Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, February 10, 2012, from 8:22 a.m. to 8:33 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything particular to announce.

[Questions & Answers]

Q.

Regarding the cause of the system glitch at the Tokyo Stock Exchange (TSE), it has become clear that the backup system did not function and that the official in charge of system operation did not take adequate measures despite recognizing the malfunction. Could you comment on that?

A.

I am aware of media reports about what you mentioned. The TSE's system glitch has had a significant impact in the world of finance, where countries are competing for supremacy, so to speak. Competition is on for transaction speed in the order of a thousandth of a second. From what I heard from the chairman of KDDI, the speed of the optical fiber cable that goes through Russia is apparently a little faster. Systems are such an important infrastructure as to determine winners and losers, so countries are desperate to improve their systems.

Therefore, the Financial Services Agency (FSA) also regards it as important to examine the cause of the system glitch and draw up measures to prevent a recurrence of a similar glitch, and so, on Thursday, February 2, we issued an order for the submission of a report based on Article 151 of the Financial Instruments and Exchange Act (FIEA). I understand that the TSE is investigating the cause, and the FSA will continue to carefully monitor the TSE's actions.

Q.

I have an additional question concerning the system glitch. There has been a media report about pay cuts for TSE President Saito. What is your view on the management team's responsibility?

A.

The TSE is now strenuously investigating this case, so it would not be appropriate for me to make comments.

The FSA will take action as needed.

Q.

As for administrative action, will you consider issuing a business improvement order or something like that?

A.

We have issued an order for the submission of a report based on Article 151 of the FIEA. The TSE is required to submit a report after examining the cause and drawing up measures to prevent a recurrence of a system glitch. It is important first and foremost that the TSE fully investigate this case.

Q.

May I take it that the FSA will consider issuing a business improvement order or something like that?

A.

As you know, we have issued an order for the submission of a report based on Article 151 of the FIEA. If a problem is found, the FSA will consider necessary actions.

Q.

I hear that the day before yesterday, you talked with Chairman (Hans) Hoogervorst of the IASB (International Accounting Standards Board). What did you talk about?

A.

Since the establishment of the IFRS (International Financial Report Standards) Foundation, the Japanese government has provided both financial and human resources. Over the past year, I met with Mr. Hoogervorst three times - in Tokyo, in London, and again in Tokyo. We talked to each other in a very friendly atmosphere, as you may know. Regarding issues related to IFRS in general, the U.S. Securities and Exchange Commission (SEC) previously stated its intention to clarify its policy direction as to the introduction of IFRS, and yet it still has not clarified its stance.

Regarding matters like that, the impact of the Lehman Shock has spread worldwide. I also think that the issue of European sovereign risk is producing significant effects. At the G-20, there is a consensus that the world should be united as much as possible with regard to uniform, strict accounting standards. The Japanese government has presented three conditions, as I mentioned earlier.

In matters like this, we must not act hastily, nor should we take too much time. What's important is a worldwide harmony. With that in mind, I talked with him in a very friendly atmosphere.

In particular, Mr. Hoogervorst is a former Dutch Minister of Finance who has experienced four national elections. Like him, people who have been elected to office have passed through the filter of scrutiny by the people, if I may say so, so I had the impression that he has a broad perspective. People who are not very adept at coordination work or are incapable of understanding other people's standpoints cannot win elections. He has passed through the filter of scrutiny by tens of thousands, hundreds of thousands of people, and in that sense, he is a very extraordinary man. Sir David Tweedie, the former ISBA chairman, was the top official of the U.K. Accounting Standards Board, so it seems to me that there are some shades of difference between them, although I would assume there has been no fundamental change at the ISAB.

Thank you very much.

(End)