Financial Services AgencyFSA Weekly Review No.568

December 28, 2023

What’s New on the FSA Website

Week of December 15, 2023 - December 21, 2023

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

Public Comments

December 21, 2023 Publication of an exposure draft for the "Revision of the Quarterly Review Standards* to be Replaced with the Interim Review Standards and Consequential Amendments to Quality Control Standards for Auditing" (provisional English title) for public consultation
<Summary>
The FSA proposed an exposure draft for the "Revision of the Quarterly Review Standards* to be Replaced with the Interim Review Standards and Consequential Amendments to Quality Control Standards for Auditing" (provisional English title) [hereinafter referred to as the "proposal"] for public consultation. 
The draft revision is intended to change the name of the quarterly review standards to the interim review standards, introduce a form of conclusion regarding regulatory compliance in addition to the form of conclusion regarding appropriateness (of disclosure) stipulated in the current quarterly review standards, and clarifies the nature of the conclusion regarding special-purpose interim financial statements.

*This in response to the revision of the statutory quarterly corporate disclosure system, where the quarterly disclosure requirements under the "Financial Instruments and Exchange Act" (Quarter 1 and Quarter 3) will be abolished and integrated into quarterly earnings reports based on the Exchange Rules.

Public comments will be accepted until 05:00 p.m. (JST), January 24, 2024.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/sonota/20231221-2/20231221.htmlopen new window
December 19, 2023 Publication of the draft amendments to the "Cabinet Office Order on Financial Instruments Business, etc." and others for public consultation
<Summary>
The FSA proposed the draft amendments to the "Cabinet Office Order on Financial Instruments Business, etc." and others (hereinafter collectively referred to as the "proposal") for public consultation.
 
The proposal is mainly aimed at setting forth the following:
- Exemption from prohibition of becoming entrusted with a purchase and sale of securities subject to granting credit.
(This is in response to a recommendation to raise the maximum amount of credit card payments for cumulative investment contracts stated in the “Report of Working Group on Capital Market Regulations and Asset Management Task Force of the Financial System Council.”)
 
- Regulation on appointment as a lead managing underwriter for securities issued by the parent corporation and its subsidiary corporations, etc. (beneficiary securities of a trust that issues beneficiary securities will be added to the scope of exemption of the regulation, and consequential amendments will be provided to the form of securities registration statement when a securities company, etc. becomes the lead managing underwriter for underwriting securities issued by its parent and subsidiary corporations, etc.).
 
Public comments will be accepted until 5:00 p.m. (JST), January 19, 2024.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/shouken/20231219/20231219.htmlopen new window
December 15, 2023 Publication of the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act” and others for public consultation
<Summary>
The FSA published the draft "Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act" and others (hereinafter referred to as "the proposal") for public consultation.
The proposal mainly intends to provide amendments in response to requests for deregulation from the financial sector and relevant industry organizations, particularly in terms of the following:
 
- to set forth that the head office, etc. shall remain in the category of the place of business subject to the approval system, when a bank applies for/notifies the FSA to designate its business office as its head office, etc. [Amendments to the "Regulation for Enforcement of the Banking Act," etc.] 
- to set forth the documents to be attached to applications for approval and/or notifications when business offices, etc. of banks, etc. newly establish business holidays (non-business days), etc. [Amendments to the "Regulation for Enforcement of the Banking Act," etc.] 
- to provide amendments to various notifications for the establishment of business offices by simplifying fill-in requirements thereof [Amendments to "Comprehensive Guidelines for Supervision of Major Banks, etc." (including Forms and Reference Materials), etc.], and 
- to provide consequential amendments in response to the amendments to the relevant and applicable Cabinet Office Orders and Ministerial Orders, etc. [Amendments to "Comprehensive Guidelines for Supervision of Major Banks, etc." (including Forms and Reference Materials), etc.]
 
Note: As for the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Guidelines, consequential amendments are to be provided in response to the draft PDF"Cabinet Office Order to Amend the Regulation for Enforcement of the Banking Act" open new window (available only in Japanese) published on June 30, 2023. 
 
