FSA Weekly Review No.584 April 26, 2024

FSA Weekly Review No.584: April 26, 2024

What’s New on the FSA Website

Week of April 12, 2024 - April 19, 2024

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

Public Comments

April 17, 2024	Publication of the finalized "the Partial Amendment to the Designation of a country or region under Articles 17-2 and 17-3 of the Order for Enforcement of the Act on Prevention of Transfer of Criminal Proceeds" after public consultation <Summary> Japan has imposed notification obligations (i.e. travel rule) on Crypto asset Exchange Service Providers and Electronic Payment Instrument Exchange Service Providers (hereinafter collectively referred to as “VASPs”) to submit information on originators and beneficiaries at the time of transfer of crypto-assets (“VAs”)/electronic payment instruments (i.e. stablecoins, “SCs”) to make it possible to track the transaction routes of VAs/SCs. Given the ineffectiveness of the regulation where relevant requirements in the legal system of the counterparty country or region (i.e.jurisdiction) is not in place, Japan has limited the scope of the travel rule to transfers to foreign VASPs located in jurisdictions that have regulations equivalent to the travel rule requirements in Japan. In light of the implementation status of travel rules in each jurisdiction, Japan adds eight jurisdictions to the scope of the requirements (see the Attachment for details).Information on the Travel Rule requirements in Japan is also available here. The finalized amendment took effect on May 1, 2024. The original press release is available in Japanese.
April 16, 2024	Publication of the finalized amendments to the "Cabinet Office Order on Financial Instruments Business, etc." and others after public consultation <Summary> The FSA finalized the amendments to the "Cabinet Office Order on Financial Instruments Business, etc." and others after public consultation. The finalized amendments mainly set forth the regulation on appointment as a lead managing underwriter for securities issued by a parent corporation and its subsidiary corporations, etc. In particular, beneficiary securities of a trust that issues beneficiary securities are added to the scope of exemption of the regulation, and consequential amendments are provided to the form of securities registration statement in a case where a securities company, etc. becomes the lead managing underwriter for underwriting securities issued by its parent and subsidiary corporations, etc. The finalized amendments to the said Cabinet Office Order alongside the consequential amendments to the "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc." will be enforced on August 1, 2024. The original press release is available in Japanese.
April 15, 2024	Publication of the draft "Cabinet Order to Amend the Cabinet Order on Travel Expenses and Allowances Payable to Witnesses and Expert Witnesses in Trial Procedures, etc. under the Financial Instruments and Exchange Act" alongside the draft "Cabinet Order to Amend the Cabinet Order on Travel Expenses and Allowances Payable to Witnesses and Expert Witnesses in Trial Procedures of the Certified Public Accountants Act" for public consultation <Summary> The FSA proposed the draft "Cabinet Order to Amend the Cabinet Order on Travel Expenses and Allowances Payable to Witnesses and Expert Witnesses in Trial Procedures, etc. under the Financial Instruments and Exchange Act" alongside the draft "Cabinet Order to Amend the Cabinet Order on Travel Expenses and Allowances Payable to Witnesses and Expert Witnesses in Trial Procedures of the Certified Public Accountants Act" (hereinafter referred to as the "proposal") for public consultation. In light of recent changes in economic conditions, and in accordance with the applicable provisions of the "Financial Instruments and Exchange Act" and the "Certified Public Accountants Act," the proposal is intended to increase the maximum daily allowance to be paid to a witness in a trial procedure pertaining to an administrative monetary penalty payment order from the current 8,100 yen to 8,200 yen and to an expert witness from the current 7,700 yen to 7,800 yen. Public comments will be accepted until 5:00 p.m. [JST], May 17, 2024. The original press release is available in Japanese.
April 12, 2024	Publication of the draft amendments to the "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc." for public consultation <Summary> The FSA published the draft amendments to the "Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc." (hereinafter referred to as the "proposal") for public consultation. The proposal is mainly intended to provide necessary amendments to the said Guidelines to expressly set forth that when a materiality policy (a response policy for material cases, where NAV [Net Asset Value] calculation errors, etc. exceed certain thresholds) is established for a settlor company of an investment trust, the materiality policy must set out the appropriate levels of NAVs as well as the need for disclosure to investors. In addition, the proposal is also intended to provide necessary amendments to the said Guidelines to expressly set forth requirements for real estate-related fund managers, such as a requirement to keep appropriate records of the process, etc. of considerations, etc. related to property acquisitions, etc., and to establish a system to eliminate inappropriate approaches to real estate appraisers. Public comments will be accepted until 5:00 p.m. [JST], May 13, 2024. The original press release is available in Japanese.

