Financial Services AgencyFSA Weekly Review No.422

January 8, 2021

What’s New on the FSA Website

Week of December 21, 2020 - December 28, 2020

This page contains the latest in events, developments, and updates to the FSA website.

Public Comments

(The following public comments are available in Japanese)

December 25, 2020 Publication of the draft amendments to the regulatory notices and guidelines pertaining to liquidity ratio requirements (Pillar 1 and Pillar 3) for internationally active banks, and of a summary of comments received from the previous public consultation on the same topic called on June 29, 2018open new window
<Summary>
The FSA proposed the draft amendments to the regulatory notices and guidelines pertaining to liquidity ratio requirements (Pillar 1 and Pillar 3) for internationally active banks. The proposal* mainly aims to implement  Pillar 1 and Pillar 3 requirements pertaining to net stable funding ratio based on the documents published by the BCBS,** namely, "Basel IIIļ¼šNet Stable Funding Ratio" and "Net Stable Funding Ratio disclosure standards," which were published in October 2014 and June 2015, in tandem with other draft technical amendments thereto.
*   This proposal is the re-opening of a one-month call for a public consultation on the same topic as that of the previous consultation called on June 29, 2018, where the FSA put the finalization of the updated requirements on hold in view of the implementation status in other countries. With the progress made in implementation in other countries since June 2018, the FSA has deemed it appropriate to now reopen a call for a public consultation on the same topic with draft technical amendments thereto this time. The comments on the previous public consultation are also available PDFhere for reference.
** BCBS: The Basel Committee on Banking Supervision
December 25, 2020 Publication of the draft amendments to the "Guidelines for Administrative Processes" regarding funds transfer service providers, and to the "Comprehensive Guidelines for Supervision of Major Banks, etc."open new window
<Summary>
The FSA proposed the draft amendments to the "Guidelines for Administrative Processes" regarding funds transfer service providers, and to the "Comprehensive Guidelines for Supervision of Major Banks, etc." In response to the recent surge of unauthorized withdrawals* (by malicious and fraudulent third parties) from financial service users' accounts linked with (online) payment services provided by financial institutions, the proposal mainly intends to expressly set forth in the said two Guidelines that financial services providers shall conduct self-assessment/inspection of their entire financial services from the perspective of security vulnerabilities in their information security management systems and shall enhance their relevant applicable systems as necessary.
 
* A typical case ascertained in the recent series of unauthorized withdrawals is that malicious and fraudulent third parties sign up with certain cashless/mobile payment services linked with deposit accounts, in which they use personal deposit account information fraudulently obtained from deposit account holders, thereby making withdrawals unbeknownst to those account holders whose personal bank account information has been stolen.
December 25, 2020 Publication of the draft amendments to the applicable cabinet orders, cabinet office orders, and others pertaining to the 2020 revision of the "Payment Services Act"open new window
<Summary>
The FSA proposed the draft amendments to the applicable cabinet orders, cabinet office orders, and others pertaining to the 2020 revision of the "Payment Services Act." The proposal intends to update the regulatory system for the funds transfer service and prepaid payment instruments.
December 25, 2020 Publication of the draft amendments to the applicable cabinet office orders and regulatory notices pertaining to the 2020 revision of the "Financial Instruments and Exchange Act"open new window
<Summary>
The FSA proposed the draft amendments to the applicable cabinet office orders and regulatory notices pertaining to the 2020 revision of the "Financial Instruments and Exchange Act."
The proposal mainly intends to reflect amendments to the said Act in regard to over-the-counter (OTC) derivatives transactions conducted by financial instruments clearing organizations, financial instruments business operators, or others, by setting forth rules for the frequency and means of providing data on centrally cleared- and/or non-centrally cleared-transactions to trade-repositories.
December 24, 2020 Publication of the finalized amendments to the "Points to be Taken into Account by Electronic Payment Service Providers when Applying for Registration with the FSA" (provisional English title)open new window
<Summary>
The FSA finalized the amendments to the "Points to be Taken into Account by Electronic Payment Service Providers when Applying for Registration with the FSA" (provisional English title) (hereinafter referred to as "Points to be Taken into Account").
The amendments mainly provide technical amendments to the "Points to be Taken into Account by Electronic Payment Service Providers when Applying for Registration with the FSA" (provisional English title) and other points that are under the purview of the FSA, pertaining to the abolishment of certain procedures where financial services (including electronic payment service) users and/or financial services (including electronic payment service) providers are requested/required to affix their seals (so-called "inkan" or "hanko" in Japanese) to certain official documents.
In particular, the amendments hereby:
(1)   remove descriptions pertaining to the said "seal"-requests/requirements from the aforementioned "Points to be Taken Into Account,"
and
(2)   allow the use of applicants'/notifiers' birth names or original family names (as opposed to using their married names),* in the course of their registration application and/or certain notifications to the FSA.
 