Public comments will be accepted until 5:00 p.m. (JST), January 22, 2024.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/ginkou/20231215/20231215.htmlopen new window
December 15, 2023 Publication of the draft amendments to "Key Takeaways with the Act on Prevention of Transfer of Criminal Proceeds" and of the draft "Guidelines for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for Certified Public Accountants and Audit Corporations" [provisional English titles for both] for public consultation
<Summary>
The FSA proposed the draft amendments to "Key Takeaways with the Act on Prevention of Transfer of Criminal Proceeds" alongside the draft "Guidelines for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for Certified Public Accountants and Audit Corporations" (provisional English titles) [hereinafter collectively referred to as the "proposal"] for public consultation.

In response to the enactment of the "Act Partially Amending the Act on Special Measures Concerning Asset Freezing, etc., of International Terrorists Conducted by Japan Taking into Consideration United Nations Security Council Resolution 1267, etc." on December 2, 2022, which updated the obligation of confirmation at the time of transaction for professionals in law and/or accounting, etc., including certified public accountants, etc., the proposal is mainly intended to provide consequential amendments to the said Key Takeaways and the Guidelines.

Public comments will be accepted until 5:00 p.m. [JST], January 15, 2024.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/sonota/20231215-3/20231215.htmlopen new window
December 15, 2023 Publication of the finalized amendments to the "Guidelines for Administrative Processes" regarding defined contribution pension plan operational management institutions after public consultation 
<Summary>
The FSA finalized the amendments to the "Guidelines for Administrative Processes" regarding defined contribution pension plan operational management institutions after public consultation. 
In line with the government-wide efforts and measures to conform to digital principles for administration procedures, the finalized amendments mainly update procedures for internal audits, etc. of defined contribution pension plan operational management institutions, thereby providing reasonable and necessary amendments to the said Guidelines.
The finalized amendments took effect on December 15, 2023.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/sonota/20231215/20231215.htmlopen new window
December 15, 2023 Publication of the draft "Cabinet Office Order on Arrangement, etc. of Relevant and Applicable Cabinet Office Orders Which Are Within the Purview of the FSA Incidental to the Enforcement of the Act Partially Amending the Basic Act on the Formation of a Digital Society to Promote the Regulatory Reform Thereof, etc." for public consultation
<Summary>
The FSA proposed the draft "Cabinet Office Order on Arrangement, etc. of Relevant and Applicable Cabinet Office Orders Which Are Within the Purview of the FSA Incidental to the Enforcement of the Act Partially Amending the Basic Act on the Formation of a Digital Society to Promote the Regulatory Reform Thereof, etc." (hereinafter referred to as the "proposal") for public consultation. 
In response to the enforcement of the "Act Partially Amending the Basic Act on the Formation of a Digital Society to Promote the Regulatory Reform Thereof," the proposal is mainly aimed at reviewing the regulation on posting notices stipulated in the applicable Cabinet Office Orders which fall within the purview of the FSA.
Public comments will be accepted until 12:00 a.m. (midnight, JST), January 19, 2024.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/sonota/20231215-2/20231215-2.htmlopen new window
December 15, 2023 Publication of the draft amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Guidelines for public consultation
<Summary>
The FSA proposed the draft amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Guidelines (hereinafter referred to as the "proposal") for public consultation.
Subsequent to the finalized amendments to the regulatory notice on capital adequacy requirements (Pillar I) open new window promulgated in September 2023 (scheduled to take effect on March 31, 2024) in response to the document titled "Capital treatment of securitisations of non-performing loans" open new window published in November 2020 by the BCBS (Basel Committee on Banking Supervision), the proposal is intended to provide the consequential amendments* to "Comprehensive Guidelines for Supervision of Major Banks, etc." and other relevant and applicable Comprehensive Guidelines.
 
