Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Tuesday, March 9, 2010, from 8:45 a.m. to 9:04 a.m.)

[Opening Remarks by Minister Kamei]

At today's cabinet meeting, I submitted a bill for the partial amendment of the Financial Instruments and Exchange Act, etc., which will be explained to journalists by FSA staff this afternoon, and I obtained approval for it (to be submitted to the Diet).

To put it simply, this bill will require the clearing of transactions to be made at a central organization from the viewpoint of the protection of investors. This bill centers on it. As you know, financial products have had an impact on the real world in a way that is beyond our reach, so we will introduce regulation from the viewpoint of the protection of investors.

That world (of derivatives products) is difficult to understand. Do you understand it? Derivatives products are somewhat like gambling. They are traded and generate profits and losses in a world disconnected from the real economy. If the impact of such transactions is confined to that isolated world, there would not be any problem. However, if such transactions collapsed or something like that happened, the whole (of the financial system) would be affected. Therefore, the clearing of such transactions should be undertaken by a central organization. If I am to use the mahjong analogy, all wins and losses will be centrally settled, thereby preventing the impact of a loss of a single player from affecting others.

(End)