Progress of Better Market Initiative (Plan for Strengthening the Competitiveness of Japan's Financial and Capital Markets)

(1)Expansion of opportunities for trading of foreign company stocks (developing a framework for secondary markets for JDRs(Japanese depositary receipts))(February 2008)

(2)Launching new electronic corporate disclosure system (EDINET) with the use of XBRL format (March 2008)

(3)Allowing the incorporation of overseas real estate in J-REITs (Japan's real estate investment trusts) portfolio (May 2008)

(4)Further diversification of ETFs (exchange-traded funds) with contribution in kind (permission of ETFs investing in securities other than stocks, and elimination of the current method of enumerating individual eligible indices)(The measure took effect on June 27, 2008)

(5)Widening the scope of securities disclosed in English (permitting to all types of securities issued by foreign issuers)(The measure took effect on June 1, 2008)

(6)Enactment of the amended Financial Instruments and Exchange Act, etc. (promulgated on June 13, 2008)

• (i)Further diversification of ETFs (Introduction of ETFs investing in commodity futures, etc.)

• (ii)Creation of markets for professional investors

• (iii)Raising the amount of administrative monetary penalties and expanding the scope of their application

  • →To be implemented by December 12, 2008

(1)Minimizing the "PE risk" to attract foreign fund managers to Japan's markets (exempting "independent agent" from agent PE (permanent establishment)) (April 2008). Publication of collections of "reference cases" (June 27, 2008)

(2)Enactment of the amended Financial Instruments and Exchange Act, etc. (promulgated on June 13, 2008)

• (i)Revamp of the firewall regulations, and development of a system for controlling conflicts of interest among banking, securities and insurance businesses.

  • →To be implemented by June 12, 2009

• (ii)Broadening the scope of businesses permitted to banking and/or insurance groups

  • Allowing spot transactions of commodities through banks' sibling companies with higher risk management
  • Allowing banks or insurance firms to engage in emissions trading directly
  • Allowing subsidiaries or sibling companies of banks or insurance firms to engage in Islamic finance
  • Broadening the scope of exemption to the restrictions on holding shareholder voting rights applied to banking groups
  • Introduction of a framework for banks' agency and intermediary operations on behalf of foreign banks

  • →To be implemented by December 12, 2008

(1)Holding extensive dialogues with the parties concerned and publishing the Principles in the Financial Services Industry (April 2008)

(2)Disclosing, earlier than many other countries, the exposures of subprime-related products, securitized products, etc. held by Japanese deposit-taking financial institutions which was compiled according to uniform standards and providing information about the impact of the subprime mortgage problem on Japan's financial system (November 2007, February and June 2008)

(3)Strengthening of overseas public relations, including the launch of the E-mail information alert service in English (January 2008)

(4)Amid the significant, simultaneous market changes at home and abroad, participating in international discussions toward the stability of financial systems and strengthening cooperation with overseas authorities in order to enhance risk management by financial institutions

(5)Conducting a questionnaire survey of financial institutions (March 2008).

• Nearly 80 percent of the respondents said that the transparency and predictability of regulation and supervision "improved" or "slightly improved."
• Nearly 60 percent of the respondents appreciated the FSA's dialogues with financial institutions, (However, they also said that there was still room for enhancing work-level dialogues.)
• Nearly 80 percent of the respondents appreciated the FSA's strengthening of overseas public relations. (However, they also said that there was still room for enriching the website contents, etc.)

(1)Publishing the basic concept for developing and securing financial experts (April 2008)

• →Summarizing the points of public comments (around summer 2008), and then, launching institutional design(after summer 2008)

(2)The Headquarters for the Regional Revitalization formulated the Plan to Enhance Japan's Role as an International Financial Center (April 2008).

• →Launching an International Financial Center Forum to steadily implement the plan and monitor progress

(1)Alliances between financial instruments exchanges and commodity exchanges (Consideration will be given by the end of 2008, and following this consideration, the relevant revisions will be implemented promptly.)

(2)Promoting efforts toward international convergence of accounting standards

(3)Cooperation with overseas authorities to ensure XBRL compatibility

(4)Efforts to strengthen the corporate governance of listed firms

(5)Making continuous efforts toward achieving better regulation, and publishing the progress thereof every six months, etc.