* The consequential amendments to the said Comprehensive Guidelines, etc. are intended to preclude transactions executed with the main purpose of reducing the capital charge on the non-delinquent exposures in the underlying relative to the 100% risk weight on the senior exposure to the non-performing loans (NPLs) securitization, in line with the document published in November 2020 by the BCBS. 
Public comments will be accepted until 5:00 p.m. (JST), January 26, 2024.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/ginkou/20231215-2/20231215.htmlopen new window

Press Releases

International 

December 20, 2023 The seventh Japan-Korea Shuttle Meeting and Modification of Memorandum of Cooperation concerning Assistance and Mutual Cooperation in the Area of Financial Supervision

Councils

December 20, 2023 Publication of the agenda and handouts of the 20th meeting of the "Expert Panel on Sustainable Finance"
<Summary>
The FSA published the agenda and handouts of the 20th meeting of the "Expert Panel on Sustainable Finance,"* which was held on December 21, 2023. 
The secretariat of the expert panel (i.e. the FSA) gave a briefing on capital market functions, followed by discussions by the expert panel members.

*The Expert Panel is composed of business, financial, and academic experts, with observers of officials from pertinent ministries and agencies. The FSA (Strategy Development Division, Strategy Development and Management Bureau) serves as the secretariat.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/singi/sustainable_finance/siryou/20231221.htmlopen new window
December 18, 2023 Publication of the agenda and handouts of the sixth meeting of the "Working Group on Tender Offer Rule and Large Shareholding Reporting Rule" of the Financial System Council
<Summary>
The FSA published the agenda and handouts of the sixth meeting of the "Working Group on Tender Offer Rule and Large Shareholding Reporting Rule" of the Financial System Council, which was held on December 19, 2023. The working group members engaged in a discussion toward the compilation of a summary report regarding what the tender offer rule, the large shareholding reporting rule, and the transparency of beneficial shareholders should be.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/singi/singi_kinyu/tob_wg/shiryou/20231219.htmlopen new window

Securities

December 15, 2023 Administrative action against Stock Japan Co., Ltd.
<Summary>
The Kanto Local Finance Bureau took administrative action against Stock Japan Co., Ltd., ordering it to partially suspend its business operations (in terms of the solicitation and conclusion of new investment advisory contracts [including contracts for changes involving an increase in the contract amount]) from December 15, 2023, to January 14, 2024, and improve its business operations pursuant to the "Financial Instruments and Exchange Act" (hereinafter referred to as the "FIEA"). 
 
The administrative action was taken in response to the recommendation from the Securities and Exchange Surveillance Commission (SESC) for administrative action against the said entity, which was ascertained to have been acting in violation of the FIEA, such as in terms of making false statements, etc. in regard to the conclusion of, or solicitation for, financial instruments transaction contracts, based on the results of onsite inspection conducted by the SESC.
 
The business improvement order against the entity includes the following:
1. to immediately stop posting inappropriate advertisements
2. to analyze the cause of the act in violation of the FIEA, and to formulate and implement measures to prevent recurrence, thereby establishing an appropriate business operational structure and internal control system
3. to explain to all customers the details of the administrative action taken against the entity by the Bureau, and to take appropriate responses
4. to clarify where the responsibility for the act in violation of the FIEA lies; and
5. to report in writing by January 15, 2024, on the status of actions 1 through 4 above.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/shouken/20231215.htmlopen new window
December 15, 2023 Publication of the updated regulatory notice concerning the designation of associated corporations of credit rating agencies (group-based designation concerning explanatory items of unregistered credit ratings)
<Summary>
The FSA published the updated regulatory notice concerning the designation* of associated corporations of credit rating agencies (group-based designation concerning explanatory items of unregistered credit ratings), whereby the FSA updated the list of designated credit rating agencies (unregistered credit rating agencies which belong to the same group of registered credit rating agencies and fulfill the requirements). The duty of securities companies to explain certain matters to their customers is partially alleviated when securities companies use credit ratings provided by the credit rating agencies that are on the said list.

*The updates are intended to designate the associated corporation as a new specified associated corporation upon examination of the associated corporation's compliance with the requirements for group designation, as the current regulatory notice (the FSA regulatory notice No. 105 as of December 17, 2021), which became effective on January 1, 2022, will expire on December 31, 2023.
The validity period for the designation is set forth from January 1, 2024, to December 31, 2025.