Press Releases

Councils

April 18, 2024	Publication of the agenda and handouts of the third meeting of "Dialogue on Enhancing Sustainability Investment Products" (provisional English title) <Summary> The FSA published the agenda and handouts of the third meeting of "Dialogue on Enhancing Sustainability Investment Products,"* which was held on April 15, 2024. In the third meeting, two guest practitioners from the private sector respectively gave presentations on practices, the current status, and so forth pertaining to sustainability investment products in Japan and abroad, whereupon the participants engaged in a discussion based on the topics presented. *The Dialogue is aimed at sharing basic awareness of the desirable state of Green Transformation (GX) investments and sustainability investment products in the Japanese market through dialogue with relevant stakeholders. The meetings for the said Dialogue will be held with broad participation on a case-by-case basis by practitioners and professionals from various sectors involved in sustainable investment products, including asset management companies, distributors, portfolio companies (investees), individual investors, and relevant associations. The FSA serves as the secretariat. The original press release is available in Japanese.

April 18, 2024

Publication of the agenda and handouts of the third meeting of "Dialogue on Enhancing Sustainability Investment Products" (provisional English title)
<Summary>
The FSA published the agenda and handouts of the third meeting of "Dialogue on Enhancing Sustainability Investment Products,"* which was held on April 15, 2024.
In the third meeting, two guest practitioners from the private sector respectively gave presentations on practices, the current status, and so forth pertaining to sustainability investment products in Japan and abroad, whereupon the participants engaged in a discussion based on the topics presented.

*The Dialogue is aimed at sharing basic awareness of the desirable state of Green Transformation (GX) investments and sustainability investment products in the Japanese market through dialogue with relevant stakeholders. The meetings for the said Dialogue will be held with broad participation on a case-by-case basis by practitioners and professionals from various sectors involved in sustainable investment products, including asset management companies, distributors, portfolio companies (investees), individual investors, and relevant associations. The FSA serves as the secretariat.

The original press release is available in Japanese. open new window

Banks

April 19, 2024	Publication of a research report on a review of literature which provided quantitative analyses on the effects of cash flow-based lending practices and interviews with the authors of the literature <Summary> The FSA commissioned Nomura Research Institute, Ltd. to conduct research on a review of literature which provided quantitative analyses as to how the collateral system over the entirety of the businesses’ assets in other countries affects the behaviors of borrowers and lenders along with interviews with the authors of those publications, and published the compiled research report (available only in Japanese) The original press release is available in Japanese.
April 12, 2024	Request sent to financial associations in the public and private sectors to collaborate with the Organization for Supporting the Turnaround of Businesses Damaged by the Great East Japan to further facilitate financing for corporate borrowers affected by disasters caused by the Noto Peninsula Earthquake in 2024 <Summary> The FSA and Ministry of Agriculture, Forestry and Fisheries (MAFF) jointly requested financial institutions and associations in the public and private sectors to collaborate with the Organization for Supporting the Turnaround of Businesses Damaged by the Great East Japan Earthquake (hereinafter referred to as the "Organization") to further facilitate financing for corporate borrowers affected by disasters caused by the Noto Peninsula Earthquake in 2024. The financial institutions and associations are expected to fully collaborate with the Organization under an integrated support structure, where headquarters and branches work together, and to proactively and continuously monitor and support the businesses of disaster-affected corporate borrowers until the completion of support, taking into account the challenges faced by the respective corporate borrowers. The original press release is available in Japanese.

April 19, 2024

Publication of a research report on a review of literature which provided quantitative analyses on the effects of cash flow-based lending practices and interviews with the authors of the literature
<Summary>
The FSA commissioned Nomura Research Institute, Ltd. to conduct research on a review of literature which provided quantitative analyses as to how the collateral system over the entirety of the businesses’ assets in other countries affects the behaviors of borrowers and lenders along with interviews with the authors of those publications, and published the compiled research report (available only in Japanese)

The original press release is available in Japanese. open new window

April 12, 2024

Request sent to financial associations in the public and private sectors to collaborate with the Organization for Supporting the Turnaround of Businesses Damaged by the Great East Japan to further facilitate financing for corporate borrowers affected by disasters caused by the Noto Peninsula Earthquake in 2024
<Summary>
The FSA and Ministry of Agriculture, Forestry and Fisheries (MAFF) jointly requested financial institutions and associations in the public and private sectors to collaborate with the Organization for Supporting the Turnaround of Businesses Damaged by the Great East Japan Earthquake (hereinafter referred to as the "Organization") to further facilitate financing for corporate borrowers affected by disasters caused by the Noto Peninsula Earthquake in 2024.
The financial institutions and associations are expected to fully collaborate with the Organization under an integrated support structure, where headquarters and branches work together, and to proactively and continuously monitor and support the businesses of disaster-affected corporate borrowers until the completion of support, taking into account the challenges faced by the respective corporate borrowers.

The original press release is available in Japanese. open new window

Securities

April 19, 2024	Publication of the "Answers to Frequently Asked Questions" on insider trading regulation <Summary> The FSA updated "Answers to Frequently Asked Questions"[available only in Japanese] [hereinafter referred to as the "FAQs"] on insider trading regulation. The new updates add Questions 9 and 10 (with the answers to those questions) to the said FAQs regarding the application of the insider trading regulations in terms of the granting of shares in kind in the form of ex-post (subsequent-delivery type) stock-based compensation and the sale of stock-based compensation for the purpose of allocating taxes withheld. The original press release is available in Japanese.

