Press Conference by Tadahiro Matsushita, Minister for Financial Services

(Excerpt)

(Tuesday, August 21, 2012, from 10:56 a.m. to 11:15: a.m.)

[Opening Remarks by Minister Matsushita]

Ahead of the end of the current session of the Diet, in relation to the Financial Services Agency (FSA), preparations are underway for the revision of the Financial Instruments and Exchange Act (FIEA). I feel deep regret at the slow pace of progress in the preparation. In any case, the FSA, including me, is strongly calling on Diet members to work hard on matters related to the FSA, such as the FIEA. First of all, I would like to stress that point.

[Questions & Answers]

Q.

Last weekend, the Japanese Bankers Association (JBA) announced that no illegal practice has been confirmed as a result of the inspection of the procedures for determining the TIBOR (Tokyo Interbank Offered Rate) rate. Could you comment on that? Also, what is your view on the idea of revising the method of calculating the TIBOR rate and introducing punishment against illegal practices?

A.

On August 17, the JBA announced the summary of the results of the inspection of banks' TIBOR-related procedures. I understand that it has been confirmed that the banks generally are complying with the guideline for TIBOR publication. I expect that the JBA will closely examine the results of the inspection.

The FSA has not received a report from the JBA regarding the specifics of the possible revision that you mentioned. However, I understand that the JBA will consider making revisions if necessary in light of the results of the inspection and the development of the review of LIBOR (London Interbank Offered Rate) in the United Kingdom.

I hope that the JBA will continue to appropriately deal with this matter as an organization responsible for calculating and publishing the TIBOR rate.

The FSA will keep a close watch on the JBA's activities with strong interest.

Q.

Let me ask you about budget requests. During the past one year, there have been many scandals in the financial industry, including the Olympus problem, the AIJ problem, and insider trading cases related to public offerings. From within the Democratic Party of Japan's (DPJ's) working team, there have been calls for enhancing the surveillance capability by increasing the staff of the Securities and Exchange Surveillance Commission (SESC) and the FSA. What is your view on the need to enhance the surveillance capability? Could you tell me whether you are really thinking of requesting an increase in the staff?

A.

I am aware that within the DPJ, there have been discussions on the need to increase the staff of the FSA and the SESC in light of the AIJ problem and insider trading cases related to public offerings, and I have read a report describing the contents of the discussions. Let me affirm that as the minister in charge, I share the DPJ's perspectives on those problems.

Regarding our budget requests for fiscal 2013, the fiscal 2013 budget request guideline was formalized by the cabinet as I mentioned in my press conference on August 17. The FSA staff is conducting intensive deliberation.

Unlike other government ministries and agencies, the FSA does not undertake project implementation. Our budget size is slightly over 23 billion yen, which we will spend in different ways compared with ministries and agencies undertaking project implementation. The FSA fully exercises its brainpower while curbing personnel costs. To achieve our goals, we must appropriately conduct operations, including the allocation of various personnel and the activities that were mentioned in your question.

For one thing, we must take measures to prevent the recurrence of the problem related to companies managing customers' assets under discretionary investment contracts, namely the AIJ problem, as I mentioned in my previous press conference. In addition, it is necessary to deal with the many challenges facing the Japanese financial and capital markets, including insider trading cases related to public offerings, in an appropriate and timely manner. I would like to make efforts to ensure that appropriate budgetary measures are taken to cover expenses necessary for increasing the staff despite the severe fiscal situation of the government.

I greatly appreciate the fact that the DPJ pointed out the need to increase the staff and you also mentioned it in your question, and I feel very glad as the minister in charge. I believe that it is important to make efforts to ensure that the system suited to our goals works efficiently while considering how to realize effective administration amid the strict restrictions on budget requests. I intend to emphasize the need to secure various personnel on various occasions although the fiscal situation is severe. I would like to thank you.

Q.

May I take it that you think it is necessary to enhance the surveillance capability?

A.

In light of the AIJ problem and insider trading cases related to public offerings, it is very important to increase the staff and enhance the capability to handle such problems. We recognize the importance of doing so. However, we must consider how we can strengthen the current capability in an efficient manner amid the severe environment. Moreover, I hear that there is a system of securing sufficient staff for a prescribed period as a provisional measure to respond to a disaster, for example, so I would like to take every possible measure to establish a sufficient organization and staff to achieve our goals. We will make serious efforts.

Q.

In relation to the previous question, I suppose that it is an urgent task to significantly increase the staff if Japan is to enable the FSA and the SESC to achieve the staffing and governance levels similar to those of the U.K. Financial Services Authority and the U.S. Securities and Exchange Commission. However, from what you have said, you are racking your brains as to how to better allocate personnel and increase operational efficiency. So, I have the impression that you are not thinking of increasing the governance level to the levels in other countries in the near future. What would you say to that?

A.

I am well aware of the matters pointed out in the various discussions held by the DPJ's project team. As to the question of whether the current staffing level is fully satisfactory, I, as the minister in charge, am very glad to see that things are moving in the direction that you mentioned, given that various problems have frequently occurred. We take the point you made very seriously.

However, we are not ready to respond immediately amid the severe fiscal situation of the government. We face strict restrictions on budget requests at this time. Under these conditions, we must first rack our brains. At the same time, I believe that it is my job as the minister in charge to continue making requests and calling for efforts with regard to the necessary allocation of personnel and an increase in the staff on various occasions so that we can raise awareness about our goals. I feel glad that you have mentioned that point.

Q.

Does that mean that you are racking your brains with regard to the allocation of personnel and operational efficiency but you are not thinking of significantly increasing the staff for the moment?

A.

That is something that we should try to achieve. However, amid the severe situation, we must keep the staffing level to a necessary minimum. We will consider whether we can do something as a provisional measure, for example. We are adopting the selection and focus approach. There has been no change in our stance of emphasizing the need to increase the staff.

Thank you very much.

(End)