The amendments were enforced on December 24, 2020.
 
* While a person's original family name under the said "Points to be Taken into Account" means the surname which is originally entered or recorded in the family register or in the expunged family register pertaining to the person, the proposal intends to expressly set forth therein the cases of change in surnames due to causes such as marriage, divorce, adoption, or separation.
December 23, 2020 Publication of the finalized "Cabinet Office Order to Amend the Detailed Regulations on the Mutual Loan Business Act" and the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and othersopen new window
<Summary>
The FSA finalized the "Cabinet Office Order to Amend the Detailed Regulations on the Mutual Loan Business Act" and the finalized amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and others.
The amendments provide technical amendments to the relevant applicable Cabinet Office Orders and Guidelines, including the aforementioned, which are under the purview of the FSA, pertaining to the abolishment of certain procedures where financial products/services users and/or financial products/services providers are requested/required to affix their seals (so-called "inkan" or "hanko" in Japanese) to certain official documents.
In particular, the amendments hereby:
(1) remove descriptions pertaining to the said "seal"-requests/requirements from the relevant applicable Cabinet Office Orders, Guidelines and such,
and
(2) allow the use of applicants'/notifiers' birth names or original family names (as opposed to using their married names),* in the course of their registration application with and/or certain notifications to the FSA.
 
The amendments to the aforementioned Cabinet Office Order and Guidelines were enforced on December 23, 2020. Other relevant and applicable Cabinet Office Orders, Ordinances for Enforcement and Guidelines will be enforced in 2021 in accordance with their respective scheduled dates.
 
* While a person's original family name under the Cabinet Office Orders and Guidelines means the surname which is originally entered or recorded in the family register or in the expunged family register pertaining to the person, the proposal intends to expressly set forth therein the cases of change in surnames due to causes such as marriage, divorce, adoption, or separation.

Press Releases

(The following press releases are available in English)

International 

December 24, 2020 Memorandum of Cooperation with Bank of Italy
December 23, 2020 Memorandum of Cooperation with the Commissione Nazionale per le Sicietà e la Borsa of Italy (CONSOB)

 

Insurance

December 23, 2020 Joint Statement on Japan’s Temporary Equivalence regarding Reinsurance and Enhanced Cooperation between Japan and EU in the Insurance Sector

 

Others

December 25, 2020 Establishment of the “Expert Panel on Sustainable Finance”
December 25, 2020 Updated statistics of money lending business
December 25, 2020 Financial Industry-wide Cybersecurity Exercise (Delta Wall V)
December 25, 2020 Updated list of issuers of gift certificates in repayment procedures based on the "Payment Services Act"
December 25, 2020 The Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code
December 24, 2020 Stewardship Code : 291 institutional investors have signed up to the Principles for Responsible Institutional Investors as of November 30, 2020

 


(The following press releases are available in Japanese)

