FSA Newsletter July 2006

[Hot Picks from the Financial World]

We deliver the hottest information of the times in this section, selected from among questions and answers given at the Minister's press conferences, etc. If you wish to find out more, we invite you to visit the ''Press Conferences'' section of Financial Services Agency's website.

Q:	The financial results of all the life insurance companies became available yesterday, and their revenues increased for the first time in eight years according to the nine major companies. Some companies even disclosed their three main sources of income to the public. What is your opinion on this?

A:		The economic climate has finally improved for life insurance companies as well, and their core life insurance businesses seem to have started to recover gradually. It is a delightful development. However, a closer observation reveals that the negative spread still remains, albeit a small one. Life insurance companies would become truly sound if this negative spread disappears. I solemnly hope that the companies make an effort.
(from the press conference following a cabinet meeting on Tuesday, May 30, 2006)

Q:	the bill for the Financial Instruments and Exchange Law submitted at the current Diet session incorporates regulations on funds. Please describe the significance of the Law once again.

A:		One aspect is that the Financial Services Agency (FSA) needs to know what kind of funds are out there, and where they are. However, not all funds need to be registered or regulated, such as funds freely managed by a small group of friends. Of course, they must act in compliance with other laws and regulations. With that said, the spirit of the new Law is that funds in the broader sense-a typical example being funds which seek the participation of outsiders-must properly clarify their own existence and inform members of necessary matters.
(from the press conference following a cabinet meeting on Friday, June 2, 2006)

Q:	The representative of Murakami Fund was arrested yesterday. Please describe what the challenges will be after the enactment of the Financial Instruments and Exchange Law, such as enhancing the surveillance of the securities market.

A:		Firstly, I believe the Securities and Exchange Surveillance Commission (SESC) fully performed its function again in this incident. Although their work is low-profile, the series of actions taken by the Tokyo District Public Prosecutors Office were supported by SESC in all aspects of the interpretation of laws, collection of materials and so forth. While SESC does not by nature come to the forefront in criminal cases, in my opinion it has fully accomplished the mission it was given. The bill for the Financial Instruments and Exchange Law, which is currently in the final stages of deliberation at the House of Councilors, provides for certain funds. It is the product of hard work by the Financial Services Agency (FSA) based on two ideas, namely, that investors must be protected by such means as disclosure of information and that the Japanese economy should be stimulated through free economic activities. At the present stage, I cannot think of any provisions that should be added. I therefore think it is our best piece of work at this point, although after the Financial Instruments and Exchange Law is approved at the Diet, there might be various matters that need to be considered in the course of its implementation.
(from the press conference following a cabinet meeting on Tuesday, June 6, 2006)

Q:	what are your thoughts on enhancements to staff at the Securities and Exchange Surveillance Commission (SESC) and financial supervision and administration?

A:		While acknowledging that outrageous staffing requests would not be met at times like this, I would like to make a request for enough staff needed to at least protect consumers and investors.
(from the press conference following a cabinet meeting on Tuesday, June 13, 2006)