FSA Weekly Review No.609 October 31, 2024

FSA Weekly Review No.609: October 31, 2024

What’s New on the FSA Website

Week of October 18, 2024 - October 24, 2024

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

Public Comments

October 23, 2024	Publication of draft "Cabinet Orders and Cabinet Office Orders Pertaining to the Amendments to the Financial Instruments and Exchange Act, etc. as of FY2023" and others for public consultation <Summary> The FSA has published the draft "Cabinet Orders and Cabinet Office Orders Pertaining to the Amendments to the Financial Instruments and Exchange Act, etc. as of FY2023" and others (hereinafter collectively referred to as the "proposal") for public consultation. The proposal is intended to develop the provisions of the applicable Cabinet Orders and Cabinet Office Orders, etc. (hereinafter referred to as the "Ministerial Orders"), in conjunction with the partial enforcement of the "Act Partially Amending the Financial Instruments and Exchange Act and other Acts" (Act No. 79 of 2023) enacted on November 20, 2023 (in regard to the provisions set forth in Article 1, item 4 of the Supplementary Provisions of the said Act). In particular, the proposal is mainly intended to develop the provisions of the applicable Ministerial Orders regarding: 1. the provision of information to customers prior to the conclusion of a contract, etc. by: - setting forth the method of providing information prior to the conclusion of a contract, etc. - setting forth exemptions from the obligation to provide explanations in light of the categories of customers, and - clarifying the starting date of the cooling-off period according to the method of information provision, etc. 2. the electronic provision of prospectuses, and 3. digitization of trial procedures for administrative monetary penalty payment orders. Public comments will be accepted until 5:00 p.m. [JST], November 22, 2024. The original press release is available in Japanese.
October 23, 2024	Publication of draft Cabinet Office Orders for public consultation, in response to the enactment (in FY 2023) of the "Act Partially Amending the Act on Book-Entry Transfer of Corporate Bonds and Shares," etc. to respond to changes in the environment involving advances in information technology <Summary> The FSA published draft Cabinet Office Orders (hereinafter referred to as the "proposal" or "Ministerial Orders") for public consultation, in response to the enactment (as of November 20, 2023) of the "Act Partially Amending the Act on Book-Entry Transfer of Corporate Bonds and Shares" to respond to changes in the environment involving advances in information technology (Act No. 80 of 2023). The proposal is mainly intended to develop provisions of the said applicable Ministerial Orders in terms of digitization of trial procedures under the "Certified Public Accountants Act." Public comments will be accepted until 5:00 p.m. (JST), November 22, 2024. The original press release is available in Japanese.

October 23, 2024

Publication of draft "Cabinet Orders and Cabinet Office Orders Pertaining to the Amendments to the Financial Instruments and Exchange Act, etc. as of FY2023" and others for public consultation
<Summary>
The FSA has published the draft "Cabinet Orders and Cabinet Office Orders Pertaining to the Amendments to the Financial Instruments and Exchange Act, etc. as of FY2023" and others (hereinafter collectively referred to as the "proposal") for public consultation.
The proposal is intended to develop the provisions of the applicable Cabinet Orders and Cabinet Office Orders, etc. (hereinafter referred to as the "Ministerial Orders"), in conjunction with the partial enforcement of the "Act Partially Amending the Financial Instruments and Exchange Act and other Acts" (Act No. 79 of 2023) enacted on November 20, 2023 (in regard to the provisions set forth in Article 1, item 4 of the Supplementary Provisions of the said Act).

In particular, the proposal is mainly intended to develop the provisions of the applicable Ministerial Orders regarding:

1. the provision of information to customers prior to the conclusion of a contract, etc. by:

- setting forth the method of providing information prior to the conclusion of a contract, etc.

- setting forth exemptions from the obligation to provide explanations in light of the categories of customers, and

- clarifying the starting date of the cooling-off period according to the method of information provision, etc.

2. the electronic provision of prospectuses, and

3. digitization of trial procedures for administrative monetary penalty payment orders.

Public comments will be accepted until 5:00 p.m. [JST], November 22, 2024.