Councils

December 25, 2020 PDFPublication of a report summarizing the issues for discussions in "Study Group on Lending and Business Turnaround Practices to Support Corporate Borrowers’ Business Enhancement" (provisional English title)open new window
<Summary>
The FSA published a report summarizing the issues for discussions in "Study Group on Lending and Business Turnaround Practices to Support Corporate Borrowers’ Business Enhancement" (provisional English title). The issues include desirable lending and business turnaround practices that can support business continuity and economic growth, the possibility of a new security interest that will provide a good incentive for financial institutions to support borrowers' business continuity and enhancement, and practical and legal points that need further discussions in order to consider legislation of this new security interest.
December 24, 2020 Publication of the summary of discussions of meetings of the "Working Group on a Review of Procedures for Paperwork, Signing and Sealing, and in-Person Responses/Services in the Financial Sector" (provisional English title)open new window
<Summary>
The FSA published the summary of discussions of meetings of the "Working Group on a Review of Procedures for Paperwork, Signing and Sealing, and in-Person Responses/Services in the Financial Sector" (provisional English title). The summary of discussions are based on meetings held nine times from June through December 2020, in which the (implementation) status of the said procedures in the financial sector was assessed at each meeting, whereby the members discussed issues  and directions for problem-solving initiatives.
December 24, 2020 Publication of the first report compiled by the "Working Group on Capital Market Regulations"open new window
<Summary>
The FSA published the first report compiled by the "Working Group on Capital Market Regulations"(provisional English title) of the Financial System Council based on its meetings which were held five times from October through December 2020, aimed at enhancing the function of Japan’s capital market as an international financial hub.
December 22, 2020 Publication of the report compiled by the "Working Group on Japanese Banking System" of the Financial System Councilopen new window
<Summary>
The FSA published the report entitled "Report of Working Group on Japanese Banking System – Toward the Establishment of Financial Functions that Strongly Support the Economy" (provisional English report title) compiled by the "Working Group on Japanese Banking System" of the Financial System Council, based on its meetings, which were held seven times from September through December 2020.
December 22, 2020 Publication of the agenda and handouts of the third meeting of the "Study Group on Impact Investment"open new window
<Summary>
The FSA published the agenda and handouts of the third meeting of the "Study Group on Impact Investment," which was held on November 20, 2020, co-hosted by the FSA and the National Advisory Board of the Global Steering Group for Impact Investment. The Study Group meets regularly (on a bimonthly basis) to deepen the understanding of "impact investment" among capital market participants and government authorities.
December 21, 2020 Publication of the proceedings and handouts of the fifth meeting of the "Working Group on Capital Market Regulations" (provisional English title) of the Financial System Council
<Summary>
The FSA published the proceedings and handouts of the fifth meeting of the "Working Group on Capital Market Regulations" (provisional English title) of the Financial System Council, which was held on December 21, 2020.

 

Banks

December 28, 2020 Request for financial measures to deal with the outbreak of classical swine fever (CSF, a.k.a. hog cholera) in Yamagata Prefecture (The Tohoku Local Finance Bureau)open new window
<Summary>
The Tohoku Local Finance Bureau issued the statement titled "Financial Measures in Response to the Report of the Classical Swine Fever (CSF, a.k.a. Hog Cholera)" to the relevant financial institutions in Yamagata Prefecture. The statement requests the financial institutions to cooperate with prefectural authorities and appropriately deal with CSF-affected parties such as pig farms considering their circumstances, such as by attentively responding to the needs of business management consultation and new loans or change of loan terms.
December 25, 2020 Overview of modifications to lending conditions by financial institutionsopen new window
<Summary>
The FSA published an overview of modifications to lending conditions made by financial institutions for the period from March 10 to November 30, 2020.
December 25, 2020 Publication of a statistical report on financing by financial institutions for enterprises utilizing the "Guidelines for Personal Guarantee Provided by Business Owners"open new window
<Summary>
The FSA published a statistical report on financing by financial institutions for enterprises utilizing the "Guidelines for Personal Guarantee Provided by Business Owners." The report reflects the period between April 1 and September 30, 2020. (The report is regularly published to further promote the utilization of the Guidelines).
December 25, 2020 Publication of the results of a survey on deposit-taking financial institutions’ authentication methods used for linking deposit accounts with online payment services, and on the actual damage from unauthorized withdrawals through the online payment services.open new window
The FSA published the results of a survey on deposit-taking financial institutions’ authentication methods used for linking deposit accounts with online payment services, and on the actual state of unauthorized withdrawals through the online payment services. The survey was jointly conducted by the FSA and Japanese Bankers Association in response to the recent surge in unauthorized withdrawals.*
 
