumi is the only conductor of the Koizumi Symphonic Orchestra. My job is to play my part well. I have no intention of starting to sing a song in the middle of an instrumental performance.

Q.

What about the assertion that proposals of private-sector members of the Council have become very restrained?

A.

I think that private-sector members have been speaking freely and with beliefs that are solidly built on their good common sense and expert knowledge. I feel that they have done a great job. I firmly believe personally that I should not exert any pressure to dampen their free thinking and speech.

(End)