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

October 23, 2024

Publication of draft Cabinet Office Orders for public consultation, in response to the enactment (in FY 2023) of the "Act Partially Amending the Act on Book-Entry Transfer of Corporate Bonds and Shares," etc. to respond to changes in the environment involving advances in information technology
<Summary>
The FSA published draft Cabinet Office Orders (hereinafter referred to as the "proposal" or "Ministerial Orders") for public consultation, in response to the enactment (as of November 20, 2023) of the "Act Partially Amending the Act on Book-Entry Transfer of Corporate Bonds and Shares" to respond to changes in the environment involving advances in information technology (Act No. 80 of 2023).
The proposal is mainly intended to develop provisions of the said applicable Ministerial Orders in terms of digitization of trial procedures under the "Certified Public Accountants Act."

Public comments will be accepted until 5:00 p.m. (JST), November 22, 2024.

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

Press Releases

Councils

October 24, 2024	Publication of the agenda, handouts, and an outline of proceedings of the second meeting of the "Study Group on Deposit-taking Institutions' Response to Post-Quantum Cryptography" (provisional English title) <Summary> The FSA published the agenda, handouts, and an outline of proceedings of the second meeting of the "Study Group on Deposit-taking Institutions' Response to Post-Quantum Cryptography" (provisional English title), which was held on September 20, 2024. The original press releases are available in Japanese (1) (2).
October 23, 2024	Publication of the agenda and handouts of the third meeting of the "Working Group on Payment Services System, etc." under the Financial System Council <Summary> The FSA published the agenda and handouts of the third meeting of the "Working Group on Payment Services System, etc." under the Financial System Council, which was held on October 24, 2024. In the third meeting, the secretariat (i.e. the FSA) gave a briefing on the optimal regulation for temporary payment (lending) services (e.g. advances), and on the participation of foreign financial institutions in syndicated loans, etc., followed by a discussion among the Working Group members. The original press release is available in Japanese.

October 24, 2024

Publication of the agenda, handouts, and an outline of proceedings of the second meeting of the "Study Group on Deposit-taking Institutions' Response to Post-Quantum Cryptography" (provisional English title)
<Summary>
The FSA published the agenda, handouts, and an outline of proceedings of the second meeting of the "Study Group on Deposit-taking Institutions' Response to Post-Quantum Cryptography" (provisional English title), which was held on September 20, 2024.

The original press releases are available in Japanese (1

) (2

October 23, 2024

Publication of the agenda and handouts of the third meeting of the "Working Group on Payment Services System, etc." under the Financial System Council
<Summary>
The FSA published the agenda and handouts of the third meeting of the "Working Group on Payment Services System, etc." under the Financial System Council, which was held on October 24, 2024.
In the third meeting, the secretariat (i.e. the FSA) gave a briefing on the optimal regulation for temporary payment (lending) services (e.g. advances), and on the participation of foreign financial institutions in syndicated loans, etc., followed by a discussion among the Working Group members.

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

Others

October 24, 2024	Administrative action against Kabushiki Kaisha FLAVA and TRAFFICS Co., Ltd., notifiers of specially permitted business for qualified institutional investors (SPBQII) <Summary> The Kanto Local Finance Bureau took administrative action against Kabushiki Kaisha FLAVA* and TRAFFICS Co., Ltd., notifiers of specially permitted business for qualified institutional investors (SPBQII), based on facts found to be in violation of the "Financial Instruments and Exchange Act" (FIEA), such as where the entities failed to file mandatory business reports (i.e. "jigyo-hokokusho" in Japanese) in response to the order by the Bureau, and failed to fulfill the business improvement orders subsequently issued by the Bureau, thereby ordering the abolition of the notifiers' entire specially permitted business for qualified institutional investors, and the improvement of their business operations, pursuant to the FIEA. The business improvement order includes the following: (1) To promptly explain to all investors who have acquired fund interests in all funds involved in the notifiers' SPBQII (under the Former Act) the facts and reasons for the administrative action taken by the Bureau against the said notifiers (2) To keep track of the status of the fund asset management and custody services, and promptly explain the status and other necessary matters to fund investors (3) To promptly formulate and implement a policy regarding the return of fund assets, etc., while giving due consideration to fairness for investors (4) In responding to and implementing (1) through (3) above, take all possible measures to protect investors, including thorough management of fund assets, while giving due consideration to fairness among fund investors, and (5) To report in writing on the status of actions and implementation of (1) through (4) above until completion (as soon as improvement measures are formulated and implemented). * As this entity has no English corporate name, the Romanized version of the Japanese corporate name is stated here. Kabushiki Kaisha (Kabushiki Gaisha) stated in the corporate name means "stock company" in Japanese. The original press release is available in Japanese.
October 18, 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 in September 2024 with relevant associations in the financial sector. (Available only in Japanese). Common topics across the groups were: - enhancement of risk management for outside contractors/vendors regarding the services outsourced by financial institutions - "Guidelines for Cybersecurity in the Financial Sector" (provisional English title) - "The JFSA (Financial Services Agency) Strategic Priorities July 2024-June 2025" - initiatives for sustainable finance - Japan Financial Literacy and Education Corporation (J-FLEC), and - the FSA's FY 2025 request for tax revisions. Notable issues discussed by most but not all groups were: - preparations in response to the Nankai Trough Earthquake Extra Information (massive earthquake alert) - request for financial measures to deal with disasters caused by Typhoon No.10, 2024 - cybersecurity and Cyber Security Self-Assessment (CSSA) - financial sector-wide cybersecurity exercise (Delta Wall IX), and - deliverables of the G20 Finance Ministers and Central Bank Governors Meeting (in July 2024). * 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 September 2024, opinion exchange meetings were held respectively with the following eight groups: major banks, etc.; the Regional Banks Association of Japan and the Second Association of Regional Banks; Shinkumi Banks Association of Japan; the Life Insurance Association of Japan; the General Insurance Association of Japan; the Japan Securities Dealers Association (JSDA); the Investment Trusts Association, Japan; and the Labor banks sector. The original press release is available in Japanese.