April 19, 2024

Publication of the "Answers to Frequently Asked Questions" on insider trading regulation
<Summary>
The FSA updated PDF

"Answers to Frequently Asked Questions" open new window

[available only in Japanese] [hereinafter referred to as the "FAQs"] on insider trading regulation. The new updates add Questions 9 and 10 (with the answers to those questions) to the said FAQs regarding the application of the insider trading regulations in terms of the granting of shares in kind in the form of ex-post (subsequent-delivery type) stock-based compensation and the sale of stock-based compensation for the purpose of allocating taxes withheld.

The original press release is available in Japanese. open new window

Insurance

April 18, 2024	Publication of a research report on regulations concerning insurance solicitation in the U.S. and Germany <Summary> The FSA commissioned NTT DATA INSTITUTE OF MANAGEMENT CONSULTING, Inc. to conduct research on regulations concerning insurance solicitation in the U.S. and Germany, and published the compiled research report (available only in Japanese). This research report was aimed at gathering basic information on regulations concerning insurance solicitation for automobile insurance in the U.S. and Germany, as well as for property and casualty insurance for businesses in the U.S. The research report is based on a literature review and interviews regarding the existence and content of regulations on conflicts of interest and business conduct during the solicitation of each type of insurance. The original press release is available in Japanese.

April 18, 2024

Publication of a research report on regulations concerning insurance solicitation in the U.S. and Germany
<Summary>
The FSA commissioned NTT DATA INSTITUTE OF MANAGEMENT CONSULTING, Inc. to conduct research on regulations concerning insurance solicitation in the U.S. and Germany, and published PDF

the compiled research report open new window

(available only in Japanese).
This research report was aimed at gathering basic information on regulations concerning insurance solicitation for automobile insurance in the U.S. and Germany, as well as for property and casualty insurance for businesses in the U.S.
The research report is based on a literature review and interviews regarding the existence and content of regulations on conflicts of interest and business conduct during the solicitation of each type of insurance.

The original press release is available in Japanese. open new window

Others

April 19, 2024	Publication of the outline of proceedings and handouts of an opinion exchange meeting with disabilities associations and financial institution-related associations (including bank associations of deposit taking financial institutions) <Summary> The FSA published an outline of proceedings and handouts of an opinion exchange meeting with disabilities associations and financial institution-related associations (including bank associations of deposit taking financial institutions, such as Japanese Bankers Association), which was held on March 8, 2024. The opinion exchange meeting is aimed at further promoting initiatives by financial institutions that take into account the needs of financial service-users with disabilities, and so forth, by sharing awareness of issues among financial institution-related associations and disabilities associations, as well as by further sharing good practices across the sector. The original press release is available in Japanese.
April 17, 2024	Publication of a research report on trends in sustainability disclosure and assurance in major countries <Summary> The FSA commissioned Ernst & Young ShinNihon LLC to conduct research on trends in sustainability disclosure and assurance in major countries, and published the compiled research report(available only in Japanese). The research was aimed at steadily promoting enhanced sustainability disclosure as a whole, while ensuring international consistency in the development of standards for sustainability disclosure and assurance in Japan. The research is based on a literature review of standards, guidance, and laws and regulations regarding the disclosure and assurance of sustainability information in other countries, as well as interviews with relevant organizations. The original press release is available in Japanese.
April 12, 2024	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 March 2024. (Available only in Japanese). Common topics across the groups were: Publication of "Holistic Support Measures for Business Turnaround of Corporate Borrowers" (provisional English title) Publication of the “Statement on the end of Euroyen TIBOR (Tokyo Interbank Offered Rate) [Publication of the Results of Public Consultation on the permanent cessation of Euroyen TIBOR and related issues]” by JBA (Japanese Bankers Association) TIBOR Administration Renewal of the FSA's operational support integrated system (which was created to facilitate and optimize operational efficiency by integrating the FSA’s multiple systems for monitoring and on-/off-site inspections) A special measure rendered by the Immigration and Residence Management Agency to uniformly extend the expiration date of the period of stay for foreign residents in disaster-stricken areas* who were affected by the disaster caused by the Noto Peninsula Earthquake in 2024 (municipalities to which the Disaster Relief Act was applied) Event information report on Japan Fintech Week 2024 Report on the results of implementing the development of systems in terms of taking measures for AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) Implementation of the finalized Basel III framework Publication of "FSA Analytical Notes"（March 2024） Japan Financial Literacy and Education Corporation (J-FLEC), and Public consultation conducted by the FATF (Financial Action Task Force) on recommendation 16 on payment transparency (in regard to cross-border remittances) 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 March 2024, opinion exchange meetings were held respectively with the following two groups: major banks, etc., and the Regional Banks Association of Japan and the Second Association of Regional Banks. The original press release is available in Japanese.
April 12, 2024	Updated list of issuers of gift certificates in repayment procedures based on the “Payment Services Act”

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