The updated list took effect on December 15, 2023.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/shouken/20231215/20231215.htmlopen new window

Insurance

December 15, 2023 Overview of financial results of major insurance companies as of September 30, 2023

Others

December 21, 2023 Warning against fake SNS (Social Networking Service) accounts posing as the FSA
<Summary>
The FSA issued a warning against fake social media advertising and other such activities disguised as the FSA, which have been recently observed on the online platforms of SNS (Social Networking Service), such as X (formerly known as Twitter). 
Where the existence of a fake X account posing as the FSA's official X account that is for the promotion of Tsumitate NISA (Dollar-Cost Averaging NISA) has been ascertained, the FSA stresses that it does not operate any other X accounts for Tsumitate NISA besides its official account @Wa_nisa_FSA, and alerts financial services users to check the list of the FSA's official social media accountsopen new window before making contacts with fake SNS accounts posing as the FSA.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/sonota/20231221.htmlopen new window
December 20, 2023 Publication of a research report on the current status and advanced practices of third-party/supply chain cybersecurity risk management at major financial institutions in the U.S.
<Summary>
The FSA commissioned Deloitte Tohmatsu Cyber LLC to conduct research on the current status and advanced practices of third-party/supply chain cybersecurity risk management at major financial institutions in the U.S., and published PDFthe compiled research reportopen new window (available only in Japanese). The report may serve as a reference for risk management at Japanese financial institutions.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/common/about/research/20231220/20231220.htmlopen new window
December 19, 2023 License for funds transfer transaction analysis service providers granted to SCSK RegTech Edge Corporation
<Summary>
The FSA granted SCSK RegTech Edge Corporation a license for funds transfer transaction analysis service providers that conduct transaction monitoring, etc. commissioned by multiple financial institutions, etc., pursuant to the amended "Payment Services Act," which was enacted in June 2022 and enforced in June 2023. This is the first time that the FSA has granted a license to a funds transfer transaction analysis service provider since the approval system for funds transfer transaction analysis service providers was introduced under the said amended Act.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/news/r5/sonota/20231219/20231219.htmlopen new window
December 18, 2023 Financial Industry-Wide Cybersecurity Exercise (Delta Wall VIII)
December 15, 2023 Publication of the main issues raised by the FSA at opinion exchange meetings with relevant associations in the financial sector
<Summary>
The FSA has published the main issues raised by the FSA at opinion exchange meetings* held with relevant associations in the financial sector in November 2023. (Available only in Japanese).
 
Notable issues discussed by most of the groups were:
- “Comprehensive Economic Measures for Completely Breaking Free from Deflation: Toward a New Stage of the Japanese Economy,” published by the Cabinet Office in November 2023
- Enhancement of the human resource intermediary functions of regional financial institutions
(The FSA has been promoting a project for matching human resources for regional corporate management to create a new inflow of professionals from major corporations to small- and medium-sized enterprises through the human resource intermediary functions of regional financial institutions, thereby encouraging professionals with expertise at major corporations to play an active role in the respective regions.)
- Steady implementation of UN Security Council resolutions (in regard to North Korea)
- Enforcement of the "Act on the Promotion of Ensuring Economic Security Through Implementation of Integrated Economic Measures" (i.e. the "Economic Security Promotion Act") [provisional English law title], and
- Semi-annual follow-up questionnaire with the respective financial institutions to ascertain the development status of their risk management systems for AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism), and other relevant matters (including the forum across the financial sector and other relevant sectors).
 
* To enhance the transparency of its administration and to share its awareness of issues in the financial sector in a timely manner, every month the FSA publishes the main issues raised by the FSA at opinion exchange meetings with the relevant associations** in the financial sector. Opinion exchange meetings are held with the respective associations on a regular basis.
 
** In November 2023, opinion exchange meetings were held respectively with the following seven groups: major banks, etc.; the Regional Banks Association of Japan and the Second Association of Regional Banks; Community Bank, Shinyo Kumiai (National Central Society of Credit Cooperatives); the Life Insurance Association of Japan; the Japan Securities Dealers Association (JSDA); Labor banks sector; and funds transfer service providers.

The original press release is available in Japanese at the following URL:
https://www.fsa.go.jp/common/ronten/index.htmlopen new window

Site Map

top of page