* A typical case ascertained in the recent series of unauthorized withdrawals is that malicious and fraudulent third parties sign up with certain cashless/mobile payment services linked with deposit accounts, in which they use personal deposit account information fraudulently obtained from deposit account holders, thereby making withdrawals unbeknownst to those account holders whose personal bank account information has been stolen.
December 24, 2020 Publication of the draft regulatory policy directions for the national implementation of the finalized Basel III standards in Japanopen new window
<Summary>
The FSA published its draft regulatory policy directions for the national implementation of the finalized Basel III standards in Japan. The FSA plans to implement the finalized Basel III standards in Japan from March 2023.
(The draft regulatory policy directions may be subject to change based on future trends in international discussions and circumstances of Japanese financial institutions).
December 24, 2020 Authorization of the merger of The Daishi Bank, Ltd. and The Hokuetsu Bank, Ltd.open new window
<Summary>
The FSA authorized the merger of The Daishi Bank, Ltd. and The Hokuetsu Bank, Ltd., pursuant to the "Banking Act." The corporate name of the merged bank will be Daishi Hokuetsu Bank, Ltd.
December 23, 2020 Publication of statistics regarding unlawful reimbursement of deposits (as of the end of September 2020)open new window
<Summary>
The FSA published statistics regarding unlawful reimbursement of deposits caused by counterfeit and stolen cash cards, stolen deposit books, and unlawful Internet banking activities. The statistics include details of incidents and compensation made by financial institutions based on reports from the financial institutions.
December 22, 2020 License granted to Minna Bank,Ltd. to conduct banking businessopen new window
<Summary>
The FSA granted a license to Minna Bank,Ltd. to conduct banking business pursuant to the "Banking Act."
December 22, 2020 Publication of a progress report on Business Revitalization Plansopen new window
<Summary>
The FSA published a report on the progress of business revitalization by Shinsei Bank Ltd. as of September 30, 2020, pursuant to the "Act on Emergency Measures for Early Strengthening of Financial Functions" and the "Deposit Insurance Act."

 

Securities

December 25, 2020 Administrative action against Abitora System Kabushiki Kaisha, a notifier of specially permitted business for qualified institutional investors (SPBQII) (The Kanto Local Finance Bureau)open new window
<Summary>
The Kanto Local Finance Bureau took an administrative action against Abitora System Kabushiki Kaisha,* a notifier of specially permitted business for qualified institutional investors (SPBQII), for not fulfilling the rectification and business improvement order which was previously imposed on the entity as of November 16, 2020, thereby ordering the abolition of the notifier's entire SPBQII and the improvement of its business operations pursuant to the "Financial Instruments and Exchange Act." This administrative action is based on the findings from the report that the entity filed in response to the FSA's order for the collection of a business improvement report, which were found to be still problematic from an investor protection perspective.
 
* As this corporation has no English name, the Romanized version of the Japanese name is stated here.

 

Publication

December 24, 2020 Publication of the FSA Annual Report for program year 2019 (July 2019 - June 2020)open new window
 <Summary>
The FSA published the FSA Annual Report for program year 2019 (July 2019 - June 2020). It covers the FSA's overall policies including its mission, organization, and measures including amendments of regulations and supervisory actions. (Available only in Japanese).