October 24, 2024

Administrative action against Kabushiki Kaisha FLAVA and TRAFFICS Co., Ltd., notifiers of specially permitted business for qualified institutional investors (SPBQII)
<Summary>
The Kanto Local Finance Bureau took administrative action against Kabushiki Kaisha FLAVA* and TRAFFICS Co., Ltd., notifiers of specially permitted business for qualified institutional investors (SPBQII), based on facts found to be in violation of the "Financial Instruments and Exchange Act" (FIEA), such as where the entities failed to file mandatory business reports (i.e. "jigyo-hokokusho" in Japanese) in response to the order by the Bureau, and failed to fulfill the business improvement orders subsequently issued by the Bureau, thereby ordering the abolition of the notifiers' entire specially permitted business for qualified institutional investors, and the improvement of their business operations, pursuant to the FIEA.

The business improvement order includes the following:

(1) To promptly explain to all investors who have acquired fund interests in all funds involved in the notifiers' SPBQII (under the Former Act) the facts and reasons for the administrative action taken by the Bureau against the said notifiers

(2) To keep track of the status of the fund asset management and custody services, and promptly explain the status and other necessary matters to fund investors

(3) To promptly formulate and implement a policy regarding the return of fund assets, etc., while giving due consideration to fairness for investors

(4) In responding to and implementing (1) through (3) above, take all possible measures to protect investors, including thorough management of fund assets, while giving due consideration to fairness among fund investors, and

(5) To report in writing on the status of actions and implementation of (1) through (4) above until completion (as soon as improvement measures are formulated and implemented).

* As this entity has no English corporate name, the Romanized version of the Japanese corporate name is stated here. Kabushiki Kaisha (Kabushiki Gaisha) stated in the corporate name means "stock company" in Japanese.

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

October 18, 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 in September 2024 with relevant associations in the financial sector. (Available only in Japanese).

Common topics across the groups were:

- enhancement of risk management for outside contractors/vendors regarding the services outsourced by financial institutions

- "Guidelines for Cybersecurity in the Financial Sector" (provisional English title)

- "The JFSA (Financial Services Agency) Strategic Priorities July 2024-June 2025"

- initiatives for sustainable finance

- Japan Financial Literacy and Education Corporation (J-FLEC), and

- the FSA's FY 2025 request for tax revisions.

Notable issues discussed by most but not all groups were:

- preparations in response to the Nankai Trough Earthquake Extra Information (massive earthquake alert)

- request for financial measures to deal with disasters caused by Typhoon No.10, 2024

- cybersecurity and Cyber Security Self-Assessment (CSSA)

- financial sector-wide cybersecurity exercise (Delta Wall IX), and

- deliverables of the G20 Finance Ministers and Central Bank Governors Meeting (in July 2024).

* 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 September 2024, opinion exchange meetings were held respectively with the following eight groups: major banks, etc.; the Regional Banks Association of Japan and the Second Association of Regional Banks; Shinkumi Banks Association of Japan; the Life Insurance Association of Japan; the General Insurance Association of Japan; the Japan Securities Dealers Association (JSDA); the Investment Trusts Association, Japan; and the Labor banks sector.

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

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