Others

December 25, 2020 Publication of the updated regulatory notice designating certain transactions pertaining to the adoption of substituted compliance based on equivalence assessment regarding margin requirements for non-centrally cleared OTC derivativesopen new window
<Summary>
The FSA updated the regulatory notice* designating certain transactions pertaining to the adoption of substituted compliance based on equivalence assessment regarding margin requirements for non-centrally cleared OTC derivatives.
Following the UK's recent exit from the European Union (EU), the updated regulatory notice designates the margin rules of the U.K. as rules deemed equivalent to the corresponding margin rules of Japan, in addition to the formerly designated foreign margin rules that are respectively within the purview of the U.S. Commodity Futures Trading Commission (CFTC), the Office of the Superintendent of Financial Institutions (OSFI Canada), the Australian Prudential Regulation Authority (APRA), the Hong Kong Monetary Authority (HKMA), the Monetary Authority of Singapore (MAS), and the European Economic Area (EEA) Agreement. The updated regulatory notice was enforced on January 1, 2021.
* This regulatory notice prescribes a framework of substituted compliance for avoiding duplicative application of Japanese and foreign margin requirements. This framework allows financial instruments business operators etc. to exchange initial and variation margins in complying with foreign margin rules provided that such rules are deemed equivalent to the corresponding rules in Japan and enforced by the foreign authorities appropriately supervising the transaction parties.
December 25, 2020 Publication of "Statistics of NISA and Junior NISA Accounts" as of June 30, 2020open new window
<Summary>
The FSA has published "Statistics of NISA and Junior NISA Accounts." As of September 30, 2020, there were approximately 14.8 million NISA accounts in total, and approximately 20.8 trillion yen (approximately 200.8 billion USD) was invested through the NISA accounts, among which, 561.3 billion yen (approximately 5.4 billion USD) was invested through approximately 2.7 million accounts of the Tsumitate NISA (Dollar-Cost Averaging NISA) which has started since January 2018.
December 25, 2020 First Meeting of the "Study Group on Environmental Improvement for Effective Transition Finance" (provisional English title)open new window
On January 27, 2020, the FSA, the METI (Ministry of Economy, Trade and Industry), and the MoE (Ministry of Environment) will jointly hold the first meeting of the "Study Group on Environmental Improvement for Effective Transition-Finance" (provisional English title) to formulate basic principles for transition-finance in Japan, particularly in terms of raising funds through transition bonds, loans, etc.
December 24, 2020 Publication of the updated "FAQs Regarding Protection of Personal Information by Financial Institutions" pertaining to the abolishment of affixing seals (so-called "inkan" or "hanko" in Japanese) required in administrative proceduresopen new window
<Summary>
The FSA published the updated "FAQs Regarding Protection of Personal Information by Financial Institutions" in accordance with the "Implementation Plan for Regulatory Reform," which was approved by the Cabinet on July 17, 2020. The updates mainly pertain to the abolishment of affixing seals (so-called "inkan" or "hanko" in Japanese) required in administrative procedures. The updates were enforced on December 24, 2020.
December 24, 2020 Administrative action against Avacus Inc., a crypto-asset (virtual currency) exchange service provider (The Tokai Local Finance Bureau)open new window
<Summary>
The Tokai Local Finance Bureau took an administrative action against Avacus Inc., a crypto-asset (virtual currency) exchange service provider, ordering the improvement of its business operations pursuant to the "Payment Services Act." This administrative action is mainly based on the findings from the report that the entity filed in response to the FSA's order for the collection of a report pertaining to conduct of its business. The entity's business management structure as well as its risk management system in terms of preventing money laundering and terrorism financing were found to be problematic.
December 24, 2020 Publication of the draft "Cabinet Office Order to Amend the Cabinet Office Order on the Audit Certification of Financial Statements"open new window
<Summary>
The FSA proposed the draft "Cabinet Office Order to Amend the Cabinet Office Order on the Audit Certification of Financial Statements." The proposal mainly intends to reflect the amendments made to the Auditing Standards in regard to "other information"* by the Business Accounting Council during its plenary meeting held on November 16, 2020.
In particular, the proposal is aimed at clarifying procedures auditors should take in regard to "other information," thereby requiring auditors to refer to that matter in the auditor's report (such as when there is a material misstatement of "other information").
 
* Other information in this context means financial and/or non-financial information included in disclosure documents, such as annual securities reports (except financial statements and auditor's reports).
December 21, 2020 Publication of the "Key FSA-Related Items in the Outline for the FY 2021 Tax Reform"open new window
<Summary>
Based on the compiled FY 2021 Tax Reform, the FSA published the "Key FSA-Related Items in the Outline for the FY 2021 Tax Reform."
December 21, 2020 Publication of the request for organization, staff and budget for FY 2021open new window
<Summary>
The FSA published an overview of the request for organization, staff and budget for FY 2021.

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